Manchester United Reduce Stock Market Value for Flotation

By Community | August 10, 2012

Manchester United have reduced the value of its stock market flotation, valuing the club at only $2.3bn and shaving as much as $100m from the anticipated proceeds for the team and its owners.

The club said its shares priced at $14 apiece, below the $16-$20 per share range it had in mind.

At the high end of the range, the team would have been valued at $3.3bn.

Manchester United priced 16.7 million shares, as planned, and raised $233.2m – which will be split equally between the club and its owners, the Florida-based Glazer family.

The loss of as much as $100m in proceeds for the club will be a blow as it copes with a heavy debt burden and seeks to buy expensive new players.

While the deal still makes it the largest sports team flotation on record, the valuation is a setback for the 134-year-old club, which had to abort plans for an offering in Singapore and then saw Morgan Stanley leave the underwriting syndicate, partly due to disagreements over valuation.

The Glazers, whose interests include shopping centres and the Tampa Bay Buccaneers football team, will also take in less money from the share sale, but the deal still represents a return of some 2.5 times their equity investment in the club.

The club is planning to use the money to pay down its pile of debt that dates back to the Glazers’ £790m buyout in 2005.

Manchester United’s debt stood at over £437m as of 30 June.

Some fans have protested, criticizing the Glazers for only using half of the deal’s proceeds to pay down debt. They argue that the large debt has led to reduced financial flexibility which came at the expense of investment in players and the team’s performance.

The club’s shares will begin trading on Friday under the stock market ticker Manu.