MAN UNITED IPO: Price slashed to $14 a share, but New York shows a yellow card on the first day

Just how desperate are the Glazers?


Malcolm Glazer

Talk in New York of ‘directionalised buying’

First of all last year, the Glazer family tried Hong Kong and Singapore, neither of whom was dumb enough to bite at a deal where the shares had no power, and the company was buried under a dung-heap of Delaware debt.

So then they get to New York, and every respectable firm, almost all the unrespectable ones, and 100% of the crooked ones, say “You are guys aren’t for real, right?”

And eventually they get to Jefferies – which has to find some way to pay the salary bill as the most generous employer on Wall Street bar none – and decide they want twenty (count them) crisp Dollar bills per neutered share.

At this juncture, a hype campaign swings into action, and the next thing you know, apparently quite bright hacks are saying hey, there seems to be good demand out there.

But then in classic, bumbling, half-arsed Glazer fashion, reality intervenes – and the opening ‘range’ target gets slashed to a very narrow range, $14.

There’s an opening leap to 14 bucks 20, followed by a fairly immediate return to earth at….$14. And then the post-hype starts: United are now the highest valued football club in the world…higher even than Real Madrid! Wayne Rooney is playing for the most expensive club on the planet! Surely Van Persie will now come to Old Trafford! My Dad knew Matt Busby!

Take a step back and recall the ‘value’ of RBS the day after Freddie Badloss bought ABNAmro. On that day, The Slog said ‘this deal is more of a comment on the inadequacy of Goodwin’s reproductive gland than any kind of commercial sense’.

Take another step back and look at the debt of Real Madrid, and the success of Barcelona.

Madrid’s lillywhites have no, nul, zero debt. In spite of their massive spending, the club is not only profitable, but is making large profits year after year: 2007 €44 million, 2008 €51 million, 2009 €25 million and 2010 €31 million. That works out to over €150 million of profit in just four seasons. Real Madrid is the richest club in the world…and certainly the least indebted institution in Iberia right now.

Barcelona has dominated European and world soccer for the last half-decade. Why? Because at the right time it invested hugely in the best and most exciting players in the world. Thus, despite failing to bring any silverware home last season, Barça’s revenues hit a record €494.9 million ($602 million) in the 2011/12 season. They are, without question, the best team in the world at the moment.

So here we have United under the Glazers: not the best team in the world, or even the richest team in the world, but merely the richest football asset in the world….and the most indebted – thanks entirely to them.

Right up until the last gong of the bell, the Glazer family hired somebody to charge up the price immediately ater launch. But the sale charts show a gradually decreasing interest during the day. Research shop Morningstar estimated that at an $18 price, United would be selling for 110 times projected 2013 earnings. Even at $14, the shares are a Carpet-bagging in reverse.

Does the Glazer-owned, Gill-run club have the growth to sustain that sort of lofty valuation? No, it doesn’t  – no way. MUFC’s revenue is growing by about 11% a year, but if you use the company’s pro-forma figures for so-called EBITDA — taking out the effect of taxes, depreciation and interest — the company’s profits have actually declined every year since 2009. Morningstar estimates that the shares are worth about $10.

By the time this fiasco is over – and the Reds continue to unerinvest in the only real asset, player talent – as I posted two weeks ago, the Mun Utd IPO is going to make Facebook look like success at the speed of Light.

I wonder – has anyone else considered this? – is the Glazer family’s plan inspired by Max Bialystock? Have they secretly garnered 50,000 sub-prime folks with their eyes too close together in Delaware, and told them that United players are to appear in a production called Springtime for Mancini? And like, sorry guys – it bombed. At $1000 a punter, they’d trouser fifty million bucks – and no paperwork to disturb the IRS as they go about their business of blackmailing deserving bankers. It works for me. And listen: in Delaware, anything goes. This conspiracy theory could run and run. Sorry, I meant close after the first night.

Also at The Slog today: Exclusive: the final word on why Germany will leave the eurozone come what may

21 thoughts on “MAN UNITED IPO: Price slashed to $14 a share, but New York shows a yellow card on the first day

  1. Matt Busby was great. From then on until now Manchester United deseve all they get. It ain’t Footie mate it is business.


  2. Here we go again…..
    Lifelong third generation Man Utd supporter who’s been there done that gives the Red devils ANOTHER kicking.
    One might ask ” Why could this be?”

    The fact is that this IPO WILL fly.
    Consider this:Man Utd paper has more value than Yen in Asia.
    Timing dear boy, with a sprinkling of patience.
    We are expecting a shooting star – when the winning euphoria kicks off.
    That reminds me …tickets.


  3. Could someone explain to me why anyone would buy stock in something that is only selling 10% of the operation? Serious capital appreciation? Massive dividend flow? Seems a little unlikely to me.


  4. Dear Roop
    I have searched in vain for anything in your comment that suggests the existence of intelligent life. I have failed, so maybe it’s now time for the Mars rover to have a go.


  5. Yer in fine form tonight John!
    Are you following “The Rangers” saga at all? Sport sectarianism and business – an explosive mixture indeed.


  6. Someone who has been watching the Man U debacle for a long time blogs over at the andersredblog. He’s spent a long time watching the owners implement an endless series of financial shenanigans in which they extract cash from the club. The BBC ran an programme on the about two years ago demonstrating the downward spiral of their shopping mall business and their habit of building spending money projects.


  7. Just how desparate are the Glazers? VERY.They did not use their own money to pay then top dollar for the brand, sorry football club,but bank debt.The game plan was always to flip it to the next Russian oligarch,but then came a prolonged recession.The squad needs big money and the manager is getting on.The Glazers were praying for a post flotation strong after market,but that is pie in the sky.No bank will lend to Man U,period.When ManU inevitably falls out of the top 4 and $!4 is a distant dream,the vicious circle gathers pace,ticket prices against results,declining commercial revenues,and Alex joining Matt up there.Martin Edwards may have had faults,but he did not treat a legendary football ‘club’ like a piece of meat in the family abbatoir.


  8. I’ve seen some half-assed IPOs over the last while (failbook comes to mind) but the man u “offering” takes the biscuit.

    The glazers ringing the wall st opening bell was hilarious. They all had a look on their faces that said one thing: “please don’t look beneath the surface, please don’t ask any questions about the real value or voting power of these crappy shares”

    By the way I have no allegiance to any football club and generally find the sport fairly uninteresting. I do however love a good slow-motion train wreck.


  9. The sight of the Glazers at the NYSE today gave me a shiver. Noting JW’s comments about “cryogenic” made me wonder if the two Zero Mostel lookalikes were the result of a grotesque cloning of Daddy Glazer. Burly curly-haired Glazer looks like… no I won’t go there.
    I still cannot get my head around why on earth someone would want to spend $14 – just under 10 quid – on a share that would never allow one to vote the buggers out, nor even produce a penny in dividends. Assuming the minimum multiple available is 100 shares, then £1,000 buys a hell of an expensive souvenir to frame and hang on your living room wall.
    I reckon real ManU supporters would rather spend that sort of money on a few jolly away legs during the next Champions’ League campaign!


  10. JW,

    Do you know if the Glaziers are prevented (at least notionally, no doubt derivatives, friends etc will get round any written assurances) from selling any further shares, or what is their ‘lock in’ period.

    The shares are ‘cocktail party’ ‘money to burn’ trophy objects, after all no sane person would buy into the Delaware share structure where only 1.3% of the voting rights have been diluted whilst ‘10%’ of the capital value has been sold off (especially as Man U’s turnover is under $1B so there reporting requirements are virtually meaningless now).


  11. John,

    I don’t know how you got the idea that Real are debt free – both they and Barca are as enmired in debt as you, our out of town neighbours.

    “Their reputation off the pitch also suffered a hit recently in the media when it was “revealed” that these great teams were built on a mountain of debt (€590 million at Real Madrid and €578 million at Barcelona), raising questions as to whether this was, to coin a phrase, “financial fair play.””

    Indeed, were it not that Real sold their training ground to Madrid City Council at a grossly inflated price, and now lease it back at a grossly deflated rent, they’d be a lot worse off as well.


  12. A great man as well as a great manager. Shame he is not still around to show Ferguson how to behave :-)

    By the way – not many know that Matt Busby was on his way to America, with a permanent residency and working visa, when he changed his mind to join Manchester City. How many United fans know how much they owe City? And that disregards us bailing them out after WWII.


  13. “Martin Edwards may have had faults,but he did not treat a legendary football ‘club’ like a piece of meat in the family abbatoir.”

    Um, selling to the Glazers would seem to me to be about the worst thing anyone could have done to United. Edwards was a rugby man as well, Wilmslow supporter. David Conn’s “The Football Business” is a fascinating read, by the way, detailing how various “big” clubs came to be owned by various people. How dad Louis (remembered fondly in M’cr as the “Bent Butcher”) got hold of the shares he needed to gain control of United is a fascinating tale of skullduggery.

    Martin, also, had the odd habit of of hiding in ladies’ loos for a spot of voyeurism. Till he got nabbed, anyway.

    Nice family.


  14. The Edwards family floated ManU in 1991.Martin sold out to Magnus and Magnier later.They sold to Malcolm Glazer in 2005.


  15. Magnus and Magnier, bless them. The sight of Ferguson going after those two heavyweights was true joy. Glasgow “hard man” meets real hard men. Glasgow “hard man” gets his ass whipped.

    They were all in it for the money.


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