Simon English: Investors will get few kicks from Man Utd float
Thursday 05 July 2012
Outlook Other than to acquire a certificate to frame and stick on the wall (or perhaps the dartboard, according to allegiance), why would anyone buy shares in Manchester United?
The second-best team in the North-west is floating in New York and creating a Cayman Islands holding company – a further reason for neutrals to dislike what the club has become, if not for investors to shun the stock.
Other reasons for investors to shun the stock are manifold, extending far beyond the ageing legs of the near-impossible-to-replace Paul Scholes.
Details of the float offering are sketchy but the rationale seems to be to pay down debt the controlling Glazer family built up as part of its takeover.
Why that should be a compelling proposition is hard to see. It suggests that the owners have uses for other people's money (don't we all?) but it hardly shouts "shareholder value".
Why is a British business floating in America? Probably because the investment banks hired to advise on the deal have already warned that a London IPO could well flop.
UK investors have been badly burned on football flotations before. The craze in the 1990s for football clubs to join the stock market was a disaster.
Clubs that were piddling businesses by any rational measure imagined they could become "global franchises" just because some children in Asia had bought knock-off replica shirts.
This fad reached its absurd apex in 1997 with the launch of a football fund backed by Singer & Friedlander.
We'll draw a veil over how this venture turned out for reasons of kindness.
Back to Man Utd. The registration statement from the Glazers makes it clear that those willing to part with their cash for a stake in the club shouldn't expect to get any say in how it is run.
The family will retain voting shares 10 times more powerful than those that are for sale. For media companies that need to keep editorial control, this makes sense. For football clubs that aim for profit through glory, less so.
There is not even the intention to pay a dividend should the club make fortunes beyond the dreams even of Premier League footballers.
The Glazers may well be clever and able folk in all sorts of ways, but they don't look like natural heads of public companies.
It's cute to imagine them being held to account at an annual meeting by angry supporters who have bought two shares each, but since that meeting would take place on Grand Cayman, we can assume few such folk will be able to afford the trip.
Part of the sales pitch for the float notes that the team has 659 million "followers", which is about how many people follow Rio Ferdinand on Twitter. Shrewd businessmen though he is, Ferdinand has not managed to make money by tweeting. And Manchester United won't make a penny from most of those 659 million people.
Enjoy the football. Avoid the shares.
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