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SBD/August 13, 2012/FranchisesPrint All
Shares in EPL club Manchester United made "a muted debut" as they opened for trading on Friday just above their initial public offering price, according to Mackenzie & Makan of the FINANCIAL TIMES. The failure of the shares to “pop” on its trading debut on the N.Y. Stock Exchange was "a second blow for the listing," after underwriters lowered the price to $14.05 (all figures U.S.) per share late on Thursday. The stock eventually peaked at $14.20 and closed at $14 on turnover of more than 30 million shares, then dipped below the offer price in after hours trade to $13.90. The club and its owners raised about $234M "from the sale of 16.7 million shares." That is nearly $100M lower than the $330M "implied at the top end of the price range." The sale of the 10% stake leaves ManU with a market capitalization of less than $2.3B. On the trading floor Friday, which was covered with artificial turf, many traders wore the club’s red shirts with “MANU-LISTED-NYSE” on the front (FINANCIAL TIMES, 8/11).
DISAPPOINTING DEBUT: In Toronto, Morgan Campbell wrote ManU's IPO "was about as exciting as a nil draw in a preseason friendly." The price reduction combined with a lack of activity "left many experts underwhelmed." IPOScoop Founder John Fitzgibbon said, “There was a lot of wing flapping, but not much flying today. It’s reflective of the overall IPO market." Campbell noted the amount of money the club will now split between ownership and obligations to creditors is "much smaller than expected." Lowering the stock price cut the IPO’s haul to $223.3M, a "modest number" compared to the sums discussed when the IPO was first considered, and "vindication for a growing group of ManU fans vocally opposed to the deal" (TORONTO STAR, 8/11). The AP's Mae Anderson noted some analysts had warned that the IPO was "overvalued, particularly since the club is debt ridden and the family that owns them, the Glazers, retained almost total voting control over the team" (AP, 8/10). ManU CEO David Gill on Friday said the team “looked at other markets” to launch the IPO, but "determined that New York was the right exchange." Gill: "The sports business model I think is understood in the U.S. The strength and demand for the shares is very apparent." Gill said the team lowered the initial price per share and lowered the number of shares offered because the club "wanted to have long-term holders in there" (“Squawk on the Street,” CNBC, 8/10).
DEBT ISSUES: In London, Ruddick, Blackden & Cooper wrote despite the lower-than-expected pricing, the IPO "still establishes ManU as the world's most valuable football club." However, the IPO offering "has created further anger among fans of the club" (TELEGRAPH.co.uk, 8/10). REUTERS' Keith Weir wrote ManU's loss of as much as $50M in expected proceeds "will be a blow as it copes with a heavy debt burden and seeks to buy new players" (REUTERS, 8/11). Gill has promised that the club "will continue to invest in top-class players" despite a slow start on the NYSE. Gill said, "We will make sure there are sufficient funds to invest in the team going forward." He added, "We've signed Chevrolet to a seven-year shirt sponsorship commencing in 2014, which is over twice what our current shirt sponsors make -- we've got a lot of interesting and good opportunities to improve our cash flow going forward" (London DAILY MAIL, 8/11). CNBC's Robert Frank wrote that ManU Owner the Glazer family's "fondness for debt may be growing into a liability." The IPO also "adds to criticism that the Glazer family has been extracting value from the team, rather than growing it through investment and added capital" (CNBC.com, 8/10).
RINGING THE BELL: In London, Helen Collis noted Gill and ManU co-Chairs Avram and Joel Glazer on Friday "applauded as they rang the bell from the NYSE balcony." The ceremony also was attended by ManU Chief of Staff and BOD member Edward Woodward (DAILY MAIL, 8/10).
As the NBA "gets used to the Lakers moving back toward the forefront, NBA players are voicing more opinions" about the team acquiring C Dwight Howard from the Magic, according to Mike Bresnahan of the L.A. TIMES. Thunder F Kevin Durant said, "That's what the Lakers do. They have great management and ownership to make those moves come to life." Thunder G James Harden: "Was I surprised? No. Big market. The Lakers always do a great job of getting good players. It doesn't take away from us at all." Bresnahan wrote more opinions "eventually will surface, but there hasn't been anything like the backlash that accompanied the quickly vetoed" Lakers-Hornets trade for G Chris Paul in December (L.A. TIMES, 8/12). Lakers GM Mitch Kupchak said team Owner Jerry Buss is a "very competitive owner. When it comes down to making a decision over a couple of dollars or a million dollars or 10 million dollars or putting another banner up, you know, he can't help himself. He chooses to go for the banner." In California, Jeff Miller wrote, "The fact Kupchak put this roster together while working within the confines of the NBA's new collective-bargaining agreement makes his performance even more magical" (ORANGE COUNTY REGISTER, 8/12). Lakers G Kobe Bryant said, "I'm excited for the Laker franchise. Now they have a player that can carry the franchise well after I'm gone. It should be his. He should be willing to accept that challenge." In L.A., Bill Plaschke wrote, "Even amid leadership transition, with Jim Buss taking sometimes awkward control from Jerry Buss, the Lakers refuse to be anything but the Lakers." This trade was "a huge win for the younger Buss, another huge endorsement of General Manager Mitch Kupchak, and yet another reason the Lakers are the best franchise in professional sports." Bryant said, "History speaks for itself. There are certain franchises that seem to make all the right decisions. The credit goes to management" (L.A. TIMES, 8/11).
THE APPLE DOESN'T FALL FAR...: Also in L.A., T.J. Simers wrote under the header, "Jim Buss Gets The Last Laugh." With the acquisitions of Howard and G Steve Nash, Lakers Exec VP/Player Personnel Jim Buss "makes his father proud." Jim Buss said, "He wanted to know the terms of the deal, the teams we were dealing with and who was going where. And I'm saying, 'Dad, you just got out of surgery 14 hours ago; what are you talking about? I can't even believe you're on the phone.'" He added, "I was with him (Thursday) night and he was basically incoherent and he was going to be like that for two or three days. But now the nurse has him on the speaker phone, and while I'm thinking he's fallen off and gone to sleep again, he suddenly wants to know the money situation and who gets what and who gives what. Are you kidding me?" (L.A. TIMES, 8/11). The L.A. TIMES' Broderick Turner noted Jerry Buss "underwent a surgical procedure on Thursday, but the team would not provide many details." Lakers VP/PR John Black said, "He did have a surgery and it went fine. He's not home yet, but he's expected to make a full recovery" (L.A. TIMES, 8/12).
GOOD OR BAD FOR THE NBA? NBA.com's Steve Aschburner wrote the new CBA "was supposed to discourage excessive spending by the league’s richest teams by imposing an increasingly harsher luxury tax, appealing to their owners’ sense of true value." Yet when a team such as the Lakers "haul in an annual profit of $150 million to $170 million (by some estimates), why should they be worried about spending $95 million (payroll) or even $125 million (taxes added)." And with a new revenue-sharing system, "aren’t the Lakers better off spending it on themselves, for their fans, than having it divvied up to lesser teams in smaller markets?" But Aschburner asks, "Is this sort of superstar migration good or bad for the league?" It is "bad for Orlando and other teams that can’t keep their stars happy or committed." It is also "bad for the NBA’s image in a general sense, because it fuels the impression that the talent deck is stacked in favor of a few chosen franchises." But it "might be good for business overall." Strong franchises in L.A., N.Y., Boston, Chicago and a few other markets "seem to keep interest, ratings and souvenir sales high" (NBA.com, 8/10). ESPN.com's Michael Wilbon wrote, "Is this good for the NBA? Hell yeah, it is. It's great for any league when it has a cornerstone team that plays for keeps every single season" (ESPN.com, 8/10).
DOLLARS & SENSE: In N.Y., Howard Beck wrote, "The NBA is a parity-conscious league, the first to institute a salary cap, maximum contracts, a draft lottery, a luxury tax and an increasingly byzantine array of rules aimed at dispersing talent across 30 franchises." The Lakers, "in defiance of it all, keep accruing the best players, exploiting every wrinkle in that array" (N.Y. TIMES, 8/11). In Boston, Frank Dell'Apa wrote, "There is a price to pay, in terms of luxury tax -- the Lakers are going to be at least $50 million over the $74 million salary cap, based on current contract values" (BOSTON GLOBE, 8/12).
SUPERMAN'S BRAND? The Marketing Arm Sports Marketing Dir Darin David said, "What marketing executive wants to make Howard the face of their brand after watching last season play out? He may be on the Lakers now, but he should be hands-off from a brand perspective for at least the short term until he can repair his image" (ESPN.com, 8/10).
NOT-SO-MAGIC KINGDOM: In Orlando, Pedicini & Schlueb wrote Howard's trade "is another blow to downtown Orlando's Church Street district, where businesses are already struggling." The trade means "a rebuilding project for the Orlando Magic that could take years and mean smaller crowds at the downtown Amway Center." Meanwhile, a plan to redevelop property across from the arena into a sports and entertainment complex including Magic headquarters "remains up in the air." The city in September "granted the Magic a one-year purchase option on the property, now a city-owned parking garage." The Magic said that they "needed a year to study the possibility of moving their corporate headquarters from Maitland to Orlando" (ORLANDO SENTINEL, 8/11).
The Dolphins have “opted to utilize the NFL's new relaxed blackout rule to increase the chances of home games being shown on local television this season,” according to Craig Davis of the South Florida SUN-SENTINEL. The league has given teams the option of having games televised in their market if 85% of non-premium tickets are sold. Dolphins CEO Mike Dee on Friday said, “The thought process of why we're doing it is pretty basic; it's consistent with our philosophy over the last three years and probably longer which is to do everything possible we can to keep the games available on local television." Davis noted the Dolphins have had “109 consecutive" regular-season games on local TV. Dee said that the change “reduces the number of tickets that must be sold to lift the TV blackout by about 9,000.” While the official capacity in the 100 and 400 levels at Sun Life Stadium “is 60,500, the Dolphins this year will need to sell 51,128 of those seats" to avoid blackouts. Dee said that season-tickets sales “are on pace to eclipse last year’s total of 42,370.” Sales “picked up after the draft in April” when the Dolphins selected QB Ryan Tannehill in the first round. Dee said, “We’re very encouraged by what we’re seeing. We’re about to surpass 8,000 new season tickets” (South Florida SUN-SENTINEL, 8/11). In Miami, Armando Salguero wrote the team now has to sell 51,128 tickets 72 hours before kickoff, "rather than the 60,500 it previously had to sell for the game to be on TV.” The “manifested" capacity for Sun Life Stadium “will be 65,000 including club seat and suites.” While the team “can continue to sell all of its 75,000 tickets to fill Sun Life, only 65,000 will count as the manifested capacity.” Salguero wrote the move “suggests the Dolphins envision trouble selling seats again this year in coach Joe Philbin's first year” (MIAMIHERALD.com, 8/10).
HAPPY CAMPERS: In Charlotte, Jones & Person wrote despite the NFL’s relaxed rule on TV blackouts, the Panthers “maintain they’re happy with the longstanding policy.” Panthers President Danny Morrison said that the team “is happy with the policy and doesn’t anticipate any changes.” Morrison: “We get great fan support, 93 straight sellouts. So we felt our present policy’s working well” (CHARLOTTE OBSERVER, 8/11).
The Bobcats have moved "most everything a fan would associate" with the club into storage units as Time Warner Cable Arena continues to prepare to host the Democratic National Convention, according to Rick Bonnell of the CHARLOTTE OBSERVER. The team will not be allowed back in to the arena until late September, "11 days before the Bobcats play their first home preseason game." Bobcats President Fred Whitfield said, "They've assured us we get our building back on the 26 (of September) just as they found it." Bonnell reported the team has arranged "to use Johnson & Wales' gymnasium on the edge of uptown as their temporary training facility." The college is giving the team the "gym, two locker rooms, their training room and a player lounge to the Bobcats' exclusive use" from 9:00am-2:00pm ET until classes begin the second week of September. The team's business offices "on the arena's upper floors will only be shut down for about a week, but that doesn't mean business operations won't be affected." The bowl at Time Warner Cable Arena is "gutted and off-limits," meaning the chance to "tour the facility with prospective customers is gone." The Bobcats will be "well compensated by the DNC for the six weeks they'll vacate the event level of their home base," but it is still a "major shakeup so close to the outset of their ninth NBA season" (CHARLOTTE OBSERVER, 8/12).
The financial and legal problems facing charter air service company Swift Air “could scramble” the Predators’ travel plans this season, according to Duane Marsteller of the Nashville TENNESSEAN. A spokesperson said the team is “exploring alternate travel options” in case Swift Air is unable to fly this season. Court records show that Swift Air in June filed for Chapter 11 bankruptcy protection but has continued to operate. This has left travel plans for the Predators and several other teams “unsettled" in advance of the team's preseason-opening Sept. 24 road game against Panthers. Swift Air “has signaled in court papers that it wants out of its Predators contract.” But the company said that it "wants to keep contracts" with six other teams: the Bruins, Sabres, Blackhawks and Blues, as well as the NBA’s Celtics and Bucks. A federal bankruptcy judge in Phoenix is scheduled to decide “after a hearing Tuesday which contracts Swift Air company will keep” (Nashville TENNESSEAN, 8/11).