As the saga (or tragedy, take your pick) of the demise of Glasgow Rangers FC (established 1873) staggers on, there is another famous football club that has a wee bit of a financial hurdle to overcome: Manchester United. Owned by the Florida based Glazer family, its debts exceed $600 million, and its bankers are a touch nervous; so much so, that United seems unable to compete for the real big name transfer targets. How well will that go down with the fans? And how long will they suffer in relative silence?
On 3 July 2012, United announced an initial public offering – sale of shares – at the New York Stock Exchange to raise $100 million. Previously, it was thought that United were going for a fuller $1 billion listing in Singapore, but whatever truth there was in that plan has been crushed by the warzones that are the current financial markets.
The Economist print edition of 7 July 2012 has an article on the situation which concludes with this hammer blow of a paragraph:
United will not have to release much financial information, since the Glazers are taking advantage of America’s Jumpstart Our Business Startups Act of 2012 to register it as a lightly regulated “emerging growth company”. (Is a 134 year old club staffed by spoilt millionaires really the sort of “start-up” the law’s drafters had in mind?) New shareholders will have little say over how United is run, including whether it pays them any dividends. The shares the Glazers are offering are special ones with minimal voting rights. So the only return from this IPO is likely to be the victories the money raised brings on the pitch. This is an offering for fools and fans only.
This is not good news for United. The proposed share sale doesn’t bring credit (sic) to the club or its owners, and looks suspiciously like a desperate bid to trade on fan loyalty. It also suggests that losing the Premier League title earlier this year may have been more of a disaster for the club than was thought at the time.
The share sale may postpone the issue, but United have a real financial problem. No true football fan wants the club to fail, but Rangers’ experience shows what can happen.