Glazer Family to Sell 5 Percent of Soccer’s Manchester UnitedTariq Panja
Manchester United Plc’s majority shareholders, the U.S.-based Glazer family, announced plans to sell 8 million shares, or about 5 percent of the record 20-time English soccer champion, in a public offering.
The sale of the Class A shares would leave the Glazers, who also own the National Football League’s Tampa Bay Buccaneers, with about 85 percent of the club they purchased through a 790 million pound ($1.4 billion) leveraged buyout in 2005. The Glazers raised $233 million after an initial public offering of 10 percent of the club on the New York Stock Exchange in 2012.
United is seeking to bounce back from its worst Premier League season, having finished seventh and failed to reach the elite Champions League. It will start a second straight season with a new coach after hiring Louis van Gaal to replace David Moyes, who was fired after one season.
The voting rights of the stock the Glazers are selling are worth a fraction of their Class B shares, which have 10 votes per share compared to Class A shares that give owners one vote.
The sale is being handled by Jefferies LLC, BofA Merrill Lynch, Credit Suisse Securities LLC, Deutsche Bank Securities Inc. and Nomura Securities International Inc. The underwriters have the option to purchase a further 1.2 million shares, according to a news release yesterday announcing the sale.
Manchester United stock closed at $19.31 yesterday in New York, down 11 cents for the day. No price has been set for the shares being released. All the proceeds will go to Red Football LLC, the Glazers’ investment vehicle, and not to Manchester United, according to the news release.
At yesterday’s closing price, the sale of the 8 million shares would translate into about $150 million for the family.
The Glazers have never been popular with fans of the team, which was debt free before they purchased the club. The 2005 buyout was financed through 374 million pounds of bank loans and 275 million pounds of notes sold to hedge funds. Fans burned an effigy of Malcolm Glazer, the late family patriarch, outside the team’s Old Trafford stadium.
Still, until recently, United enjoyed a successful period, including five league titles and a European Cup, thanks to the coaching of Alex Ferguson, the Scot who led the team for 27 years before stepping down in 2013. Almost 700 million pounds has been spent on servicing the club’s ownership-related debt since the takeover.
The debt has fallen to about 350 million pounds, while revenue has grown thanks to better television contracts negotiated by the Premier League and Manchester United’s appeal to sponsors. General Motor Co.’s Chevrolet brand will appear on the club’s shirt for the first time this season following a $559 million deal agreed upon in 2012. Earlier this month, Adidas AG agreed to pay $1.3 billion for the right to produce United’s apparel, including its jersey, for 10 years.
United disclosed to potential shareholders that its sponsorship deal with Adidas has a performance-related clause that would reduce the annual amount paid by the sporting goods company by 30 percent from $131 million to $89 million should United fail to make the Champions League two straight seasons.
“Our success and many achievements over the last 20 years does not necessarily mean that we will continue to be successful in the future, whether as a result of changes in player personnel, coaching staff or otherwise,” United said in the share prospectus. “A downturn in the performance of our first team could adversely affect our ability to attract and retain coaches and players.”
United is currently touring the U.S. as part of its preseason training with new squad members including Ander Herrera and Luke Shaw. The Red Devils played to a 0-0 draw with Inter Milan two nights ago in Washington before winning a penalty shootout.