Nelson Mandela: A life in pictures
Nelson Mandela and his wife Winnie in this undated file picture.
Topics: From the Wires
NEW YORK (AP) — The world’s most popular sports team is getting ready to list its stock on the world’s largest exchange.
British soccer club Manchester United is expected to set a price for its initial public offering Thursday night and start trading Friday as it tries to pay off more of the heavy debt piled on the club in its 2005 takeover.
The 134-year-old club, with a record 19 English championships, is one of the most well-known teams on the planet, so the IPO is highly anticipated. But some analysts say the debt-ridden team is overvalued and the offering is dependent on investors wearing their fan colors rather than their financial thinking caps.
“It’s really trading on the level of fan interest as opposed to any sort of financial interest,” said Sam Hamadeh, CEO of PrivCo LLC, which researches privately held companies. “A winning team does not make a winning investment.”
United is selling 8.3 million shares and a selling shareholder is selling 8.3 million shares for a total of about 16.7 million shares. The price is estimated to come in between $16 to $20 per share, for net proceeds of about $141 million. The team expects to use all proceeds to pay down debt.
United is looking to raise funds to help reduce debt from the Glazer family’s 2005 leveraged takeover valued at $1.47 billion. It carried 416.7 million pounds ($666.2 million) in debt as of March 31. It had no debt when it was bought by the Glazer family in 2005.
The Glazers are a U.S. family who also own the Tampa Bay Buccaneers American football team. Malcolm Glazer is CEO of First Allied Corp., a holding company with many business interests. His two sons Avram and Joel are co-chairmen of Manchester United.
After the stock offering, the Glazers will keep control of the team through Class B shares with 10 times the voting power of the stock that would be sold to the public.
The team is one of the most celebrated in the world. It claims 659 million followers and 26.9 million Facebook fans. It is especially popular in Asia, where its games are televised and its replica shirts and other products are huge sellers. But analysts are more skeptical when it comes to how viable as a financial commodity the team known as The Red Devils will be, because it is not a high-growth company like a tech startup and is heavily in debt.
Manchester United is hoping to expand its lucrative sponsorships and licensing deals. The team sold 2 million jerseys alone last year, and in total 5 million branded licensed products. And earlier this month it announced a $559 million, seven-year shirt sponsorship agreement with Chevrolet. Commercial revenue rose 34 percent in 2011 to total 103.4 million pounds ($159.8 million).
But deals such as these are only one-third of the business, said Renaissance Capital analyst Nick Einhorn. The other two-thirds comes from less-glamorous broadcast and ticket sales. Those aren’t as high-growth areas as commercial revenue because prices increase more gradually over time. And ticket and broadcast revenue depends on how far the team goes in English and European cup competitions.
Manchester United’s broadcasting revenue rose 14 percent to 117.2 million pounds ($181.1 million) in 2011. Matchday, or ticket revenue, rose 5 percent to 110.8 million pounds ($171.2 million.
“I think the club has to convince investors that the growth they’re getting from the commercial segment outweighs the less exciting broadcasting and matchday pieces,” Einhorn said.
Pouring a lot of money into the stock doesn’t make sense, said Sam Hamadeh, CEO of PrivCo LLC, which researches private companies. The top end of the IPO price range would value the club at about $3.2 billion. That would make it the most valuable sports team on the planet, Hamadeh said. It would dwarf the record $2 billion paid for the Los Angeles Dodgers baseball team.
And slashing the debt the Glazers loaded on the club has been a constant challenge, with the commercial operation ramped up and a London suite of offices employing dozens of people to squeeze every pound out of the brand.
The team expects to report a loss for the year ended June 30, excluding a tax credit, with revenue down 3 percent to 5 percent.
“You’re really buying a team that is way overpriced, with no financial justification for the value,” Hamadeh said.
Analysts aren’t the only skeptics. Protests have raged against the Glazers since they bought the club and delisted it from the London market in 2005. Fans have sent more than 1 million messages against the IPO to the club sponsors and banks, rallying against the IPO and the Glazers’ ownership of the team.
But others are more positive.
“It’s fairly rare for a team to be in a position to go public, but obviously Manchester United has exposure to domestic and international deals where there’s a lot of growth,” said Philip Hall, a partner at New York-based investment bank Inner Circle Sports, who advised on the 2010 takeover of Liverpool by Boston Red Sox owner John Henry.
Manchester United will trade under the “MANU” ticker.
Rob Harris contributed to this report from London.
Nelson Mandela and his wife Winnie in this undated file picture.
Mandela is accompanied by his former wife Winnie, moments after his release from prison February 11, 1990 after serving 27 years in jail. (Reuters)
In this February, 1990 photo, shortly after his release from 27 years in prison, Nelson Mandela, gives the black power salute to the 120,000 supporters packing Soccer City stadium in Soweto, near Johannesburg. (AP Photo)
Nelson Mandela showed his passport in February 19, 1990, shortly after his release from prison. The South African government authorized an application for himself and his wife Winnie - (Juda Ngwenya / Reuters)
In this July 27, 1991 photo, Cuban President Fidel Castro, and Nelson Mandela gesture during the celebration of the "Day of the Revolution" in Matanzas, Cuba. (AP Photo)
In this July 4, 1993 photo, President Bill Clinton and Nelson Mandela listen during Fourth of July ceremonies in Philadelphia during which Clinton presented the Philadelphia Liberty Medal to the African National Congress president and South African President F.W. de Klerk. (AP Photo/Greg Gibson)
President of the African National Congress Nelson Mandela acknowledges cheers from the crowd as he prepares to unveil the ANC's official election platform in 1994. (AP Photo/David Brauchli)
African National Congress (ANC) leader Nelson Mandela greeted residents of Mmabatho in March 1994, during a visit after the nominal homeland came under South African control following the ousting of the former President Lucas Mangope. (Reuters/Howard Burditt)
South African President Nelson Mandela smiles with actor Sidney Poitier at a press conference in Cape Town in 1996. Poitier played Mandela in the film "One Man, One Vote" (AP Photo / Sasa Kralj)
South African President Nelson Mandela waves to crowds as he sits next to Queen Elizabeth II in a an open carriage on the way to Buckingham Palace.(AP/Louisa Buller)
Chairman of the Constitutional Assembly Cyril Ramaphosa, left, holds up a copy of the country's constitution which was signed by President Nelson Mandela, in December 1996. (AP Photo / Adil Bradlow / POOL)
Nelson Mandela at a news conference in Johannesburg in February 2000. (AP Photo / Denis Farrell)
South African rugby captain Francois Pienaar, right, received the Rugby World Cup trophy from President Nelson Mandela also wearing a South African rugby shirt, after South Africa defeated New Zealand in the Rugby World Cup , in 1995. (AP Photo / Ross Setford)