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SBD Global/August 1, 2012/Franchises
ManU Flotation Begins Amid Heavy Criticism Of Glazer Family
Published August 1, 2012
TOUGH SELL: REUTERS' Oran & Lacey reported that the IPO "may be a tough sell" in the U.S. given the lack of U.S. publicly traded sports teams to compare to, and given that many Americans "don't regard football as a top sport." The company's latest financials may also "give investors pause." Revenue for the fiscal year '12 is expected to be between £315-320M ($495-503M), down 3-5% from the previous year (REUTERS, 7/31). BBC's Richard Anderson wrote that ManU fans "aren't happy." Looking at the terms of the proposed share sale, "it's not hard to see why." Only "part of the proceeds" will go toward paying down the club's $680M debt, with "a significant chunk going directly to the Glazers themselves." ManU Supporters Trust CEO Duncan Drasdo said, "Supporters are going to be very angry about this. The Glazers have already cost United more than £550M ($863M) in debt-related fees, and now we have another slap in the face as they help themselves to half of the proposed [sale] proceeds" (BBC, 7/31). In London, Rob Smyth opined that the Glazers are "the naffest magicians in history." He wrote, "Abracadabra! Watch hundreds of millions of pounds turn to dust. Hey presto! Watch Cristiano Ronaldo disappear and return a year later as Bebe. Shazam! Watch the Glazers trouser half the money from the IPO that was supposed to ease the club's elephantine debt." He continued, "It seems half the money will be going straight to the Glazers' cavernous pockets" (GUARDIAN, 7/31).
SHARE PLAN: In London, James & Rushe wrote the flotation further angered supporters "after it emerged that senior employees at Old Trafford stand to benefit from a share scheme worth up to £204M ($320M)." A "2012 Equity Incentive Award Plan," as it is described in the prospectus released on Monday, "has raised questions among some United fans" as to whether Manager Alex Ferguson and CEO David Gill "stand to personally profit from the Glazers' decision to list the club on the New York Stock Exchange." United refuse to comment on the situation. A United spokesperson said, "Under the regulations of the SEC [Securities and Exchange Commission], we are not permitted to disclose the contents of the document." Ferguson and Gill have "both staunchly defended the American owners in the past, much to the dismay of those that have protested against the way that the club has been run since the Glazers' leveraged buyout in 2005." Only nine days ago, Ferguson said the Glazers were "great" and suggested "the majority of real fans will look at it realistically and say it's not affecting the team" (GUARDIAN, 7/31)
RISE AND FALL: The prospectus states that ManU's total club revenues "in the year to June 30 are expected to be down by as much as" 5%, at $494-501M. Much of that is "due to a reduction of as much as £15.2M ($23.8M) in broadcasting income in the light of United's early exit from the Champions League." But commercial revenues "are up" by 13% to £117M ($183.3M) thanks to "new sponsorship deals and a north American promotional tour." The prospectus states that the company "was incorporated in the Cayman Islands on April 30." It also "outlined the club's future commercial strategy -- including a 'regional sponsorship model' across the world and an expanded MUTV" (MANCHESTER EVENING NEWS, 7/30).