Manchester United IPO Float: 7 Reasons the Glazers Chose to Do It

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Manchester United IPO Float: 7 Reasons the Glazers Chose to Do It

Manchester United's New York IPO received a timely boost last Friday with the US jobs figures showing 163,000 new jobs created.

US stock markets rocketed by up to 2%; demand for individual stocks will have surged in a fairly illiquid market. Unless there is a setback, these are excellent conditions for the debut for an iconic global brand.

The biggest challenge may not be the financials or MUST demanding a boycott of sponsors. Instead, market watchers will be looking to see whether burnt fingers have healed after the over-hyped Facebook issue.

And indeed, the latter issue is what gives me confidence in MANU not only succeeding, but possibly being oversubscribed.

A friend asked me a month before Facebook debuted what I thought about buying shares. I told him "don't touch them with a bargepole, because they will be overpriced and will fall back after issue." And so it was, leaving a large overhang in the markets.

So what about the Manchester United IPO? 

Well, there is still a wall of money waiting to find a home and while it is not being piled into markets in general, there is always an appetite for new stocks because a prospectus gives you loads more insight than normal.

Anti Glazer feeling

So, as the link above implies, MUST want United supporters to boycott sponsors' products. The article concludes that this is unlikely to impact the success of the float.

As I've made clear over and over, I'm not a Glazer apologist. I try to write objective, informed commentary. No doubt, however, this article will get its usual quota of anti-Glazer hyperbole from one-eyed critics.

I have had some respect for Andy Green because of the depth and diligence of his "Andersred" website. However, his unfounded suggestions that Sir Alex would benefit from the IPO have damaged his reputation and undermined any legitimate concerns that anti-Glazer campaigners might have.

Sir Alex was rightly angry because such suggestions go to the heart of his integrity, which is the major component of his service and commitment to the United cause over the last 26 years. His comments are also reproduced in the same article.

It is equally unwise to suggest, as many have done in the past, that his hands have been tied in the transfer market. People have particularly picked on the Ronaldo money not being reinvested, which by now is rubbish.

He has made so many comments in press conferences about the importance of value in the market place that anyone continuing to suggest that the Glazers, or the debt, have tied his hands in the transfer markets is tantamount to calling Sir Alex a liar.

In fact, one could reasonably conclude from a raft of comments over time that both Sir Alex and David Gill are rightly preoccupied with Financial Fair Play.

You can be sure that neither would put the club, its finances or its reputation and tradition at risk.

Of course, any true supporter is rightly concerned about the level of debt. I am. But I do not see the same concerns expressed anywhere about the level of players' salaries—except by Sir Alex.

Instead, in hundreds, if not thousands of comments across these boards, I see supporters demanding that United pay whatever it takes in transfer fees or salaries to land marquee players.

That's just daft.

Just because Roman Abramovich, Sheikh Mansour and other magnates have massive amounts of cash doesn't change the fact that such spending is, frankly obscene.

We are in the midst of the worst global financial crisis since the 1930s. Ordinary people in the UK are losing their jobs; some people can barely afford to eat; the country is in a recession; Greece is on the verge of bankruptcy because of profligate spending.

Bankers have been castigated for bringing the global economy to its knees and paying themselves huge salaries, but United supporters criticised the club and indirectly the owners for failing to beat Chelsea to the signature of Eden Hazard.

The same Eden Hazard who cost £35 million, PLUS £9 million a year wages!

Sir Alex criticised this profligacy, but where were MUST in supporting his outburst?

Where is the criticism of David Beckham, Wayne Rooney, Rio Ferdinand, Michael Owen and Ryan Giggs, with an estimated net worth totalling £317 million from playing football?

There are far too many hypocritical comments flying around. What is the motivation of the anti-Glazer supporters? To get rid of the owners; and replace them with whom?

MUST say the club should be owned by its fans. "We want the IPO shelved and a proper fan ownership model put in place—one share, one vote." says Duncan Drasdo.

How naive can you get?

Whether or not United has 659 million fans worldwide, it is those fans who support the club and buy its merchandise. Only a fraction attend matches.

Even without the Glazers, it is sponsors and fans who NEVER go to Old Trafford who provide the lion's share of United's income.

Of course I would rather it wasn't going on paying off debt; and one day soon there won't be any debt. But of the 180,000 MUST members whose leaders want a boycott, what do they really expect to happen if the boycott worked?

That United would start losing money; that it would run into financial difficulties; that Sir Alex would have no money to spend; that team morale would be hit; that players would decline to come and worse still would start to leave; that ultimately the club would fail and the Glazers would walk away penniless?

And where would our beloved football club be then?

People think the Glazers hijacked the club. Sorry, but where were MUST and their supporters, or the so-called "Red Knights" when the Glazers were buying their shares in the open market, to get up to 28%?

And how many so-called United fans sold their shares in United when the actions of the Glazers pushed the price up? Of course the Glazers didn't have true leverage until they got Magnier and McManus's shares, but if nobody had sold them shares in the first place they would have had less than 30% even with that stake.

What really sticks in my throat is people who criticise the leveraged buyout of the club and the level of debt that has been created. 

That debt is less than twice United's Gross income this year.

How many MUST supporters and anti-Glazer critics have bought a house with a mortgage on three, four or even five times their wage? How many are struggling to repay their mortgage, or their credit card debt? How sanctimonious can you get?

So then people might say "it's not the same, it's my football club." Now let's examine that. 180,000 MUST members; 76,000 seats at Old Trafford...something doesn't add up.

So then the cry is that people don't want to put money in the Glazers' pockets.

Sorry. Why did nobody complain when money was going into the Edwards' family pockets? Did Martin Edwards make no money on the Manchester United UK IPO? Did he not make any afterwards by selling his shares? Is there no United supporter alive who made a profit on United shares when the Glazers took over?

There is understandable resentment at the Glazers taking money out of the club. I agree that it was wrong for the statement that the funds raised would be used to pay down the debt to be apparently reneged on.

However, whatever the outcome of the IPO this week, funds will be generated for the club, which presumably will be used to reduce the debt. 

Players' transfer fees and wages should come out of Operating income, not share sales. That is called "living within your means." With the new Chevrolet deal and other sponsorships, there will be more than enough money to buy and pay players. Why would MUST want to damage this, just to register a protest?

So finally, Manchester United is a major global business. Its value by next week could be $3.3 billion. Its turnover and profits would make it a FTSE 250 company if it was listed in the UK.

We live in an era of leveraged buyouts. The Glazers were the only bidders, once the Murdoch bid was blocked. United were only in play because the Edwards family floated them on the UK Stock Exchange. They allowed one share one vote; and what did we get? The Glazers.

In this article we examine the reasons they may have for the float. The two things that stick in fans' throats are: raising money for themselves; and the two-tier ownership structure.

Any owners of a company floating on the Stock Market always sell shares for themselves as a reward for the risks they have taken. The ownership structure will at least prevent an even more unacceptable owner buying up the shares in the market, even though it leaves that decision in the hands of the Glazers.

This is intended to be an objective, thought-provoking article. I am a United season ticket holder who has no intention of giving up his seat at Old Trafford...ever...for as long as I live...

I have supported United for 56 years and I don't live in Manchester. Why do you have to, to be a true supporter? How xenophobic can you get?

You can't change the fact that United is a global brand. The Glazers didn't do that, 659 million fans did. We all feel a part of the club's success, its tradition and values. The owners may not have helped those, but they have presided over a period of great success. It wasn't their fault we didn't win the title last year.

But with their loud and bitter protests, 180,000 so-called supporters, most of which don't even have a season ticket, run the risk, if they are successful, of doing great damage to the club I love and, in the extreme, driving it out of existence, just because they resent the current owners.

And what would we have instead? FC United? No Old Trafford; no tradition; a place in the Second Division at best? All in the name of democracy.

Frankly I'd rather stick with the present owners. 

When the IPO is successful, funds will be raised to pay off debt. If it's oversubscribed, more debt will be paid off. It also establishes a market in United shares that would allow further placings in future to raise enough money to eventually pay off the whole debt.

When that happens, there will be no debt and the Glazers will still own the club. MUST's proposed alternative is, frankly, cloud cuckoo land, driven by three one-hundredths of one percent of the club's global fan base. How would the other virtually 100% feel if United ceased to exist?

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