David Prosser: Own goal looming at Manchester United

 

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The Independent Online

Outlook It's not been a bad start to the season for Manchester United: the team is top of the table, the manager has been lauded for some smart transfers completed well ahead of the chaotic end to the transferwindow, and now the business has unveiled record profits – even that horrible debt pile has started to come down rapidly. All in all, this is a healthy backdrop against which to launch the initial public offering in Singapore that the club's owners are thought to be considering.

If, however, the market gossip is correct, the Glazers are planning a two-tier share structure for their $1bn flotation. It is now understood that the stock they plan to sell off will not carry voting rights.

That would be unfortunate. For one thing, investors value non-voting shares at a discount – understandably enough, since they offer the risks of ownership without all of the rights. The Glazers will get less bang for their buck by structuring the deal this way.

For another, dual share structures are ghastly from a corporate governance perspective. Consider the best-known large company with such a structure in place: Rupert Murdoch's News Corporation. Is this the example that the Glazers – who cannot have failed to notice all the criticism of their stewardship of Manchester United – really want to follow?

It's not as if the owners need worry about losing control, for they propose to sell only a minority stake – possibly as little as 25 per cent. Since they will remain absolutely dominant whether or not they sell stock with voting rights, why sell corporate governance standards short or riskraising less money than possible?

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