Soccer club Manchester United, owned by the U.S.-based Glazer family, is scheduled for an IPO Friday in the U.S. But not everyone is happy about it—certainly not fans, who complain the Glazers saddled the club with debt and made it difficult for it to continue its winning ways or pay for top players. Not some financial experts, either, who question everything from share structure to the club’s valuation to the fact that the IPO was “shopped” first in Hong Kong, then in Singapore, and now finally in the U.S.—not London, as might be expected.
The Financial Times reported Thursday that critics are especially hard on the share structure, which allows the Glazers to remain in control. The Glazers are selling 16.7 million class A shares—a tenth of the club. They will keep the proceeds from 8.33 million shares and pay down debt with the rest. However, the shares retained by the Glazers have 10 times the voting power of the shares being sold, so that investors buying a piece of the club will own 42% of the class A shares but have only 1.3% of the voting rights.
Leon Kamhi, executive director at Hermes Equity Ownership Services, was critical of the setup, and said in the report that such dual voting structures were “clearly not aligned to the interests of outside shareholders. The public markets are being taken for a ride.”
Others have questions about the pricing of the shares. They are expected to come in between $16 and $20 each prior to the NYSE listing on Friday, with the club valued at around $3.3 billion at the high end of the range. However, Manchester is being marketed more as a brand than as a sports team—something that has caused concern among potential investors and even potential underwriters.
Reuters reported that the lead underwriter, Jefferies Group, is touting the soccer club as a high-growth consumer brand, according to unnamed sources, and comparing it to retailers such as Michael Kors Holdings and Lululemon Athletica. JPMorgan Chase & Co. and Credit Suisse Group, on the other hand, present the club as an e-commerce company and comparing it to Amazon.com, while Deutsche Bank is comparing it to Walt Disney Co. and pushing it as a media company, the sources said.