Date: 4th July 2012 at 8:37pm
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Is this a positive move from the Glazers?

Is this a positive move from the Glazers?

Late on Tuesday evening the Glazer family gave notice of their intention to list Manchester United on the New York stock exchange by way of an IPO (initial public offering) and released a 293 page prospectus outlining their intentions.

Despite having previously explored a flotation in Asia, the Glazers have now settled on the US market, having satisfied themselves that there is sufficient investor interest in the States. In the 24 hours or so since the announcement a great deal of inaccurate reporting and scaremongering has surfaced in the media and elsewhere. To the average United fan the contents of the prospects and comment on it is hard to understand and so the purpose of this article is to attempt to present the important issues relating to the IPO in a way that we, as fans, understand.

The first thing is should say is that this is not a morality piece about the Glazer ownership. No United fan wants them or their toxic debt at the club. There can be absolutely no doubt that United have been hampered by the debt. Whilst the clubs wage policy of 50% of turnover is a continuation of the PLC line it is hard to imagine that money available for transfers has not been affected as £500m has leaked out of the club. Similarly there is no arguing with the fact that a proportion of the Ronaldo sale money was used to buy back the club’s debt. The astonishing rise in commercial income since the takeover goes some way to offset these expenses but the in practice losses under the Glazers, even by conservative estimates, run into 9 figures. However, what we must not do is to assume that United have “no money” or cannot compete. The club is still extremely cash profitable. What the IPO does demonstrate though is that, under the burden of debt, the club are dealing in very fine margins and having to be extremely careful in the transfer market.

Anyway, enough waffle. The reality of the situation that we find ourselves in is that the Glazers simply aren’t going to go away and we cannot get all the money wasted back. The best route for Manchester United to return to full health is for the debt to be paid off and the Glazers to get stinking rich, as unpalatable as that may be. The IPO is an opportunity for Manchester United to become healthier. The important points are as follows:
-MUFC is not going to go bust without the IPO. It is, however, an acknowledgement by the Glazers that the club needs more financial flexibility to maintain on and off pitch performance.

-The club currently carries £423m of debt, down from the £485m of 18 months ago.
-The size of the IPO offer is not yet known and will depend on share demand. A decision to list shows that the Glazers a confident of significant interest. Contrary to reports the share offering is NOT for $100m. That figure is a minimum used solely for the calculation of the SEC listing fee. The money raised will likely be significantly larger, probably approaching or above the club’s debt burden.
-The prospectus says that proceeds from the IPO will largely be used to pay down the debt. This is extremely reassuring as it means that the Glazers aren’t planning to run off with all of the loot.
-The prospectus states that there are no intentions to withdraw dividends from MUFC and none can be taken until the debt is paid off in full.
-The shares offered are “A” shares. Put simply investors will have few voting rights and will not be getting dividends. The investment will simply be on the basis that shares can be sold at a profit (or loss) in future. This is common in the US but not the UK. Google are listed on a similar basis.
-There is a huge list of “risk” factors. The most often quoted one refers to the club not being able to compete financially.  Another warns of the risk of relegation. These are NOT the club admitting anything. It is, for wont of a better expression, legal arse covering. Investors must be made aware of potential risks, however remote.
-MUFC are being moved as a company to the Cayman Islands. Companies being listed offshore are not uncommon. This is a tax issue and not one that I fully understand. It does not significantly impact on the club.
And that is just about it.  United are still very profitable but the Glazers clearly think that the margins are too fine. My overriding wish is for MUFC to be debt free. Put simply I love United more than I hate the Glazers. My only motivation in writing this article is to explode some of the myths and hysteria of the last 24 hours and to reassure my fellow fans that a successful IPO is a good thing for the club. Removing the debt or a portion of it will release up to £40m that is being annually wasted on interest. The profit margins are good, but they could be great, meaning more money for transfers and possibly wages.

One other point: United are attractive to investors if their financial figures are good, but they also recognize that to achieve that the club must be performing on the pitch. Selling Nani or failing to invest in the squad wouldn’t look good and it’s my hunch that neither will happen this summer. Regardless of the vehement dislike that we all feel for the Glazer family, United are not in imminent danger of falling apart and might soon be faring a whole lot better. So there you go. Clear as mud.

Love United (more than I) Hate Glazer

For more Red views follow me on twitter @richardcann76


16 responses to “United’s Stock Flotation Analysed & Explained”

  1. Bishampton Red says:

    Why would anyone want to buy shares in a company that is carrying £423m of debt ? With no dividends been paid and no guarantee of an increase in the share price what could possibly attract investors? I just don`t get it at all.

    • Richard Cann says:

      It’s a fair question and I guess the answer is two fold. Firstly, if the IPO is successful the club won’t be in debt anymore. Secondly, the club is a money making machine. The new domestic and overseas tv rights and commercial revenues are going through the roof.

      Stat from @andersred yesterday (I can’t find the tweet so my figures may be slightly off): new MUFC income from deals relating to mobile Internet technology last year was in the region of £17m. Arsenal’s entire commercial operation was worth £46m.

      United’s EBITDA is £100m plus and going through the roof. That’s Earnings Before Interest Tax Depreciation and amortisation. Essentially we are a big read cashpoint. It’s hard to see the value of the club doing any thing but grow medium term.

  2. Blueknight says:


    The US based Glazer family have taken steps to move the club
    to the tax haven of the Cayman Islands.

    “it’s a great move for the club,” said a United insider.
    “We think it will give us a great chance of doing
    another treble. No other club has won the
    Cayman Islands League, the Cayman Islands
    Cup and the Cayman Islands League Cup in the
    same season.”

  3. RoastyMUFC says:

    I’m with Bishampton red on this one. why would anyone want to buy these shares? especially in the states. I cant see it raising much. Hope I’m wrong and it leads to a healthier state of affairs.
    one thing is for sure though- the glazers wont b leaving until they’ve milked an almighty profit from United.

  4. RJ says:

    @Bishampton Red
    That’s the reason for the risk section.
    The major incentive for the investors will be the share price after the debt has been wiped.
    e.g. A share is worth £1 before the debt is wiped and £2 after the debt is wiped, the investor could then double their money.

  5. RoastyMUFC says:

    Blue Knight- i notice u mention “another treble”

    have u ever won the treble have you fuck??

  6. MikeR says:

    “I’m with Bishampton red on this one. why would anyone want to buy these shares? especially in the states.”

    I think the market is basically a global one. Buyers of shares don’t have to be located in the US, and many or most probably won’t be. All it takes is a broker with a computer. I assume there are reasons for listing on the NYSE rather than in Asia.

    While I understand the idea of shares with limited voting rights, I’m not sure I get why anyone would buy shares without dividends. I thought the theoretical value of shares was in dividends, even though as a practical matter they’re often not paid and people tend to make money on the buying and selling of the stock itself.

  7. Richard says:

    The listing wouldn’t have been initiated without significant interest. The listing is also being underwritten by a number of banks? The fact it’s in the US is irrelevant. Investors wont be stumping up money because they love MUFC. It will purely be a money maker.

    • MS says:

      Thanks for your article Richard, and yes – now it is indeed clear as mud, well to me at least! I have read that there is a lot of interest in the United shares already, so I hope that continues to be the case. Like you I so want Man Utd to be totally debt free. Could I ask you another question Richard please? Say for instance people from Qatar, and other middle east billionaires want to buy a lot of shares, will they be allowed to buy shares if they are owners of other football clubs, especially in UK ownership or european ownership? Also how many shares are each person or company allowed to buy, is there a limit put on that? With regards to the commercial side of things, I think it is going to be down to the BRAND of football United play. I know this is not going to be popular to say, but it is just my honest opinion, so please don’t all jump on me. I feel that the excellence of our football has not been what it used to be for a couple of seasons now, and the quality of our football has been absent in a lot of games. Yeah we have got the wins, but we have been very fortunate at times. I am hear from different United fans, that they are not renewing their season tickets, and it breaks my heart to hear that, because United fans have always been there in the past through the good and the bad times, standing together. So if our football quality any further deteriorates, will we still be getting all the TV time we have gotten in the past. People world wide want to watch great football when they pay for sky etc. I noticed when I went to away games in the last couple of season, where United away games would always be a sell out, the empty seats in the home sections were starting to show. Whether that was to do with clubs highly elevating their prices for United games, and their fans baulking at paying the hiked prices, was the cause, I am not sure. Anyway, what I am saying is that we can be affected commercially if we are not producing top class football on the pitch, and if we continue to not compete and win the very best players. Please tell me if I am wrong about this. No offence meant guys, I am just trying to share some of the things bothering me as an ardent fan!

      • Richard says:

        Thanks for your post. The nationality of investors is irrelevant. Re your point about holding stakes in other clubs, I’m not entirely sure what the rules are on this. There are certainly examples in Europe of owners/investors in more than one club. This becomes a problem should those clubs be competing in the same competition: CL, Europa league etc.

        On your point about how much stock can be bought, i think that that depends entirely on how attracted investors are at the share price quoted and how many shares the Glazers decide to sell. At the moment we don’t know any of these things.

  8. MS says:

    @Blueknight – one question, what are you a Man City supporter doing spending your time on a Man Utd blog? I wouldn’t be seen dead visiting and posting on any Man City blogs. Only one answer for the City visitors to United blogs, you are still totally obsessed with all things United, otherwise you wouldn’t be here!

  9. Gorse Hill Red says:

    Although many companies offer no dividends for example Ryanair and Apple what surprises me is the class of shares (which is basically saying you have little say in the company). Would this deter big investors and only attract smaller ones? Ideally this is what the Glazers want and would not surprise me if that would have a detrimental effect on the ultimate share price.

    • Richard says:

      Im afraid we just don’t know at the moment. It really is a wait and see. It’s up to the banks underwriting the IPO to work their magic now and see how many subscriptions they can get.

  10. 4evraRed says:

    The glazers seem to know how to manipulate the media. once season tickets have been sold out and nani stays who is to say they wont pull out until next summer. They are taking us fans for fools and only saw doing a van persie on them will work. Yes they have done well commercially but our club would have been untouchable without their debt. We are slowly becoming arsenaland this ipo is something I’m not too sure about as I have not much knowledge but has Facebook not just failed with something similar?