Manchester United risked a backlash from fans today over the owning Glazer family’s plans to retain half the proceeds of the club’s US flotation.
Supporters of the Old Trafford club had hoped that all $333 million (£212m) raised in the initial public offering (IPO) would be used to help pay off its £437m of debt which it has accumulated since being acquired by Florida-based businessman Malcolm Glazer and his family in 2005.
The club and the Glazers will each sell half the shares in the IPO priced at between $16 and $20 and valuing the club at $3.3 billion (£2.1bn).
But the Glazers will retain 89.8 per cent of the combined class A and B shares. The B shares have ten times the voting power of A shares.
The flotation may prove difficult in the US which does not have the same affection for football as Europeans. Investors may also have concerns about the clubs finances. Operating expenses increased as a result of higher player wages. The shares will also trade on a hefty price earnings multiple of 95 times.
“It could be challenging to justify such strong multiples for a company that needs to spend a lot of money to generate success,” said Ken Perkins, an analyst with Morningstar. “Even if their performance is good their price may be a bit high.”
Details of the sale coincided with the announcement of a £380m seven-year sponsorship deal with General Motors to have the Chevrolet brand on the club’s shirts from 2014.
A global roadshow for the IPO will begin tomorrow with pricing of the shares expected on 9 August.
The Glazers, who also own the Tampa Bay Buccaneers UD football team, opted to float the club on the New York Stock Exchange rather than Singapore and Hong Kong.