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Man Utd. Got Most IPO Demand From U.S., Woodward Says

Manchester United Plc (MANU), the English soccer club that raised $233.3 million yesterday in its U.S. initial public offering, received the most demand for its stock from American investors, Vice Chairman Edward Woodward said.

The 134-year-old team with a record 19 championships and the Glazer family, which bought the team in 2005, sold 16.7 million shares yesterday, equivalent to a 10 percent stake, for $14 each, below the range of $16 to $20 it marketed to investors globally.

“The understanding that U.S. investors have around sports business, given it’s the most developed sport market in the world, has been a benefit,” Woodward said in a telephone interview after the stock started trading.

United chose a U.S. sale after scrapping plans for an offering worth as much as $1 billion in Singapore. Most of its fans are from Asia, according to a club-financed survey by Kantar Media.

The stock was unchanged as of 4 p.m. in New York after climbing as much as 1.4 percent. The IPO price gave the team, which says it’s the most popular in the world, an enterprise value of $2.9 billion, about $1 billion more than the value of Spain’s Real Madrid, according to data compiled by Bloomberg and Forbes.

Woodward said the club decided to go public at $14 because the caliber of investors at that level would reduce the risk of volatility experienced by recent high-profile IPOs. The U.S. market froze for more than a month following Facebook Inc.’s record $16 billion offering. The stock sank as much as 32 percent in the weeks following its May debut.

‘Growth Story’

United’s pitch to investors was its “growth story,” Woodward said. The club’s revenue has more than doubled since the Glazers completed a leveraged buyout in 2005, filings show.

Much of the recent growth has been on the back of a series of commercial agreements. In July, General Motors Co., the world’s largest carmaker, said it signed a seven-year deal to have its Chevrolet brand on United’s jerseys starting in 2014. The agreement will generate $559 million through 2021, the club said in a filing Aug. 3.

GM ousted its marketing director Joel Ewanick for not properly disclosing as much as a third of cost of the agreement with United, people familiar with the situation said. Ewanick’s departure was announced hours before United said it would list.

Woodward confirmed elements of the deal were changed following Ewanick’s ouster.

“Deals evolve all the way through to the moment you sign them,” said Woodward.

The agreement is more than 2 1/2 times what current sponsor Aon Corp. is paying, Woodward said. Aon offered an increase on its 20 million pounds-a-year contract but baulked when it was told of GM’s offer.

“We had cover bids close to that level because this is the most valuable piece of sporting real estate in the world,” Woodward said.

Sponsorship Deals

United’s sponsorships and product licensing helped generate 89.5 million pounds of revenue in the nine months through March 31, more than one-third of total revenue, filings show. That’s 17 percent more than the year-earlier period.

“We’ve done a whole raft of deals since we’ve even been on the road,” said Woodward, without providing details.

The Glazers will maintain almost 99 percent of the voting control, according to the original terms of the prospectus, because the Class B shares they own carry 10 votes apiece, compared to 1 vote each for the Class A shares sold in the IPO.

The Glazers sold half of the shares in the IPO, while the company sold the other half and planned to use the proceeds to repay debt. Borrowings stood at 437 million pounds as of June 30, and the company has spent more than 500 million pounds on service costs associated with the owners’ debt.

Fans have complained money needed to invest in players has been diverted to debt reduction. United has been outspent by rivals including billionaire-owned neighbor Manchester City and London-based Chelsea. Last season was the first time since the Glazers bought the team that it didn’t win any trophies. Still, manager Alex Ferguson has said the owners have supported him throughout their tenure.

“The commitment is very clear to Sir Alex that he has whatever he wants as he has had since 2005 with regards to buying players,” Woodward said. “Money’s always been available for that.”

To contact the reporters on this story: Tariq Panja in London at tpanja@bloomberg.net

To contact the editors responsible for this story: Jeffrey McCracken at jmccracken3@bloomberg.net; Christopher Elser at celser@bloomberg.net

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