[guide.chat] Manchester United talk
- From: "Carol O'Connor" <missbossyboots33@xxxxxxxxx>
- To: "guide chat" <guide.chat@xxxxxxxxxxxxx>
- Date: Wed, 4 Jul 2012 08:36:51 +0100
Manchester United are set to float on the New York Stock Exchange.
The Reds last night filed a 283-page prospectus for an Initial Public Offering
with the US government.
Within the report a figure of $100m is mooted but it is thought United will
want to raise more than that and will revise the amount at a later date.
The Glazer family will retain a controlling share in the Reds and no figures
are given for how many shares will be offered and at what price.
The report says the money raised will be used to reduce the club's £423.3m
debt. United describe themselves as 'an emerging growth' company and say that
Red Football Shareholder Limited - the company through which they conduct their
business - will become a 'wholly-owned subsidiary of Manchester United Ltd an
exempted newly-formed company with limited liability formed under the laws of
the 'Cayman Islands'.
The document refers to the club's '659 million followers' based on a survey
they paid for which asked people who their favourite football team was.
It describes United as 'one of the most popular and successful sports teams in
the world' and estimates a cumulative audience of more than 4bn watched their
matches last season.
And it says: "We intend to use all of our net proceeds from this offering to
reduce our indebtedness."
The prospectus also claims more than five million United products were sold in
the last year including more than two million shirts. It points out that
United's facebook page has 26 million connections compared to the New York
Yankees' 5.8m and the Dallas Cowboys 4.9m and highlights a commercial revenue
of £103.4m from the year ending June 30, 2011.
Under the 'risks' section the Reds highlight competition for key players and
increases in operating costs.
They add: "Although we are currently profitable and growing there can be no
assurance that we continue to be profitable or grow our profitability at the
same rate in future or at all."
The report also points out that a successor to Sir Alex Ferguson may not be as
successful and adds that Champions League football and the money it brings
'cannot be guaranteed'.
It also warns that the Uefa Financial Fair Play Rules 'could negatively affect
our business ... and the performance of our first team'.
In what could be seen as a veiled dig at big spending neighbours Manchester
City the document also states: 'Despite the adoption of the Uefa financial fair
play initiative, a set of financial monitoring rules on clubs participating in
the Champions League and Europa League, European and Premier League football
clubs are spending substantial sums on transfer fees and player salaries.'
As of March 31 the Reds were £423.3m in debt and the prospectus acknowledges
that this could increase the risk that they 'may be unable to generate cash
sufficient to pay amounts due in respect of our indebtedness'.
The report also says it states that the club's 'indebtedness could aversely
affect our financial health and competitive position and adds that it may limit
their ability to pay dividends and 'increase our vulnerability to general
adverse economic and industry conditions'.
It also appears to acknowledge the impact the debt may have on improving the
playing staff stating money may have to pay for the debt 'thereby reducing the
availability of our cash flow to fund the hiring and retention of players' and
'affect our ability to compete for players and coaching staff'.
The document also lists having to sell assets as a risk and the possibility the
club may have to enter into 'leaseback transactions'.
United say they do not plan to pay dividends on their Class A shares and warns
interested buyers that a return on their investments will depend on the share
price performance.
The prospectus also reveals the company was incorporated in the Cayman Islands
on April 30. It adds that upon completion of the offering the principal
shareholders will continue to be the Glazer family, who have owned the club
since 2005.
In a revelation that is sure to anger fans the report discloses that Manchester
United Limited (UK), granted loans of £1.7m each to the six descendants of
Malcolm Glazer worth a total of £10m for 'general personal purposes'.
Each was paid back with 5.5 per cent interest.
United had previously hoped to raise about $1 billion in either Hong Kong or
Singapore before abandoning Asia for the US.
The offering will be led by the Jefferies Group, Credit Suisse , JPMorgan Chase
, Bank of America Merrill Lynch and Deutsche Bank
The Reds declined to comment when contacted by the M.E.N. citing US financial
regulations as a reason for doing so.
Duncan Drasdo, from the Manchester United Supporters Trust gave the planned
listing a cautious welcome.
He said: "We are at a very early stage but it appears as though the money
generated will be used to pay down debt which is something we have asked for.
"There are admissions in several places that the debt may cause problems with
attracting players. And future performance. We feel vindicated because this is
what we have always said.
"Anyone who buys the shares would have no control, no dividend and little say
so you would wonder why they would."
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