Manchester United have filed the initial IPO paperwork with the Securities and Exchange Commission to pave the way for a partial floatation of the club on the New York Stock Exchange.
The paperwork is extremely interesting, if a little dense, and sheds light on the Glazer’s reading of the state of the club with hitherto unseen honesty. SEC Regulations state that the paperwork must warn potential investors of a so called ‘dooms day scenario’ to prevent said investors claiming they were unaware of the business’ risks when they bought their shares.
Even with this in mind however, this is the first time we as fans of Manchester United have heard anyone from the club even acknowledge that the debt is a problem, let alone remark that it could (read is) affect our ability to recruit top class players and staff, and as a consequence, our level of success on the field. Time and time again we’ve heard Sir Alex remark that “there’s no value in the transfer market” and David Gill state that the debt was not a problem. The fans are not stupid and now we have our proof.
It also provides previously unknown background to claims such as United having 659 million followers worldwide (extrapolated from the answers of an internet-based survey with 53,287 respondents from 39 countries – i.e. conjecture) where a follower is classed as “a respondent who either watched live Manchester United matches, followed highlights coverage or read or talked about Manchester United regularly” – a hardcore die hard Red then…
The Glazers have set the value of the IPO at $100m however this is merely a placeholder amount, with the real goal likely to be higher (around $1bn) with the money earmarked to pay off some or all of United’s £423m debt.
The shares will be split into two kinds, A and B, with A’s offered in the float, and B’s kept by the Glazers. A’s come with no guaranteed dividends and 1/10 of the voting rights of B’s. If the IPO pans out this way, it would seem to be quite an unattractive proposition from an investors point of view. Not only are your funds only being used to eradicate existing debt levels, you have very little to no say in the running of the club that you have invested in – the attractive side of the deal however, is the gamble that the shares bought in the club go up in value, and therefore earn the investor a profit that way.
So how should United fans react to this news? Respected authority on football finance, Andy Green (@andersred) believes this is good news for us as “a) proceeds will be used to pay down debt and b) they won’t pay dividends.” and could even pave the way to the eventual sale of the rest of the club “You’d suspect that once the price is established they will look to offload their own shares onto the market in future years.”
If there’s even a glimmer of hope that this could be the start of the end of the Glazer’s reign (even at HUGE cost to Manchester United), then it must be considered nothing but good news.
The full document can be read here.