Friday was a good day for Malcolm Glazer and his sons Joel, Avram and Bryan.
The Glazer family sold a 10 percent stake in a restructured Manchester United, ending the day wealthier and holding tighter control of the world’s most valuable sports team than before.
With great fanfare, Manchester United successfully launched its initial public offering on the New York Stock Exchange. Shares in the club were initially sold at $14, and the price barely fluctuated during their first day on the public market.
The sale of all 16.7 million shares at or around the initial figure prompted analysts to say that the IPO was launched at “the perfect price,” and spared the Glazers, initial investors, United itself (the soccer team) and its fans from the angst that comes with losing lots of money in a short period of time.
The IPO raised around £148.8 million ($233.3 million) in total. The Glazers sold half of the shares themselves, taking home £74.4 million ($116.6 million). United’s portion of the initial sale to the public earned the club around £74.4 million ($116.6 million) as well.
The club is expected to put around £63.8 million ($100 million) of its earnings toward reducing its debt, which stood at £437 million ($682 million) at the end of June. What the Glazers will do with their winnings is anyone’s guess.
The IPO clarifies two things. The first is simple. Selling a 10-percent stake in Cayman Islands-based holding company Manchester United plc for £148.8 million ($233.3 million) makes the club the worth around £1.5 billion ($2.3 billion). That figure gives United the official title of “world’s most valuable sports team,” surpassing the £1.28 billion ($2 billion) paid for Major League Baseball’s Los Angeles Dogers earlier this year. It also ensures Real Madrid, which Forbes Magazine values at £1.2 billion ($1.88 billion), does not surpass United on world soccer’s rich list for the time being.
The IPO also solidifies the Glazer family’s hold on the club. The Class B shares sold on the NYSE give investors one-tenth of the voting rights that class A shares permit. Also, changes to the club’s constitution have made it harder for another entity to launch a hostile takeover.
“The Glazers are only selling around 10 [percent] of the club through the stock market listing, so they would be able to block any takeover bid launched immediately after the float,” the Guardian reports. “However, financial experts said that the new anti-takeover clauses would protect their position if they needed to raise cash in the future by selling down their holding.”
The Glazers also launched the IPO under the recently passed law called the “Jumpstart Our Business Startups (JOBS) Act,” which allows a company of United’s size to raise capital on public markets without filing quarterly financial disclosures or facing the same financial regulation and scrutiny that other publicly traded firms must face. The new United can operate under these relaxed rules for up to five years.
United logos and colors adorned parts of the NYSE on Friday and the IPO, the most high-profile launch since Facebook’s (in May), went off without a hitch. The Glazers’ future as United’s owners is as secure as it has been since their 2005 leveraged takeover, and one has to think things are going according to their plan. The largest sports IPO in history turned out to be a dream scenario for Malcolm Glazer and his sons. If and when the time comes for them to sell the team, potential buyers will know who to call and at what price the bidding will start.
Photo via Flickr/cvrcak