SBD/August 31, 2011/Franchises

ManU Set To Use Record Operating Profits To Help Singapore Float



ManU operating profits have doubled since Glazers took over in '05
EPL club Manchester United this week will "report record operating profits" of more than $163M (all figures U.S.), and is "set to use Thursday's financial results as a springboard for a bid to raise" up to $1B by floating a minority stake on the Singapore Stock Exchange, according to Owen Gibson of the GUARDIAN. An increase in revenues, reportedly topping $489M (£300M) for the first time, "has been driven by new overseas sponsorship deals that are likely to have pushed commercial income" above $163M (£100M) for the first time. That figure "does not include" the new $16.5M a year training kit sponsorship with DHL, nor "other recently signed contracts." ManU is "likely to point out that operating profits have more than doubled" since the Glazers acquired the club in '05. The club also is "expected to record a net profit for the year ending June 2011," a contrast to last year's record losses of $135.8M. Still, Gibson notes for the "ambitious flotation scheme to succeed when it goes ahead in mid-October, Manchester United will have to overcome doubts about the way it is structured." The club reportedly "will pursue a dual share structure, whereby investors will have to purchase one 'non-voting' share for every voting share, allowing the Glazers to raise funds while staying in control of the club." Sources indicated that it is "modelled on the US sports model, where clubs in the NFL and the NBA must have a single designated owner, and will allow for strategic long-term planning and swift decision making." But corporate governance experts said that it "was out of step with best practice and increasingly frowned upon by investors" (GUARDIAN, 8/31). Sources indicated that ManU's "goal remains to raise" up to $1B by floating a stake of up to 30% in the club (, 8/30).

READY FOR A DUAL? The FINANCIAL TIMES' Brown & Blitz cite sources as saying that the ability to use a dual share structure "was an important reason for the club’s decision to switch the IPO from Hong Kong to Singapore." One source said, "There will be a dual share structure because that makes most sense for the business. The club could not have done that in Hong Kong and it is an important reason why they chose Singapore. But it is not the main reason." The "disclosure of the proposed dual share structure will trigger fresh debate about the corporate governance standards at the club under the Glazers, since two-tier shareholding structures are often regarded as inequitable" (FINANCIAL TIMES, 8/31). The WALL STREET JOURNAL's Nisha Gopalan notes the listing plan "is a blow to Hong Kong," which was the favored listing destination before it "refused to give Man U a waiver" (, 8/29).
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