Low IPO Price affects Manchester United Club Worth

Manchester United

Manchester United

The preliminary public offering of Manchester United Ltd. that took place on Thursday priced a whole lot lower than its estimated range, assigning the value of the 134 year old team at just 1.47 billion pounds or $2.3 billion which resulted in the shaving off of almost $100 million from the expected proceeds for the team as well as its owners.

The club revealed that its shares charted at $14 each instead of achieving the $16-$20 individual share range it was hoping for. The value of the team would have been a whopping $3.3 billion at the high end of the scale. 16.7 million shares of the club were priced according to plan and managed to raise $233.2 million which is set to be divided equally between the team and the Glazer family, the owners of the club who are based in Florida.

Negative Impact

Facing a loss of $50 million worth of proceeds comes as a harsh blow for the club as they struggle to clear a large debt obligation and seek to invest in new players at the same time. Fresh players cost a substantial amount of money, usually ranging in millions.

Even though the deal ensures that Manchester United continues to remain the biggest sports-team IPO on the rosters, the present approximation acts as a major stumbling block for the British soccer team which had to cancel plans for a contribution in Singapore and then witnessed the departure of Morgan Stanley from the financial syndicate owing somewhat to the occasional disputes regarding valuation.

According to market analysts, bankers, shareholders, the United States IPO range signified a very rich valuation. One analyst claimed that investors were ready to pay even at the price of the IPO. It came as a surprise to most that there was no further discount. The anticipated value was apparently a rich price considering the fact that people had to come up with a lot of money to pay to them in spite of economic and operational hazards.

The Glazers whose area of focus comprises of the Tampa Bay Buccaneers football group and shopping malls are likely to rake in a lot less money from the sale of shares. However, the deal signifies a revenue of almost 2.5 times their equity venture in the team.

Application of Profits

Most of the money is reportedly going to be used by the club to settle a part of its huge debt that can be traced back to 2005 when the Glazers bought out an amount of 790 million pounds through leverage. Till the 30th of June, the debt burden of Manchester United was well over $682 million or 437 million pounds.

The IPO has been protested against by a large portion of fans of the team who disapprove of the Glazers’ decision to use just half of the deal’s profits to settle some of the debt. They are quick to point out that this immense debt pile has resulted in diminished economic flexibility which came at the cost of venture in new players and the performance of the team.

Jay Raol

Recent Posts

Why Is Squid Game So Popular?

Why Is Squid Game So Popular?

The Squid Game segments were watched by at least 132 million people in the first 23 days of the show on Netflix. Know what excited the viewers.
18 hours ago
Amazon under Congressional scrutiny for pushing own products over others

Amazon under Congressional scrutiny for pushing own products over others

US judiciary Antitrust Committee writes a letter saying that Amazon is given time till November 1 to prove that it utilizes seller data available to create competing products and p
2 days ago
Porsche’s Taycan EV outsells ICE powered its 911 sports car

Porsche’s Taycan EV outsells ICE powered its 911 sports car

The Porsche Taycan EV has outsold the Porsche 911 sports car for the first time since it was introduced in 2019 by the German automaker.
3 days ago
Tesla expected to make a killing in Bitcoin profits in next earning report

Tesla expected to make a killing in Bitcoin profits in next earning report

The price of Bitcoins has rallied to another high in October after hitting around $64,800 in April. This time it has hit over $58,000 on Oct. 14.
4 days ago
Tesla Cybertruck V/s Rivian’s R1T

Tesla Cybertruck V/s Rivian’s R1T

The Tesla Cyberturck left many disappointed with its alien space ship-like design; though both trucks are still under production, what matters most is what comes under the hood.
5 days ago
College sports is multibillion dollar industry in the US

College sports is multibillion dollar industry in the US

According to data analyzed by GOBankingRates, head football coaches, closely followed by basketball coaches, easily rack up seven-figure salaries in the US.
6 days ago