Business

Manchester United: George Soros invests in football club

  • 21 August 2012
  • From the section Business

The billionaire investor George Soros has bought a stake in Manchester United football club, a US regulatory filing showed.

Mr Soros' investment fund bought a 7.85% stake in Class A shares - about 3.1 million - in the club, according to the Securities and Exchange Commission.

Class A shares carry less voting power than Class B shares.

His shares equate to a 1.9% stake in the entire club, worth about $40.7m (£25.8m) at Monday's closing price.

Manchester United floated on the US stock market earlier this month, at $14 a share, valuing the club at more than $2.3bn (£1.46bn), making it one of the biggest sports clubs in the world.

But since its 10 August listing, its share price has fallen 6.7%. Its share price was up 1.6% to $13.26 in London afternoon trading, a day after hitting a fresh low of $12.91.

Manchester United has been controlled since 2005 by the Glazer family, the billionaire US sports investors who also own the Tampa Bay Buccaneers American football franchise.

About half of the $233m that the club raised from its flotation will go to paying off the club's debts - of about some £417m - with the rest going to the Glazers.

The Glazers have voting control over the club through their ownership of Class B shares that enjoy 10 times the voting rights of Class A stock that are sold to the public, of which Mr Soros' investment fund took out the 7.85% stake.

That means Mr Soros and his fund do not have voting power nor can benefit from payouts, as Manchester United does not issue dividends.

Mr Soros was unavailable for comment.

Football investment

The 82-year-old investor, who oversees $25bn in assets through his Soros Fund Management LLC, has in the past eyed other football clubs as lucrative investments.

He considered a takeover of Italian club AS Roma in 2008 but decided against it due to the club's debt problems.

Mr Soros was likely attracted to Manchester United because of the team's profitable media rights deals.

"This could be a play by Soros on the strength of Manchester United's brand and the English Premier League's growing media rights," said Philip Hall, a partner at Inner Circle Sports, an investment bank focused on the sports industry.

"The domestic rights are set to increase 70% for the 2013-2014 season and the international media rights, set to be announced in late October or early November, are also expected to come in at a very robust uplift," he added.

Richard Hunter, head of equities at Hargreaves Lansdown, told the BBC that Mr Soros is banking on the club's ability to become a "merchandising machine" through its fanbase, estimated to be 700 million worldwide.

Another factor behind Mr Soros' decision could be the growing popularity of football in the US, which was given a boost thanks to the gold medal-winning US women's football team during the Olympics.

"Given that it is still a long way behind the three major sports in the States (American football, baseball and basketball), I can only imagine that is the attraction for him," Mr Hunter said.

But football clubs in general are notoriously difficult investments, he said, adding: "Ultimately although United has a track record, their fortunes are very much tied to what's going on on the pitch. If United has a few poor seasons, clearly that would start eating into their income. It's a high-risk investment strategy."

Mr Soros became prominent in 1992 when he successfully bet on the devaluation of the British pound, netting about $1bn in the process and earning him the moniker: "The man who broke the Bank of England".

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