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Market lap
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London, July 4 (Reuters): Manchester United plans to cut its debt with a New York flotation that should free up cash for top players after a trophyless season in which it was replaced at the top of English football by rich rivals Manchester City.
The American Glazer family, owner of the NFL team Tampa Bay Buccaneers, will keep its grip on the 19-times English champions after the planned US float by using a dual share structure.
The club wants to raise up to $100 million to reduce its debt pile of £423 million ($663.20 million).
United ditched plans to raise up to $1 billion in Asia, home to many of the club’s 659 million fans, and the move to North America, where English football has a much smaller following, was surprising when flagged last month.
However, market volatility has delayed a number of flotations in Asia in recent months, including the Formula One motor racing business.
US investors are also familiar with the dual-class structure planned for United. The class A shares to be issued will have only a tenth of the voting rights of the ones held by the Glazer family, who bought the club in 2005 for £790 million ($1.24 billion).
“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,” United said in its Securities and Exchange Commission filing on Tuesday.
Formed in 1878, United, whose past players include George Best, Bobby Charlton and David Beckham, issued a hefty preliminary prospectus but has not yet given details on the timing of the float and the precise size.
The club had revenues of £331 million last year but incurred finance costs of £51 million after the Glazer takeover loaded the club with debt.
Can’t win them all
United was recently ranked by Forbes as the world’s most highly valued sports team. As well as winning a record number of English titles, they have been European champions three times.
That success has allowed the club to sell its brand around the world. It has commercial partners in 72 countries, working with companies including US sportswear company Nike, shirt sponsor Aon, Turkish Airlines and Singha beer.
However, United lost their league crown to City in May, a club bankrolled by Sheikh Mansour Bin Zayed Al Nahyan of Abu Dhabi. It also made an early exit from the European Champions’ League, putting a dent in their earnings in the first trophyless season since 2005.
Fans are hoping the flotation will help the club to get back to its previous dominant form.
United was one of a number of soccer clubs listed on the London Stock Exchange in the 1990s but investor interest quickly waned because of the volatility of a results-driven industry.
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