Manchester United May Rely on Support From Fans in Asia for Singapore IPO
Manchester United May Rely on Asian Fan Support
Jerome Favre/Bloomberg
Customers browse Manchester United Football Club paraphernalia and souvenirs in the Manchester United Restaurant Bar in Hong Kong, China.
Customers browse Manchester United Football Club paraphernalia and souvenirs in the Manchester United Restaurant Bar in Hong Kong, China. Photographer: Jerome Favre/Bloomberg
Manchester United May Rely on Asian Fan Support
Jerome Favre/Bloomberg
People walk in front of the Manchester United Restaurant Bar in Hong Kong, China.
People walk in front of the Manchester United Restaurant Bar in Hong Kong, China. Photographer: Jerome Favre/Bloomberg
Manchester United May Rely on Asian Fan Support
Jerome Favre/Bloomberg
Manchester United Football Club paraphernalia and souvenirs on sale in the Manchester United Restaurant Bar in Hong Kong, China.
Manchester United Football Club paraphernalia and souvenirs on sale in the Manchester United Restaurant Bar in Hong Kong, China. Photographer: Jerome Favre/Bloomberg
Manchester United may rely on Asian fans buying shares with their hearts, rather than their heads, as the 19-time English soccer champion plans a $1 billion initial public offering in Singapore.
Analysts and fans say the sale of as much as 30 percent of the club may tempt retail investors with affection for United as opposed to institutions. The U.S.-based Glazers bought United for 790 million pounds ($1.3 billion) in 2005. The proposed IPO implies a value of more than $3 billion. The owners will use the proceeds to cut debt and invest in players, said two people with knowledge of the decision. The club hasn’t confirmed the plan.
“I would be more inclined towards investing in the club, even if valuations are slightly on the high side, because of my emotional connection with it,” said David Hu, a 25-year-old financial analyst based in Singapore and a United fan since he was 10. “It’s exciting to own a material interest in a team you’ve supported for so long.”
The team, which will gauge investor demand as soon as next month, decided to list in Asia because of its fanbase there, according to the people familiar with the discussions. United spokesman Philip Townsend declined to comment on that.
United says it has more supporters than any soccer team, with 190 million of the estimated 330 million “Reds” living in Asia. The team’s popularity has climbed with the increase in global demand for Premier League soccer, which is now televised in 211 territories.
Ronaldo Sale
The Glazers have doubled revenue to about 300 million pounds since a debt-funded takeover that made them unpopular with many fans. Interest costs from the acquisition meant the team was profitable only once in the past five years, thanks to the record 80 million-pound sale of Cristiano Ronaldo to Real Madrid in 2009.
In an IPO, “my sense is the investor base is going to be less institutional,” said Philip Hall, a partner at New York- based Inner Circle Sports, who advised on the takeovers of Liverpool and Sunderland. “It’s more likely people will invest from a retail perspective so they can say ‘I own 200 shares of Manchester United.’ It’s like buying the ultimate piece of merchandise.”
United announced a four-year deal on Aug. 22 that allows delivery company DHL to put its name on training wear. The contract is worth about 40 million pounds, said two people with knowledge of the negotiations. Malaysian snack Mister Potato and Vietnam telecommunications company Beeline also joined as sponsors this week.
The DHL deal is bigger than principal jersey contracts held by most in the 20-team league. Only Liverpool, Chelsea, Tottenham and Manchester City make more. Insurer Aon Corp. (AON) pays about 80 million pounds to advertise on United’s shirt.
Value Differentials
Stephen Schechter, chief executive officer of Schechter & Co., an adviser to other teams that sold shares to the public, places the value of United at closer to $2 billion. Forbes magazine said it’s worth $1.86 billion.
The figures quoted for the IPO are too high “because of the massive debt burden, the massive payroll, and the need to replace certain aging players” Schechter said. United’s second- youngest starting 11 in Premier League history helped the team beat Tottenham 3-0 on Aug. 22.
United first toured Asia four decades ago and plans to go again next year. When the club last made the trip, the players were mobbed by supporters wearing replica shirts bearing names of stars like Wayne Rooney and Ryan Giggs.
Barcelona to Chelsea
“Manchester United has got the heritage and also the current form on the field,” said brand consultant Nigel Currie. “Asian fan-bases are quite changeable in terms of their support habits. Manchester United has maintained their success.”
European champion Barcelona and Real Madrid also are popular in Asia, while Liverpool and Chelsea attracted thousands to matches. That prompted Felomina Devaraj Rulloda, who owns licensing rights to a United-themed restaurant in Singapore, to change the name to Charlie’s Tapas Grill & Bar from Manchester United Cafe because it was deterring fans of other clubs.
The Glazers borrowed about 500 million pounds against United’s assets to buy the club. Raising $1 billion in a share sale would be “one of the most incredible pieces of financial engineering in the history of sports,” said Stefan Szymanski, a professor of sports business at Cass Business School in London.
Tony Fernandes, chief executive officer of AirAsia Bhd., who last week bought control of London’s Queens Park Rangers, said there’s a big appetite for Premier League soccer.
“It’s a very smart move if done correctly,” he said in an interview. “Singapore’s got lots of capital and Man. U. is a very strong brand in Southeast Asia.”
The history of soccer listings is littered with setbacks. Former Premier League teams such as Leeds United went on to have spells in bankruptcy protection. German champion Borussia Dortmund is trading at about 2.4 euros a share, having been first sold at 11 euros in October 2000.
“Buyer beware,” Schechter said.
To contact the reporters on this story: Tariq Panja in London at tpanja@bloomberg.net;
To contact the editor responsible for this story: Christopher Elser at at celser@bloomberg.net
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