Rags IPO faltering at first hurdle
Posted: Wed Jul 25, 2012 10:47 pmSeems noone wants to invest...
http://www.marketwatch.com/story/manche ... atest_news
For sale: world-famous company that’s highly leveraged with anti-takeover provisions and no dividend or stock buyback plans in sight.
To which potential buyers in Hong Kong, Singapore and now, reportedly, the U.S., have replied: No, thanks.
At least that’s according to a published report in the Financial Times Wednesday, which said the Manchester United initial public offering is on hold.
In interests of full disclosure, this author is a fan of a soccer club that counts Manchester United as a bitter rival. But that’s not really the point — the club is clearly one of the dominant teams in the English Premier League, despite cross-town rival Manchester City winning the league title this year, and its success on the pitch, as the Brits say, looks to continue for some time.
The issues surround the team’s recent owners, the Glazer family, and the debt they’ve loaded onto the franchise: 423 million pounds against 259 million pounds of equity. The prospectus says they want the cash to pay off debt carrying interest rates north of 8%. And remember, this isn’t some new start-up — this is a company that’s been around for more than a century.
Plus, as an “emerging growth company” per the new JOBS Act rules — quite an achievement in labeling for one founded in 1878 — it won’t have to attest to the effectiveness of its internal controls for up to five years.
Of course the investment case carries some valid points. In the U.K., BT Group BT -3.20% aggressively bid for television rights, in the process completely shutting out Disney’s DIS +0.29% ESPN and making inroads to BSkyB’s UK:BSY +1.11% local broadcasting dominance of the sport. (BSkyB is partly owned by News Corp, which also owns MarketWatch, the publisher of this report.)
There’s also the Premier League’s and Manchester United’s growing ability to tap into demand to watch soccer in Asia, as its own broadcast channel reaches 54 countries. Plus, the club’s mobile and “new media” revenue is surging, as is sponsorship and licensing revenue.
But even so, operating margins were basically flat in the nine months ending March 31, at 21%. Expenses also are growing, and the club hasn’t of late been able to repeat the feat of developing home-grown talent like David Beckham and Paul Scholes — which is important to its finances, because it forces the club to buy players from other clubs at a premium. The club also is competing against rivals like Chelsea and Manchester City whose oil-rich owners show little regard for turning a profit.
Yes, it’s true that there’s growing market uncertainty, not making it the best of times for any initial public offering. And yet the reason for the market uncertainty, largely the European debt situation, also directly threatens the revenue and profit potential of Manchester United. Only Wednesday, the U.K. government’s statistician reported the economy in the second quarter shrank 0.7%.
The fans may sing “We love United, we do,” but investors most certainly do not
http://www.marketwatch.com/story/manche ... atest_news
For sale: world-famous company that’s highly leveraged with anti-takeover provisions and no dividend or stock buyback plans in sight.
To which potential buyers in Hong Kong, Singapore and now, reportedly, the U.S., have replied: No, thanks.
At least that’s according to a published report in the Financial Times Wednesday, which said the Manchester United initial public offering is on hold.
In interests of full disclosure, this author is a fan of a soccer club that counts Manchester United as a bitter rival. But that’s not really the point — the club is clearly one of the dominant teams in the English Premier League, despite cross-town rival Manchester City winning the league title this year, and its success on the pitch, as the Brits say, looks to continue for some time.
The issues surround the team’s recent owners, the Glazer family, and the debt they’ve loaded onto the franchise: 423 million pounds against 259 million pounds of equity. The prospectus says they want the cash to pay off debt carrying interest rates north of 8%. And remember, this isn’t some new start-up — this is a company that’s been around for more than a century.
Plus, as an “emerging growth company” per the new JOBS Act rules — quite an achievement in labeling for one founded in 1878 — it won’t have to attest to the effectiveness of its internal controls for up to five years.
Of course the investment case carries some valid points. In the U.K., BT Group BT -3.20% aggressively bid for television rights, in the process completely shutting out Disney’s DIS +0.29% ESPN and making inroads to BSkyB’s UK:BSY +1.11% local broadcasting dominance of the sport. (BSkyB is partly owned by News Corp, which also owns MarketWatch, the publisher of this report.)
There’s also the Premier League’s and Manchester United’s growing ability to tap into demand to watch soccer in Asia, as its own broadcast channel reaches 54 countries. Plus, the club’s mobile and “new media” revenue is surging, as is sponsorship and licensing revenue.
But even so, operating margins were basically flat in the nine months ending March 31, at 21%. Expenses also are growing, and the club hasn’t of late been able to repeat the feat of developing home-grown talent like David Beckham and Paul Scholes — which is important to its finances, because it forces the club to buy players from other clubs at a premium. The club also is competing against rivals like Chelsea and Manchester City whose oil-rich owners show little regard for turning a profit.
Yes, it’s true that there’s growing market uncertainty, not making it the best of times for any initial public offering. And yet the reason for the market uncertainty, largely the European debt situation, also directly threatens the revenue and profit potential of Manchester United. Only Wednesday, the U.K. government’s statistician reported the economy in the second quarter shrank 0.7%.
The fans may sing “We love United, we do,” but investors most certainly do not