By Rick Horrow and Karla Swatek
August 17, 2012
So you want to buy a sports team? Now you have the chance to be a co-owner of the world’s most valuable franchise, Manchester United, which is now on the New York Stock Exchange. ManU had an IPO price of $14, below the $16 to $20 range projected by underwriters at Jefferies. Whether shares were priced lower because of the “Facebook effect” or because of the team’s heavy debt load is irrelevant. ManU isn’t your average stock.
While 10% of ManU went up for sale in the IPO, current owners the Glazer family will retain 99% of the club’s voting control. This poses an interesting dilemma. In the case of publicly traded sports teams, it’s hard to answer whether the goal is to win a championship or generate profits for shareholders. For example, of the $230 million raised by going public, half will be used to lower the club’s debt and the half will go towards singing players.
ManU claims to have nearly 660 million supporters worldwide, and owning shares of your favorite team is a pretty unique novelty. But before adding the club to your retirement account, recognize why so few sports teams are traded on the open market. Their goals don’t always align with yours.