The US-based Glazer family who own Manchester United have signalled their intention to move the club’s registration to the tax haven of the Cayman Islands and float its shares on the New York Stock Exchange.
The principal intention, set out in a US Stock Exchange registration statement, is to sell enough shares to new investors to pay off an as yet unspecified portion of United’s £423m debts, which the Glazers loaded on to the club when they bought it in 2005. To date the Glazers’ takeover has cost United more than £500m in interest, bank charges and fees, after they borrowed £525m to buy the club, then made it responsible for servicing their debts.
The registration statement makes it clear that the Glazers have reorganised the ownership of United, via the Cayman Islands, so they can realise cash from investors while retaining control of the club. The United shares will be split into two classes, A and B; the A shares will be offered for sale to investors on the New York Stock Exchange while the Glazer family will retain ownership of the B shares, which carry 10 times the voting rights of the A shares.
Manchester United Ltd, reorganised to be a Cayman Islands company, will, the document says, remain owned by the “linear descendants” – the five sons and one daughter – of Malcolm Glazer.
More on Manchester United ‘Floating Shares on the NYSE’ after the Jump……….
Not only will investors have diluted voting rights but there is no intention even to pay them a regular dividend, so the investment would be to realise some future gain via the Cayman Islands if they sell the shares.
The registration statement does not set out yet how many A shares will be sold on the market, nor the price which will be set, and therefore the total by which the family is seeking to reduce United’s huge debt.
In part a sales pitch aimed at enticing investors to buy the shares in United, the document talks up the club’s popularity and commercial reach, claiming it has 659m “followers” worldwide. Coming after a season in which United were pipped to the Premier League championship by Sheikh Mansour’s lavish-spending Manchester rivals City, and were knocked out of the European Champions League in the group stage, the document boasts of a massive global TV audience and that “over 5 million items of Manchester United branded licensed products were sold in the last year”.
The “strategy” for United is also set out, specifying how the family intends to “increase our revenue and profitability, by expanding our high-growth businesses that leverage our brand, global community and marketing infrastructure”.
The Glazers state they intend to develop areas including “global and regional sponsors, retail, merchandising and product licensing, exploit new media and mobile opportunities, enhance the reach and distribution of our broadcasting rights [via United's MUTV channel] and diversify revenue and improve margins”.
The document states confidently: “We believe that we are one of the world’s most recognizable global brands with a community of 659m followers”; and it predicts that football’s popularity and profitability around the world will continue to grow.
As required by Stock Exchange regulations, the document also sets out risk factors which investors should take into account before buying shares. These feature generalised warnings about maintaining football’s popularity and crowds at Old Trafford holding up despite the recession. There is, however, a formal warning that United’s debts, wholly imposed by the Glazers’ original takeover, “could adversely affect our financial health and competitive position”.
The document explains that the debt, still at £423m, despite the £500m United has paid out since 2005, could affect the club’s ability to compete for players and soak up cash. That is the impact of the massive Glazer debts which their representatives and United’s chief executive, David Gill, have always denied. This flotation of Manchester United, re-registered in the Cayman Islands and sold via New York, is intended finally to reduce that indebtedness, by finding outside investors willing to buy shares, while the Glazers remain in control.