On
Friday 10th August, 2012, Manchester United made its debut on the
New York Stock Exchange, a step which valued the club at £1.5bn making it the
most valuable club in the world, followed by Real Madrid who are estimated to
be worth £1.2bn.
16.7
million shares are to be sold (10% stake), which will raise money which was originally
said to be used to pay off the club’s debts. It has now come to light that half
of the money raised to date may have gone to the Glazer family with a smaller
proportion spent in reducing the club’s debts. This has led to United fans
worldwide to boycott the club’s sponsors’ products to prove the brand is
worthless without the purchasing power of the loyal fans.
The
club’s IPO (initial public offering) was priced at $14 which was below the $16
to $20 per share the club was initially offering investors. The IPO was cut the
night before their debut on the stock exchange as a result of comments from
Wall Street analysts and Facebook’s disastrous unveiling on the stock market in
May. Facebook’s shares initially sold for $38 are now worth only $20, so it’s
no wonder Man United was cautious with their IPO. One week after their debut on
the stock exchange, United’s shares fell 5% below their IPO price before somewhat
bouncing to just 1.99% below the IPO.
Both
Facebook and Man United have fans all over the world, but these fans don’t seem
to count for much on Wall Street. Facebook share owners are now able to sell
their stakes in the company, which may lead to a further downward spiral in
share price. Are Man United facing the same destiny? Some analysts believe Man
United’s share price was wildly over-valued; some saying it is truly worth
$4.97 per share.
Will
it be a case of the higher they’re priced, the harder they fall? Only time will
tell! Who knows, maybe the new signing, Robin Van Persie, has the answer!?
- John Heavey, Marketing Advisor
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