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Manchester United IPO Sells Under Range

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Manchester United, the British soccer team owned by the Florida-based Glazer family, came in under its projected IPO range of $16–$20 per share to sell at $14 per share, raising $233.3 million and giving it an enterprise value of $2.9 billion.

Bloomberg reported late Thursday that the team failed to draw as much attention at its U.S. IPO as the Glazers had hoped. Even though the valuation came out around $1 billion higher than that of Spain’s Real Madrid soccer team, the world’s second most valuable sports franchise valued at $1.88 billion, the family had hoped to raise considerably more. Even the New York Yankees only come in third in this competition, valued at $1.85 billion.

Still, because of a two-tier share structure, the Glazers retain nearly 99% of voting rights thanks to their Class B shares, while purchasers of the Class A shares sold together account for only 1.3%. The B shares carry 10 votes each.

Kenneth Perkins of Morningstar, a Chicago-based analyst who covers consumer companies, valued the stock lower still, at $10 per share. He said that stiffer competition for fans and corporate sponsorships from other teams, together with a costly debt load, could take a toll on earnings. In the report he was quoted saying that the company “was asking investors to pay a pretty high price and take on a lot of risk.” He added, “It could work out, but the risk is to the downside.”

The decision to offer the club’s stock in the U.S. came after plans for IPOs in Hong Kong and Singapore were scrapped; the Singapore IPO sought to raise as much as $1 billion for the club. However, indications were that the IPO would be nowhere near as successful as hoped, so the venue was changed.

Ronald Wan, a Hong Kong-based managing director at China Merchants Securities, which oversees about $1.5 billion, said the club still might have done better to be offered in Asia, where its fan base is already large and growing.

In the report he said, “U.S. investors are not as enthusiastic about soccer as those in former British colonies like Singapore and Hong Kong. Market reactions might be slightly better if the deal was done in Asia.” Soccer is nowhere near as popular in the U.S., where the club has only around 5,000 registered fan club members and soccer is poorly followed.


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