Manchester United may list in Hong Kong, but should investors buy shares?

14th June 2011

The club has a huge following around the world and some of the most passionate fans are from Asia as this report from the Sydney Morning Herald notes which should drive demand for any share offering.

The paper even suggests that the float could be linked to the success of luxury goods brand Prada's Hong Kong listing.

Here Michael Baxter writing on the Share centre blog doesn't quite see the connection.

He writes: "The strength of the Man Utd brand has, I suspect, little to do with luxury. (Although corporate hospitality, or flying from China to England to watch your team ain't cheap.)  But, Man Utd is huge in Asia."

Fan sites have welcomed the news though reports say the Glazers may retain an equity stake which could dampen any celebrations.

High finance has been interested in Manchester United for years. There has been reported interest from the Qatari Royal family since February and UK tabloid the Sunday People says Manchester United's latest buying spree suggests their takeover is imminent.

And in the last few years, frustration with the club's debt over hang, has prompted a group of wealthy supporters, led by Jim O'Neill, chairman of Goldman Sachs Asset Management, to try to put together a bid to buy the club. The Red Knights included Tony Fernandes, founder of Air Asia and Singapore businessman Peter Lim and encouraged fans to sport the old green and yellow club colours (from the last century when the club was named Newton Heath).

Here MUST, the Manchester United Supporters Trust, which backed the bid by O'Neill gives its view, though it certainly isn't happy with all the details and makes some demands.

It writes: "Firstly that this would have to be a full IPO signalling a clean exit for the Glazers. Secondly the valuation would have to be realistic – something closer to 1bn GBP rather than the 1.5bn+ GBP that the Glazers seem to feel is possible. Thirdly shares should be freely available to all MUFC supporters and certainly floated on the UK market to maximise accessibility."

However demands such as a lower float price and a UK listing would seem unlikely to be met. However there is certainly value inherent in the club.

Last year, a list of the 10 most valuable sports brands compiled by Forbes magazine ranked United second only to the New York Yankees in terms of global brand value.

But whether investing in any Premiership teams makes sense – whatever market they list in – is up for debate.

Here an article from the Motley Fool by Tony Luckett suggests that if you really want to invest in football stocks – companies such as BSkyB which cover premiership games may be a better bet than piling directly into clubs. It should be remembered however that at one stage Sky did nearly take over United.

 He also suggests that American sports clubs represent a better bet because they exist in a ‘rigged' market i.e. they have players' salary cap agreements, a regime which is actually against EU law.

And here This is Money in answer to a reader's question also charts the troubled history of football club listings. It notes that many ultimately decided to take the clubs private again to avoid the scrutiny that listing requires. Investment has very rarely proved profitable.

Here Sports website the Bleacher report considers Man Utd's recent financial performance.  

Manchester United became a plc in 1991, before the Glazers took it private in a leveraged buy-out in 2005. This allowed them to load debts for the purchase on to the club.

Man Utd fans and would be shareholders should consider the fact that there was very little small shareholders could do to ensure the club was not taken over when institutional shareholders decided to sell.

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