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SBD Global/August 13, 2012/Finance
ManU's Shares Fail To Fire In U.S. Stock Market Debut
Published August 13, 2012
DISAPPOINTING DEBUT: In N.Y., Michael J. de la Merced reported that ManU's IPO "fell short" of its aim to "add to its soccer successes." The stock's performance "appeared to meet low expectations" (N.Y. TIMES, 8/11). In Toronto, Morgan Campbell wrote that the debut of ManU as a publicly traded company "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." IOPScoop Founder John Fitzgibbon said, “There was a lot of wing flapping, but not much flying today. It’s reflective of the overall IPO market." But the amount of money the club will now split between ownership and obligations to creditors is "much smaller than expected." Lowering the stock price to $14 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, 8/10). The AP reported that ManU made a "disappointing debut" on the NYSE with enthusiasm for the club "overshadowed by its debt load and financial track record." 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).
DEBT ISSUES: In London, Ruddick, Blackden & Cooper wrote that despite their lower-than-expected pricing, the float "still establishes ManU as the world's most valuable football club." However, the float "has created further anger among fans of the club" (TELEGRAPH, 8/10). REUTERS reported that the loss of as much as $50M in expected proceeds for ManU "will be a blow as it copes with a heavy debt burden and seeks to buy new players" (REUTERS, 8/11). The London DAILY MAIL reported ManU CEO David 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" (DAILY MAIL, 8/11). CNBC's Robert Frank wrote that ManU Owner Malcom Glazer's "fondness for debt may be growing into a liability." Yet the IPO also "highlights the high levels of debt" Glazer put on ManU. It also "adds to criticism that the Glazer family has been extracting value from the team, rather than growing it through investment and added capital." Investors have been "lukewarm to the IPO, in part because of the debt issues" (CNBC.com, 8/10).
RINGING THE BELL: In London, Helen Collis reported that Gill and ManU Co-Chairs Avram and Joel Glazer "applauded as they rang the bell from the NYSE balcony at 9:30am N.Y. time" Friday, signalling the start of the day's trading in the U.S. The ceremony was attended by Exec Vice Chair Edward Woodward, however, the club said neither Manager Alex Ferguson or any players "would be there for the traditional flotation event" (DAILY MAIL, 8/10).