Manchester United share sale causes controversy among fans and investors
Manchester United fans aren't happy. And looking at the terms of the proposed share sale in New York announced on Monday night, it's not hard to see why.
The Glazer family, the club's US owners, want to raise up to $330m (£210m) on Wall Street, having shelved plans to raise $1bn in Singapore.
The problems lie with the terms of the sale, and what the Glazers intend to do with the money raised.
Only part of the proceeds will go towards paying down the club's $680m debt, with a significant chunk going directly to the Glazers themselves. And the structure of the sale means the Glazers' Class B shares will have 10 times the voting power of the Class A shares sold to the public.
"Supporters are going to be very angry about this," says Duncan Drasdo, chief executive of the Manchester United Supporters Trust.
"The Glazers have already cost United more than £550m in debt-related fees and now we have another slap in the face as they help themselves to half of the proposed [sale] proceeds.
But it's not just the fans that are unhappy.
More worrying perhaps for the Glazers, given their need to raise cash fast, some investors appear equally sceptical.
"Shareholders are getting a shoddy deal," says Michael Jarman, chief equity strategist at H2O Markets, an ex-professional footballer and a United fan himself.
"Investors are not idiots and there is simply no value in the company. The Glazers want to have their cake and eat it - the share structure shows they want to retain complete and utter control."
He says there are plenty of other more attractive investments, where shareholders get a dividend and the chance for capital growth.
While conceding that, "debt free, Manchester United is a good business", Mr Jarman sees no such value at Old Trafford given its current debt position. In fact, he argues the club is massively overvalued.
At the upper range, the upcoming share flotation values Man Utd at more than $3bn. This is almost 50% more than the value placed upon it by Forbes magazine, which recently pronounced United, at $2.2bn, the most valuable club in world sport.
But many analysts believe even this figures is vastly inflated.
Less than two years ago, a group of investors led by the respected chairman of Goldman Sachs Asset Management, Jim O'Neill, valued the club at about $1.5bn. With two years of global economic stagnation since then, the club's value will not have risen significantly, if at all.
Factor in operating profits - minus transfer activity - of $150m, and Mr Jarman argues investors are better off buying shares in Tesco.
But there are many others who believe United's financial woes have been overplayed.
While acknowledging that "it's disappointing investors won't be able to vote and won't get a dividend", Roy Kaitcer, divisional director at stockbroker Brewin Dolphin, says the club's finances are not as bad as some suggest.
Also a keen United supporter, he points to the fact that the club's debts are already being paid down, and the upcoming share sale, if successful, will reduce them further by more than $100m.
He also points out that the Glazers are able to change the debt profile of their various holding companies by moving debt off the books of one and on to another.
Perhaps most importantly, he says the club's strong brand name and loyal support from more than 650 million supporters - according to United's own figures - across the world makes the club an extremely attractive commercial partner for global companies.
Further evidence for this came on Monday with the announcement that Chevrolet, owned by General Motors, one of the biggest carmakers in the world, will be the club's new shirt sponsor from the 2014-15 season.
And fanatical fans, driven by emotion rather than dispassionate financial analysis, may well ensure the upcoming New York share sale proves hugely successful.
But there is no denying the club's heavy debts are impacting on the club's ability to maintain its pre-eminent position in the Premier League.
They have, for example, been blamed by many for the club's restrained activity in the transfer market in recent seasons, certainly when compared with free-spending rivals such as Chelsea and Manchester City.
Manchester United is bound by commercial realities that do not, for now, appear to affect its two biggest domestic rivals.
As Mr Jarman argues, running a successful football club and running a sustainable business are no longer compatible.
You just need to look at the recent success of Manchester City and the spending power of clubs such as Paris St Germain and Anzhi Makhachkala to see how the landscape is changing, despite UEFA's financial fair play rules.
"Football has become a rich man's paradise," says Mr Jarman. And in today's market, it would appear the Glazer's pockets simply aren't deep enough.