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Own goal: Manchester United fans hit out as Glazers cash in on float

The Glazer family risk a backlash from Manchester United fans. Picture: Getty

The Glazer family risk a backlash from Manchester United fans. Picture: Getty

  • by SCOTT REID
 

MANCHESTER United fans yesterday accused the controlling Glazer family of milking the club for cash after it emerged that they plan to take half of the proceeds of its US flotation.

Members of the Manchester United Supporters Trust (Must) questioned why all of the cash being raised in the initial public offering (IPO) was not being used to reduce a debt pile that they argue is holding back the team’s on-pitch performance.

The Old Trafford club has been controlled since 2005 by billionaire investor Malcolm Glazer and his family, who also owns American football team the Tampa Bay Buccaneers. The English Premier League side is nursing debts of more than £430 million.

Under the terms of the IPO, the club and the Glazers will each sell half the shares, which are priced at between $16 and $20. That would raise up to $333m (£212m) and the debt would be cut to some £345m using the club’s proceeds from the IPO.

The Glazers’ class B shares will have ten times the voting power of the class A shares being offered to the public.

Duncan Drasdo, the head of Must, which is campaigning for fans to play a greater role in the ownership of the team, said: “Supporters are going to be very angry about this.

“The Glazers have already cost United more than £550m in debt-related fees and now another slap in the face as they help themselves to half of the proposed IPO proceeds.

“Clearly this has nothing to do with benefits for Manchester United and is all about giving the Glazers quick access to desperately needed cash at the expense of our football club.”

The supporters group has fought a lengthy campaign against the Glazers, who bought the club for £790m in a highly-leveraged deal. Discontent has grown after United failed to lift a trophy last season – its first barren year since 2005.

The 134-year-old club will now kick off a two-week investor roadshow, with stops expected in Asia, Europe and the United States. It chose to float in New York after scrapping listings in Hong Kong and Singapore. The Singapore plan could have raised as much as $1 billion.

The flotation may prove challenging in the US which does not yet have the affection for football Europe has. Investors may also have concerns about the club’s finances. Operating expenses have increased as a result of higher player wages. The shares will also trade on a hefty price earnings multiple of 95 times.

David Menlow, president of IPO Financial, a firm which tracks IPOs, said: “The mentality with sports teams is that people like owning a piece as a trophy investment, but will it live up to expectations?”

Ken Perkins, an analyst with Morningstar, added: “It could be challenging to justify such strong multiples for a company that needs to spend a lot of money to generate success. Even if their performance is good their price may be a bit high.”

Final pricing of the shares is expected on 9 August.

Meanwhile, the club said its total revenue for the past financial year would be between £315m and £320m, down 3 per cent to 5 per cent from the previous year. This was mainly due to a slump in broadcasting revenues.

On Monday, United unveiled a seven-year shirt sponsorship deal with US car maker Chevrolet. The General Motors brand will become only the club’s fifth shirt sponsor when the agreement starts from 2014.

 

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