An unusual sight greeted guests at New York’s posh St Regis’s hotel this week: Dozens of investors trickled out carrying Manchester United hats and footballs after a marketing event for the club’s upcoming initial public offering.
Soccer is not a particularly popular sport in the US. The US chapter of Manchester United’s official fan club has only 5,000 paid members and even the presence of David Beckham at LA Galaxy has failed to ignite widespread interest.
But US investors may turn out to be the ones who help the club and its owners, the Glazer family, raise up to $333m (€264m) in the offering.
A source close to the deal said on Tuesday the IPO, which is expected to price this evening, is already oversubscribed. Two other sources said bankers on the last leg of a two-week global marketing effort are finding Americans particularly receptive to the IPO.
The unexpected US support for the IPO adds to the intrigue and controversy surrounding the Glazers’ stewardship of the club and its second attempt to go public.
The Glazers, a US family with business interests ranging from shopping centres to the Tampa Bay Buccaneers NFL team, have been reviled by Man United fans since they took the club private in 2005.
Fans say the Glazers saddled the club with debt, hurting its ability to buy players and win matches.
Some investors and experts also say the club’s proposed valuation — $3.3bn at the high end of the $16 to $20 per share range — is hard to justify, especially given the volatile nature of its business.
Without other listed sports teams with which to compare Man United, the club’s valuation has been a source of consternation for potential investors. That was one reason why Morgan Stanley dropped out of the underwriting syndicate after plans to list the club in Singapore were abandoned.
JPMorgan Chase & and Credit Suisse Group are marketing it as an e-commerce company, comparing it to online giant Amazon. Deutsche Bank sees it as a media company, comparing it to companies such as Walt Disney, sources said.
“I think it is very interesting how they have been shopping this around the world, first in Asia, now the US.” said James Clunie, head of equities at Scottish Widows Investment Partnership, a fund management house overseeing £142bn (€176.5bn) in assets. “Why not list in London where people actually know something about the business?
“I suspect the reason is that they think they can get a higher price from foreign investors than they can in the UK. That makes me very cautious as an investor. They are trying to get the higher price instead of a fair price.”
The banks are using Man Utd’s earnings pro-jections for 2014 in their valuation analysis, but that figure could not be ascertained.
JPMorgan, Credit Suisse, and Deutsche Bank officials declined to comment. Officials with Jefferies could not be reached for comment.
One fund manager who attended the marketing roadshow in New York said he sees the club as a media company, “only better”, because it engenders strong brand loyalty around the world. The club’s push in emerging markets where it has plenty of room to grow is also attractive, he said.
“With Disney, you’re not going to go see a movie or buy merchandise because you have any sense of loyalty to the company,” he said. “But with Manchester United, you have a huge global base of fans.”
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