Glazers are 'testing the water’ with United’s stock exhange share offering, claims Manchester academic
A Manchester academic has told MM that the Glazer brothers are ‘testing the water’ with Manchester United’s share offering in the United States.
The mega-club is hoping to clear £64million of debt from their books by applying to sell shares on the New York Stock Exchange.
The most valuable sports team in the world filed with the United States government’s Securities and Exchange Commission yesterday.
Share prices are yet to be set but the application revealed that all profits would be used to tackle the debt overhanging the Old Trafford side.
Manchester Metropolitan University principal accounting and economics lecturer Kieran Maguire told MM that he believes that the Glazier brothers are only ‘testing the water’ across the Atlantic.
Dr Maguire said: “The value of the Initial Price Offering (IPO) is small in relation to United's debt, so the Glazer's are testing the water to see if the market will be enthusiastic to the idea of an equity deal.
He added: “If there is a positive response, expect a far larger share offering in the not too distant future.”
Some have been critical of the Glazer brother’s decision to move the registration of Manchester United Ltd to the Cayman Islands, a well known tax haven, but Dr Maguire was less damning about their choice of country.
He said: “The registration in the Cayman Islands is to give the Glazer's extra privacy in regards to their investment in United, and I suspect it is linked to succession planning too, as Malcolm Glazer is (a) old and (b) not in good health, so is looking to divest his investment to his offspring (The Glazerettes, or whatever he chooses to call them).”
The economics expert also ruled out the idea that the Manchester United owners were laying the foundations for a profitable sale in the future.
Dr Maguire said: “No, the nature of the IPO is to allow the Glazer family to retain control of the club, as the shares issued contain restricted voting rights on a 1:10 ratio."
He added: “For example, the Glazers could own 1 million shares, and therefore have 10 million votes, and raise cash via an issue of 9 million shares, with the 'new' shareholders only having 9 million votes between them.”
This type of deal is more common in NY than in London, which explains the choice of bourse on which the Glazers have listed United.”
The Red Devils were taken over by the Glazer family in 2005 in a deal worth £940million – but the takeover left the club in £423million debt.
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The club, who boast more than 659million fans worldwide, were investigating a potential flotation on the Singapore stock market.
The process, however, was delayed due to the volatile markets in the East and European investments have been dampened due to the economic crisis.
The Glazer family in recent years have landed themselves in hot water over Manchester United’s debt.
Tensions came to a head in 2010 when a fan led consortium made up of city bankers and lawyers called the Red Knights put forward a takeover bid for the prestigious club.
Fan anxiety over the club’s ownership since then has died down and less protest green and yellow scarves, recalling the days when Manchester United formed at Newton Heath , have been seen on the terraces of Old Trafford.
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