By Simon Goodley
Manchester United are on the verge of being rated the world’s most valuable sports team, as they prepare to reveal the pricing of their initial public offering on Thursday. The club announced last month that they would float their shares in New York and a two-week sales effort by Wall Street bankers appears to have paid off, with sources close to the flotation insisting that shares should start trading on the stock market tomorrow.
A successful float would see United worth around $3bn (£1.92bn), about twice the value of Spain’s Real Madrid once debts are factored in, according to data compiled by the financial media groups Bloomberg and Forbes. The offer would also make United about 10 times as expensive as publicly traded European teams such as Juventus.
Wall Street sources said that the United share offer has been oversubscribed by investors, although it is not yet clear what price they agreed to pay. “The book is looking pretty solid,” one source confirmed. “It’s covered.”
In total the Glazer family is hoping to raise up to $332m by selling 16.6m shares at a range between $16–20 a share. Half the proceeds of the sale will go towards paying down some of Manchester United’s £437m debt, while the other half will go directly to the Glazers, despite previous promises to use all cash raised to improve the club’s balance sheet. The controlling family has also retained an option to sell a further 2.5m shares, potentially giving them a further $50m windfall.
It is understood that demand for the shares has been particularly high among US investors, who have bought a sales pitch that they are investing into a “luxury brand” and who appear unaffected by the dissenting voices who argue the offer overvalues the club. The investor roadshow, which saw United’s team of 13 investment banks meeting their clients to sell them the shares, has also touched down in Asia as well as Europe, a leg of the trip that involved the bankers visiting investors in London this week.
Apart from raising money for the Glazers and to pay down the club’s debt, a flotation will achieve the further aim of giving the club a financial valuation which the Glazers will need if they are to cash in their investment by selling the club. It is understood that previous discussions with potential buyers have been scuppered by the gulf between the prospective purchasers’ valuations and the one put on the club by the Glazers. A stock market flotation would end these debates.
Meanwhile, Paris St Germain said they had agreed a deal with São Paulo for the transfer of the midfielder Lucas Moura. The 19-year-old, who had been tenuously linked with United, will remain with the Brazilian club until January before linking up with Carlo Ancelotti’s side on a four-and-a-half-year deal.