Manchester United Looks Forward to More Competitive Years After NYSE IPO
Manchester United, arguably the most popular sports club in the planet, wishes to join the fray in Wall Street purportedly to fix its financial woes, which reportedly commenced when the team changed ownership in 2005, and possibly to prolong its legacy.
According to The Associated Press (AP), United is saddled by debts of up to $US663 million and blotting a big portion of that is the core purpose of Cayman Island-registered firm's IPO venture on the New York Stock Exchange.
Its IPO goal is to muster $US100 million, United said on its SEC filing last week, which the company said "we intend to use ... to reduce our indebtedness."
Forbes said United is currently valued at around $US2.24 billion, mostly on the huge attentions that it has been attracting both from global sports fans and company brands lining up to be associated with the club that had produced the likes of David Beckham, Cristiano Ronaldo and Wayne Rooney.
Last year alone, United earned some $US300 million just by selling broadcasting rights of the games played by the team to global media firms, underscoring the club's commercial viability not only in the United Kingdom but also to the rest of the world.
The 2011 revenues have yet to include brand sponsorship contracts that AP has estimated could run hundred-millions more in pounds to last until mid-2015.
But why the gigantic liability which the Red Devils have been trying to kick away since Malcolm Glazer and his family took full ownership of the football club in 2005 forking out $US1.47 billion?
Apart from the losses of more than $US47 million that United had reported in financial year 2009, the club claimed on its filing that recent developments in the European league, in which teams were being snapped up by new owners with deep pockets, could eventually put United at a gross disadvantage.
The arguments were with semblance of truths, analysts said, citing the case of Chelsea and Manchester City, which when bought by wealthy owners have since increased their level of performances, with titles to boot as badge for the resources used up in beefing up the formerly lacklustre roster of the teams.
With the Glazers hobbled by financial limitations, mostly highlighted by their inability to clear United of debts, the club could soon find itself unable to maintain a competitive line-up to face up with the current competition.
"In the Premier League, recent investment from wealthy team owners has led to teams with deep financial backing that are able to acquire top players and coaching staff, which could result in improved performance from those teams in domestic and European competitions," the club was quoted by AP as saying on its filing.
It needs the cash and United eyes the NYSE as its likely saviour, overlooking the lure once offered in London, Hong Kong and Singapore.
Analysts said the U.S. stock market was the best option for United because it gives more room for the club to manoeuvre - to raise the funding it needs while allowing the Glazers to keep majority ownership through stock tweaks that are unique in America.
The Glazers, AP said, are poised to keep their majority stakes in the club by holding on to so-called Class B United shares, empowering sufficient voting power as compared to the stocks that will be sold to the average investors.
Obviously, the Glazers were aiming to improve on a tested formula as United once traded publicly in London prior to the family's entry and this time around they would want to capitalise on a set up they shunned when they took over the global brand.
But will United go the way of Facebook? The social media giant attracted too much attention before its market debut but to date its shares have yet to match the initial price value of $38.
The disappointment at least failed to dampen the actual growth pace of Facebook, not yet anyway, and the same should mark the entry of Manchester United to the U.S. stock market.
Fans of the club could only hope that the financial steroid being sought by the Glazers would actually boost the club's performance in the immediate seasons ahead, sustaining the reputation that earned the company numerous titles and hordes of supporters worldwide.
As New York Times puts it, Manchester United's U.S. IPO foray is testament to a hugely successful 120+-year-old brand that was forged in the United Kingdom and is being devoured by global consumers.