Manchester United shares debut in New York

Shares began trading on the New York Stock Exchange (NYSE) to the applause of co-chairmen Avram and Joel Glazer and chief executive David Gill

Shares in Manchester United have begun trading on the New York Stock Exchange.

The football club's shares initially rose slightly to $14.05, before closing flat at the offer price of $14. The offer price was less than the $16-$20 United had wanted to sell them for.

Ten percent of the club was sold in the initial public offering (IPO), raising $233m (£150m), a third less than hoped.

Members of the club's American owners, the Glazer family, rang the opening bell which marks the start of trading.

Ed Woodward, vice chairman of Manchester United, said that the club reduced the share price because more investors were comfortable with that figure.

"The huge number of high-quality institutional investors that were there at $14 just made us more comfortable in terms of the longer-term view here, with regard to the type of investor base we wanted," said Mr Woodward.

There are concerns that this will deprive Manchester United of some of the funds it needs to compete in the transfer market, potentially hitting its performance on the pitch. And as sporting success is so closely linked to profits, there have been fears this could affect its bottom line.

Mr Woodward denied that there was a shortage of cash for player transfers.

"If you look at where we are today in terms of the cash-generative nature of the business, and even more so contractually going forward, we have huge firepower in the transfer market," he said.

'Exception to the rule'

Duncan Drasdo, Manchester United Supporters Trust, accused the Glazers of loading debt onto the club

Stefan Szymanski, a professor of sport management at the University of Michigan, said that the debut was "not exactly awe inspiring" but it "hadn't sunk without trace".

"The performance of a stock once it has floated is about how ambitious the seller was in the pricing. The Glazers have not done themselves any favours with that," said Prof Szymanski.

"We've only ever had one phase where we've had a few football teams floating, between 1995-1998 and they were catastrophic - investors lost pretty much everything.

"That said, this club has always been the exception to the rule. They are the only club in the last 30 years that have done well on the pitch and turned a decent profit," he added.

The Glazers believe that the broadcasting income is growing fast internationally and should prove attractive to US investors, who know little about football, but know that Manchester United is "the most valuable, most global sports asset around", Prof Szymanski told BBC News.

"So there is not very much for those investors to get excited about - they'll buy the shares, hold them for a while, and see what happens," he added.

Big deal?

The New York Stock Exchange marked the occasion of the start of trading of the shares by laying astroturf on the trading floor.

The flotation values the club at more than $2.3bn, making it one of the biggest sports clubs in the world.

Around half of the $233m raised will go to paying off the club's debts, with the rest going to the club's owners, the Glazers.

Supporters had hoped that all of the money raised would go towards paying down its debts, which the club says currently stand at £423m.

It called for fans to boycott the club's sponsors and demanded that the Glazers give up ownership of the club.

"For fans, it is a bad deal because it is a missed opportunity for more equitable ownership of our club, with proper distribution of voting rights; and by floating shares at this inflated price, it provides a poisoned pill which might deter any more enlightened owners from buying the club in future," the Manchester United Supporters Trust said this week.

The shares do not pay a dividend to investors, leading some analysts to warn the shares offer little value to investors.

The club cancelled plans to list the shares in Singapore earlier this year, citing difficult economic conditions.

Underlying value

Despite the scepticism voiced by some, the club itself maintains it is strong financially with good growth prospects.

Its commercial revenue increased from £66m in 2009 to £103m in 2011, thanks to sponsorship and merchandising deals.

It made a profit of £13m on continuing operations in 2011. It estimates that it will have made profits of £23m in 2012, but this includes a tax credit of almost £30m.

Without the credit the club would have made a loss, it said.

The Old Trafford club said it intended to increase revenue and profits in the coming years from sponsorship deals, sales of Manchester United branded products, broadcasting rights and improving its new media and mobile offerings.

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