SBD Global/May 9, 2013/Finance

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  • ManU Shares Fall 5% Following Ferguson's Departure, Investors Await Financial Fallout

    The bronze statue of Manchester United's Alex Ferguson watches over Old Trafford.

    Shares in ManU fell almost 5% on news of Manager Alex Ferguson’s departure "and continued to fall," according to Graham Hutson of the LONDON TIMES. The club is listed on the N.Y. Stock Exchange and "the share price slide has been seen as a reflection of the lack of confidence investors have with the club’s future under new management." Ferguson, 71, announced shortly after 9am London time that "he would leave the club." The news "was greeted with decisive action by investors," who knocked $145M off the market cap of the club within minutes "by selling out of their shares." The stock price fell $0.89, or 4.8%, to $17.88 (LONDON TIMES, 5/8). CNN reported ManU's "winning team, brand and management are considered to be key reasons behind the company's impressive share price performance." However, uncertainty "now hangs over the stock." London's City Index market strategist Joshua Raymond said, "Replacing Alex Ferguson is a monumental task and one that shareholders will watch with great interest and nervous uncertainty" (CNN, 5/8).

    GAUGING THE IMPACT: The BUSINESS STANDARD's Peter Thal Larsen reported Ferguson's retirement "should worry" ManU's fans and investors as much as it "delights long-suffering rivals." His 26-year reign "has gone hand-in-hand" with the club's "impressive financial rise." Ferguson's departure "will reveal how much of that value depends on the manager." Ferguson's plaudits "will rightly focus on his triumphs on the pitch." However, Ferguson's tenure also coincided with British football's "emergence as a global sport," with ManU "as its chief beneficiary" (BUSINESS STANDARD, 5/8). REUTERS' Keith Weir reported ManU itself "set out in plain language the importance" of Ferguson when it floated on the NYSE last year. In the risk factors section of official documents that accompanied the $2.3B listing, ManU said, "Any successor to our current manager may not be as successful as our current manager." Deloitte Sports Business Group partner Dan Jones said, "Manchester United has been transformed as a football club under the management of Sir Alex Ferguson." Under Ferguson, ManU has "grown into a global brand that claims to have more than 650 million followers around the world." With CEO David Gill "also stepping down this summer, it's suddenly all change at the club." ManU Exec Vice Chair Ed Woodward "will take over many of Gill's duties and work with the new manager on player signings" (REUTERS, 5/8).

    GLAZER CONNECTION: In London, David Conn wrote companies "must set out for investors the risks to their future success." ManU Owners the Glazer family "dutifully detailed their worst nightmares" in the club's annual report. It says, "Our business" depends on "our ability to attract and retain key personnel." That "frank assessment" for a money market to which the famous ManU has been flung, "is a central truth about even modern, sophisticated football, which this club embodies more than any other." They can "have all the revenue streams, global sponsors and 'digital followers' possible, yet what might seem a licence to print money flows from success on the pitch and one person, the team manager, is still utterly central to that" (GUARDIAN, 5/8). The FINANCIAL TIMES wrote more than most businesses, "successful football clubs suffer an extreme form of key man risk." In the psychology of football -- "a sport that manufactures dreams and illusions, not an industry that makes widgets -- success and failure embody the personal qualities of the man in charge." That "is the manager, not the owner" (FT, 5/8).

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  • Brazilian Government Considers Legislation Banning Sale Of Player Transfer Rights

    The Brazilian government "is planning to propose banning soccer teams from selling player-transfer rights to investors, a key source of revenue for many of the country’s cash-strapped clubs," according to Panja & Colitt of BLOOMBERG. The plan "is part of a wider bill that will be sent to Congress" to improve the financial state of Brazilian football. Lower house sports Committee Workers' Party member Vicente Candido said that "clubs have unpaid tax debts" of about 4B reais ($2B). A group of 21 Brazilian teams "have joined to fight any ban on so-called third-party ownership plans," which allow investors to loan clubs money in return for a stake in the future transfer rights of players. FIFA said that "it is discussing rules to stop the growth of the practice around the world." UEFA has said that "it will wait to see what FIFA decides, and if that body fails to introduce a ban, the European group will do so." Sao Paulo-based Traffic Sports int'l business President Jochen Loesch said about 90% of players in the country's top league "are somehow linked to investors." Traffic "has invested more than" $75M in the rights of about 60 players since it was founded in '07. Although banned in France and England, "the practice is now common in Europe as clubs look for alternative sources of income" (BLOOMBERG, 5/6).

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  • José Luis Sáez Believes 2014 Tournament Will Make $416M Economic Impact On Spain

    Spanish Basketball Federation (FEB) President José Luis Sáez said that the 2014 FIBA World Cup basketball tournament in Spain will generate more than $416M, according to José Félix Díaz of EL CONFIDENCIAL. At a Europe Press breakfast Wednesday, Sáez said, "The World Cup will be an event that has an impact of €316M ($416M), and we will demonstrate that we are a top-level event organizer. It will be the best basketball tournament in history and not only for the six sites, but also because all of Spain is behind the project. There is also a legacy for the whole world. I want Madrid to be able to host the 2020 Olympics. Madrid has given proof that it knows how to organize events of this type better than anyone."

    SAEZ WANTS EVENT TO OPEN IN AFRICA: Sáez has asked FIBA to allow the first game of the World Cup to be played in Africa, and there are indications it could be in Dakar, Senegal, where Spain has its House of Spain project, which looks to educate more than 300 impoverished children (EL CONFIDENCIAL, 5/8). 

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  • Global Eleven Sues Swiss Sports Marketer Kentaro After Football Investment Fails

    Football investment fund Global Eleven, whose backers include the son of an Italian count, sued Swiss sports marketer Kentaro, saying that "it failed to return profits from matches played by five-time world champion Brazil," according to Tariq Panja of BLOOMBERG. Global Eleven Administrator Nick Hoskins, a lawyer with Bermuda-based Wakefield Quin said, "The company is currently in litigation with Kentaro for breach of contract and for non-payment of amounts due and ongoing under those contracts. Until this matter is resolved, it isn't possible to comment any further." Global Eleven raised as much as $20M "to invest in marketing rights for exhibition games played by Brazil that Kentaro held until last year." Two people familiar with the matter said that Global Eleven's suit seeks about $8M in damages. Most of the claim is linked to Brazil's exhibition games, "which Kentaro began promoting" in '06. Kentaro COO Jonathan Hill and company spokesman Johannes Berendt "declined to comment" (BLOOMBERG, 5/7).

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  • Bundesliga Club Hamburg SV Expects Biggest Loss In Club History, More Than $31M

    Bundesliga club Hamburg SV Exec Chair Carl-Edgar Jarchow had already announced that the club "will have a double-digit-million loss," but new reports suggest that "it could be the biggest loss in club history," according to the HAMBURGER ABENDBLATT. A Hamburg-based radio stadion reported that the club expects a €24M ($31.6M) loss for the current season. Back in March, Jarchow said, "We have generated less income than expected from hospitality. In addition, due to our standing in the table, we will receive less TV money as previously planned." The club "had already endured high losses during the previous two seasons." In '10-11, the club lost €4.9M. During the previous year, the HSV lost €6.6M. The club's record loss of €14.3M occured during the '02-03 season (HAMBURGER ABENDBLATT, 5/8).

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  • Olympic Gold Medalist Victoria Pendleton Says Women's Cycling Has Become Big Business

    Sunday is Global Women's Cycle Day, "a sport where participation by women lags significantly behind that of men" in the U.K., according to Emma Sinclair of the London TELEGRAPH. The "statistics are, however, changing." British Cycling said that some 525,000 women in England currently cycle at least once a week and just under 1.2 million women in England cycle at least once a month. These figures "have caught the attention of the private equity world." Calculus Capital has invested £2M ($3.1M) in Human Race, the U.K.'s largest organizer of mass participation sports. The company organizes women-only cycling events called "Cyclettas," backed by Victoria Pendleton. The Olympic gold medalist has been "key to Cycetta's success." British Cycling Policy Dir Martin Gibbs said, "There are fantastic women role models with world beating athletes like Victoria Pendleton, Lizzie Armitstead, Laura Trott, Becky James and Shanaze Reade who are inspiring more and more women to take up cycling." Cycling retailers and brands "are making the sport more female-focused with new bikes like the Pendleton at Halfords" (TELEGRAPH, 5/8).

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