Manchester United Files For IPO In United States
NEW YORK (AP) — Manchester United plans to go public. In the United States, to boot.
The record 19-time English champions filed a registration statement with the Securities and Exchange Commission on Tuesday to hold an initial public offering of stock and become a listed company on the New York Stock Exchange. The deal could ease pressure on the club’s cash flow as it tries to keep and acquire players in an attempt to regain English and European titles.
While the stock price and the number of shares were not listed, the registration statement said the club hoped to raise a maximum of $100 million — a place-holding figure that could change before the offering becomes effective.
“We intend to use all of our net proceeds from this offering to reduce our indebtedness,” the team’s filing said.
The Glazer family, which bought the club in 2005, would retain control through Class B shares, which would have 10 times the voting power of the stock that would be sold to the public.
Under the reorganization, the team would become a wholly owned subsidiary of Manchester United Ltd., a newly formed holding company based in the Cayman Islands.
The team was listed on the London Stock Exchange from 1991 until June 2005, when Glazers completed a leveraged buyout valued at $1.47 billion. The Glazers also own the NFL’s Tampa Bay Buccaneers.
United has been looking to raise funds to help reduce debt from the 2005 takeover that was 423 million pounds ($663 million) as of March 31, much of it with interest rates of 8 3/8 and 8 3/4 percent. A $1 billion offering on the Singapore stock market was pursued last year, but the plans were halted due to volatile global markets.
The team, European champions in 1968, 1999 and 2008, has been valued at $2.24 billion by Forbes magazine, ranking it as soccer’s most valuable club for the eighth year in a row.
The Red Devils were on track to their 20th league title this year, taking an eight-point lead in the final weeks of the season. But crosstown rival Manchester City, which became soccer’s biggest spender following its purchase by Sheikh Mansour bin Zayed bin Sultan Al Nahyan of the United Arab Emirates, won the title on goal difference on the final day of the season.
“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,” the filing said.
Manchester United said that it had a loss from continuing operations of $47.5 million in the year ending June 30, 2010, then had a profit of $13 million in the following year. It said it had an unaudited profit of $38.2 million in the nine months ending March 31.
A nearly 300-page prospectus to the SEC contains a series of warnings about the state of the club’s finances.
The filing says “our indebtedness could adversely affect our financial health and competitive position” and reduce “the availability of our cash flow to fund the hiring and retention of players and coaching staff.”
United also warned that new UEFA spending restrictions “could negatively affect our business.”
European soccer’s governing body is phasing in spending restrictions over several seasons, known as Financial Fair Play. Under the rules, clubs have to break even from soccer operations, or they risk being excluded from European competitions starting with the 2014-15 season.
But United is by far English soccer’s biggest moneymaker, helping to soften the impact of its debt.
The filing revealed the club received 25.6 million pounds from Nike in 2010-11 under its 303 million pound, 13-year deal with the equipment supplier, which has three years remaining, and another 5.7 million pounds as its split of the profits.
Its shirt sponsorship with the insurance company AON, which runs through the 2013-14 season, and a separate agreement with the company that runs through June 2015 guarantees 88 million pounds, up from a 14 million pound-a-year deal with AIG that ran for three years through the 2009-10 season.
New media and mobile revenue alone was 17.2 million pounds in 2011.
Managers of the offering are Jefferies & Co. Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC, BofA Merrill Lynch and Deutsche Bank Securities Inc. United does not intend to pay dividends to shareholders.
Several other Premier League teams have U.S. owners, including Arsenal (controlled by Stan Kroenke), Liverpool (by the parent company of the Boston Red Sox), Aston Villa (Randy Lerner) and Sunderland (Ellis Short).
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