Schumpeter | Manchester United’s IPO

MANU

By M.S.L.J.

TODAY the New York Stock Exchange listed a new, very red, kid on the block under the ticker MANU. The initial public offering (IPO) of Manchester United saw 16.7m class A shares, one-tenth of the club, offered at $14 each. This would value the club at $2.3 billion, close to what Forbes magazine guessed the club was worth earlier this year. As the club's owners originally anticipated selling shares at $16-20, this was a disappointing start to a new financial season.

The Glazer family, who bought Manchester United in 2005, will hang on to the proceeds from roughly half the shares being offered. The cash from the rest will help to reduce the club’s debts. Originally all the proceeds were going to be used for this purpose. Fans who were furious when the Glazers first burdened the club with such whopping debts—estimated at £423.3m ($662m) in March—are now even angrier. They would rather the money was spent on putting the club on a sounder financial footing, or on Robin Van Persie, a star striker. The IPO itself will cost $12.3m, according to the prospectus.

Manchester United is still probably the most valuable brand in world football. So its listing will be watched as avidly as a Champions League final. Two previous plans to list in Asia flopped. This time, early trading was cautious. An hour after the listing the price had barely budged. The prospectus lists several risks. For instance: “European competitions cannot be relied upon as a source of income.” (In other words, United might be knocked out of the Champions League.) Also, the shares on offer confer only a tenth of the voting rights of those owned by the Glazers. Oh, and the club does not currently intend to pay any dividends. Compared with this IPO, Malcolm Glazer’s facial hair seems attractive.

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