Manchester United, the World's biggest football (soccer to many Americans) team, is set to sell a portion of its ownership stake on a public exchange. Previously linked to the Singapore Stock Exchange, the team is now mulling its options to list in the United States. The world famous soccer team has officially filed with the SEC. The team will be using proceeds from the offering to pay off debt that has a 8.375% interest rate.
Manchester United will sell Class A stocks to the public. Class B shares, controlled by the company, will have the majority of the voting rights. Each Class B share will have 10 votes compared to the one for Class A shares. Therefore, anyone investing in Manchester United shouldn't get their hopes up about making important votes related to the Manchester United team. The excitement does come with the first high profile soccer team to ever list in the United States. Manchester United was previously listed in England in the 1990s. Other English Premier League teams that have been publicly traded in England are: Tottenham, Newcastle, Arsenal and Manchester City. Other high profile soccer teams that are currently traded publicly are: Celtic, Sporting Lisbon, Ajax, AS Roma, and Lyon.
The company's operating segments are broken down as follows:
- Commercial - Sponsorship, Retail, New Media and Mobile
By 2011 revenue:
- Commercial - 54.9 million pounds (40.9 in 2010)
- Broadcasting - 117.2 million pounds (103.3 in 2010)
- Matchday - 110.9 million pounds (105.8 in 2010)
As you can see, all areas surpassed their 2010 revenue totals. The company had a profit of 13.0 million pounds, after posting a loss (47.5 million pounds) in 2010.
In the company's prospectus, they lay out their strengths:
- One of the most successful sports teams in the world
- A globally recognized brand with a large, worldwide following
- Ability to successfully monetize our brand
- Sought after content capitalizing on the proliferation of digital and social media
- We establish global media and marketing infrastructure driving commercial revenue growth
- Seasoned management team and committed ownership
Manchester United plays in the English Premier League, where the television rights are sold to one television station, and all teams split the revenue. This differs from other leagues in Spain and Italy, where each team can sell their individual TV rights, giving high value teams more lucrative deals. Broadcasting is the team's biggest source of revenue. It's partially owned Manchester United TV "MUTV" is available in 54 countries. The EPL recently signed a new three year television deal that was over 1 billion pounds richer than the previous. The money is all split to each team, giving Manchester United a higher amount of revenue from the league under the new deal.
The company has strong partnerships through sponsorships and licensing. The company's current shirt sponsor is AON with a deal ending in 2013/2014. The current deal is worth 20 million pounds a year, and a new deal in 2014 will likely exceed that amount. Manchester United also added a partnership with DHL as the official sponsor of the team's training uniforms, adding an additional source of revenue. Nike (NYSE:NKE) manages the company's licensing division. Manchester United and Nike have a thirteen year deal in place that expires in 2015. The deal has three years of guaranteed revenue minimums left. The guaranteed amounts are 25.4, 25.4, and 25.3 (in millions of pounds). With its growing popularity, Manchester United is pushing its brand throughout emerging markets. The team now has new retail stores in Singapore, Macau, Thailand and India.
The team has been named the number one football team in the world by Forbes magazine for the last eight years. Manchester United has featured legendary footballers like George Best, Bobby Charlton, Wayne Rooney, Christiano Ronaldo, David Beckham and Eric Cantona. With worldwide popularity, Manchester United is more valuable than any MLB or NFL team in the United States. According to a study done by Kantar Media, Manchester United has 659 million fans around the World. The team also has 26 million fans on Facebook.
The shares listed as part of an initial price offering will likely be Class B shares with no voting rights. This ensures that owner Malcolm Glazer has full voting rights. Malcolm Glazer and his family have owned the English Premier League team since a buyout in 2005. Glazer also owns the National Football League's Tampa Bay Buccaneers and shopping center operator First Allied Corporation. His 2005 buyout included 300 pounds per share for the 70% of shares he did not own. At the time of the buyout, the company was valued at 796 million pounds, with a price to earnings ratio. A price to earnings ratio of Manchester United today would see their value at 2.2 million pounds.
Glazer has been a controversial figure for Manchester United fans. Since taking over the large football team, he has loaded the team and company with high levels of debt. Despite the large amount of debt, Manchester United has also been a target of other investors. In fact in 2010, a group led by former Goldman Sachs chief economist and Manchester United fans tried to purchase the team. In 2011, rumors again came abound with the Qatari royal family offering over 1.5 billion Euros.
As a lifelong sports fan, I hate the fact that there is minimal options of publicly traded companies with team ownerships. Here are some other options for sports fans:
- Rogers Communications (NYSE:RCI) - owns Toronto Blue Jays, partial owner Toronto Blue Jays, partial owner Toronto Raptors, partial owner Toronto FC, partial owner Toronto Marlies (see Buy Shares of Rogers Communications and Own its Undervalued Sports and Media Segment).
- Madison Square Garden (NASDAQ:MSG) - owns New York Knicks, New York Rangers, Connecticut Whale, New York Liberty (see Buy Madison Square Garden and Own Four Sports Teams).
- Liberty Media (NASDAQ:LMCA) - owns Atlanta Braves
- Comcast (NASDAQ:CMCSA) - partial owner Philadelphia Flyers, partial owner Philadelphia 76ers
There also is a Index in Europe that tracks all publicly traded soccer teams. The index is ran by STOXX and can be followed under symbol FCTP. The index currently trades at over 80 Euro. Twenty one components make up the index, including only one from England. Scottish team Celtic makes up 5% of the Index. Turkey has a heavy weighting with four of the top ten teams, including number one Fenerbache (11%). Manchester United will likely be added to the index, although its trading in America could lead to exclusion. The index is a good way to gauge how world soccer teams are doing in several countries.
With the number of shares and pricing information yet to become public, it's hard to recommend buying or selling shares of Manchester United. With worldwide demand for the team and their products, I don't see there being a problem for selling all the offered shares. Shares could actually be oversubscribed from the start. In a previous article, I discussed how the Green Bay Packers went public this year. For $275, you could buy one share of Packers stock. The stock certificate is just that, a piece of paper with no value, no ability to gain, and no dividend. Manchester United offers the chance for fans to own a piece of the team they love and possibly make a profit in return.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in (MSG) over the next 72 hours.