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Butler: Manchester United set to become ticker symbol 'manu'

Nole Butler
8/3/2012 10:14:18 AM
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Back on May 12 as the Manchester United players were leaving the Stadium of Light pitch in full knowledge Manchester City had - by the slimmest of margins - pipped them to the title, Sir Alex Ferguson ushered his charges over to acknowledge the thousands of United fans who had journeyed to Sunderland.

Earlier this week, those very same fans were openly hostile towards Ferguson as they questioned his motives behind recent public support of the Glazer family.

It's no coincidence that Ferguson's support for the owners comes at a time that the club will shortly be listing on the New York Stock Exchange where approximately 10 percent of the club's shares will be made available.

Just a month ago, Forbes in their annual survey of the World's 50 Most Valuable Sports Teams placed a value of $2.3 billion on a club that has won 12 of 20 Barclays Premier League titles. 

Seems the Glazers and their financial advisors aren't in agreement with Forbes. If, as expected, the most famous IPO since Facebook's flop earlier in the summer is floated at the top end of the offer price of $20 per share the value placed on the Manchester United would be an astronomical $3.3 billion.

To put perspective on that $3.3 billion valuation, a consortium led by Magic Johnson purchased the LA Dodgers for a reported $2 billion in March. Then factor in Glazer purchasing the club for £790 million ($1.2 billion) only back in late 2005.

Glazer's relationship with Manchester United, if you can call it that, started in spring of 2003 when Manchester United PLC was a publicly traded entity listed on the London Stock Exchange when the relatively unknown owner of NFL's Tampa Bay Buccaneers scooped up a less than three percent stake in the fabled football club.

Just over a year removed from that transaction and after a series of further minority purchases, Malcolm Glazer's holding had risen to a threatening 20 percent stake. As he continued to purchase shares on the open market by the fall of 2004, Glazer was in position to present a bid to the Manchester United board.

When the bid eventually came it was rejected out of hand. The single concern cited by the board was over the extremely large amount of borrowed money Glazer would be using to purchase the remainder of the outstanding share capital.

At this time an Irish consortium led by two racing partners of Ferguson's held a near 30 percent stake in the club which by now Glazer and his advisors had focused their attention on away from the board. This they identified was the key to gaining complete control.

When in May 2005, the Irish tycoons eventually agreed to sell to Glazer their friendship with Ferguson had soured over the ownership and breeding rights of a horse. It was now only a matter of time before Glazer would be in position to seize full control - which he successfully did less than six months later.

Even though under the House of Glazer the club has enjoyed more success than anyone else in jolly old England - with a haul of silverware that would rival anyone in world football - the Glazers have never received anything resembling the type of fan support Roman Abramovich or Sheik Mansour undoubtedly have.

In fact it's been quite the opposite. Since Day 1, the Glazer family - who have even flat out refused UK government attempts to engage with their fans - have been met with open hostility and public protests from large swathes of the club's support - from the very ardent even down to the most docile.

Simply put, as Abramovich and Mansour have invested their own money, the Glazer's have used debt in their attempt to keep Manchester United at the top table of world football.

Duncan Drasdo, the CEO of the Manchester United Supporters Trust a group that has adamantly opposed Glazer since his first purchase of shares in early 2003, is vehemently against the IPO.

In an email, Drasdo told TSN.ca, "Prior to the Glazers 2005 takeover Manchester United was exceptionally successful both on and off the pitch and growing commercial revenues every year. After the Glazers 2005 takeover Manchester United was exceptionally successful both on and off the pitch and growing commercial revenues every year. So not much difference?"

"Well no - they've cost the club £550 million in costs associated with their takeover - all lost to the club and the forthcoming IPO will mean another $633m and a further £350m still in debt after (the) IPO pays down £73m".

A credible report out of London in midweek placed the total cost of interest and bank payments to be well in excess of  $750 million during Glazer's close to seven-year reign.

Put another way, this works out an irrational $375,000 a day. Isn't it marriage that comes with the seven-year itch?

Meanwhile, the Glazers themselves have benefited financially - taking over $50 million in consultancy fees and $15 million in the form of a dividend from the club's coffers.

Drasdo maintains too high a cost has come with Glazer. "So cost is astronomical and ticket prices have gone through the roof to pay for Glazers ownership. And remember - prior to them taking over not only were we debt free but we actually had a £40 million ($60 million) surplus in the bank on top of probably the strongest squad in Europe."

"There are many more issues but the simple money equation says it all £550m already gone - more than a £1 billion pending total and compare that with City and Chelsea where the owners have put similar amounts of money in."

Referencing the original managerial legend who led the club to its very first European triumph, Drasdo concluded, "However we don't need a sugar daddy at Manchester United. We are a proud and independent club and like all clubs we prefer to stand on our own feet - live within our means and take glory in our achievements because they've been earned honestly and with integrity just like Sir Matt Busby would have insisted."

Now with less than a fortnight before the most winningest team in English football club history are expected to make their debut on Wall Street, speculation has centred on some of the fine print matter for the Initial Public Offering.

This has come in the form of substantial profiting for the most senior members of the Old Trafford management based on Wall Street success.

Just yesterday as Manchester United's most senior executives began a worldwide tour to meet with potential institutional investors, the current Lord of the Old Trafford manor was forced to issue a statement denying that he would be one of those to profit financially.

Last season, Ferguson's tilt at a record 20th English league title came unstuck courtesy of his jet propelled noisy neighbours. This season, City will be joined by a vastly improved Chelsea and to a lesser extent both Arsenal and Liverpool should push the giants of English football.

Add now the New York Stock Exchange and the club's $300 million flotation to that list. Where the Glazers will find investors do not possess the same type of blind emotion as Manchester United fans do especially those who stuck with the club through the decades of Liverpool dominance.

This for a club that was formed in 1902 over a $4,000 debt.

WISE DECISION

With Roman Abramovich's recent failed attempt to purchase Battersea Power Station the London landmark made iconic on the Pink Floyd album cover Animals the club's lofty ambition to build a 60,000 seat stadium will refocuses on the Chelsea Pitch Owners. A collective that number in their thousands that own the freehold land to Stamford Bridge and who turned back Abramovich in his attempt to purchase their shares last fall. This morning comes news that ex-club captain Dennis Wise has stepped down as a director of CPO. With talk last fall of mystery purchasers buying large blocks of shares ahead of the vote to manipulate the outcome John Le Carre like reports speculate on the reason for Wise's abrupt departure on intrusions into his private live by an opponent of Chelsea's bid. Now free of his national duty escorting the Queen to the opening of the London Olympics perhaps its time to send James Bond down to Stamford Bridge.

DOT COM JERSEY-SHIRT BOOM

On Monday, Manchester United announced an unprecedented seven-year sponsorship deal with Chevrolet  that could net the club $600 million over its lifetime - or $85 million a season. The deal represents a near three-fold increase on the club's current agreement with AON that the Financial Times reports to be worth £80m [$120 million] over its four-year term. It also outstrips by an extremely wide margin Barcelona's shirt deal worth £25 million per season in this current era where shirt sponsorship deals have entered another stratosphere.  With media impressions the most intrinsic metric for when clubs attach values to sponsorship deals the boom in internet football culture can ironically be the only rational explanation for the recent giant leaps in prices. Think of all them global eyes fixated on all them branded images as they read umpteen accounts of their club's latest exploits. If though a harbinger of things to come for when Ticker Symbol MANU rings out on Wall Street when news immediately broke of the deal GM's shares were down one percent.

ONE GIANT STEP, 38 REMAINING

With the likes of the Champions and Arsenal taking their roadshows to the Far East and with Chelsea, Spurs and Liverpool taking part in the 2012 Herbalife World Football Challenge, Manchester United playing in South Africa and Shanghai for the first time in league history all 20 clubs have participated in pre-season tours that have taken them outside of England. Clubs will cite growing global fan bases require they do, the highly remunerated marketers will talk of brand awareness but in reality it's an exercise in softening up those who are opposed to the so termed 39th Game. A series of Barclays Premier League fixtures that will see all the clubs jaunt off to football rich destinations like Dubai, Sydney and who knows -  even Montreal. The idea of playing this additional competitive match overseas was put back in the fun box after reports first leaked back in February 2008.

Beginning August 18, listen to live play by play coverage of the Barclays Premier League Match of the Day on TSN Radio 1290, TSN Radio 1050, TSN Radio 990 and TEAM Radio 1410. Kick Off with the Pre-Game Show at 9:30am et/6:30am pt.

Noel Butler

Noel Butler


Noel Butler is an analyst for TSN's soccer coverage and his blog can be read on TSN.ca. You can follow him on Twitter at twitter.com/TheSoccerNoel and listen to his radio program oranges@halftime on TSN Radio 690 Montreal.

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