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Manchester United shares debut in New York Manchester United shares debut in New York
(about 1 hour later)
Shares in Manchester United have begun trading on the New York Stock Exchange (NYSE). Shares in Manchester United have begun trading on the New York Stock Exchange.
The shares debuted at $14.05, up from the float price of $14, opening trading with the stockmarket ticker MANU. The shares debuted at $14.05, up from the float price of $14, which was less than the $16-$20 it had wanted to sell shares for.
Ten percent of the club has been sold on the markets, which means it has raised $233m (£150m). Ten percent of the club has been sold to investors, raising $233m (£150m), about a third less than it had hoped.
On Thursday, Manchester United was forced to cut the value of the shares to $14 each from $16-$20. As expected, trading in the shares was subdued, with some analysts warning that the offer price overvalued the club.
It initially wanted to raise up to $333m with the float.It initially wanted to raise up to $333m with the float.
Ed Woodward, vice chairman of Manchester United, said that the club reduced the share price because more investors were comfortable with that figure.Ed Woodward, vice chairman of Manchester United, said that the club reduced the share price because more investors were comfortable with that figure.
"The huge number of high-quality institutional investors that were there at $14 just made us more comfortable in terms of the longer-term view here, with regard to the type of investor base we wanted," said Mr Woodward."The huge number of high-quality institutional investors that were there at $14 just made us more comfortable in terms of the longer-term view here, with regard to the type of investor base we wanted," said Mr Woodward.
As expected, trading in the shares was subdued, as some analysts had warned that the offer price overvalued the club. There are concerns that this will deprive Manchester United of some of the funds it needs to compete in the transfer market, potentially hitting its performance on the pitch. And as sporting success is so closely linked to profits, there have been fears this could affect its bottom line.
The NYSE celebrated the share launch by laying astroturf between the bell and the club's market-maker. Mr Woodward denied that there was a shortage of cash for player transfers.
Manchester United executives, including members of the controlling Glazer family, rang the opening bell on the exchange, while some traders sported the club's shirts. "If you look at where we are today in terms of the cash-generative nature of the business, and even more so contractually going forward, we have huge firepower in the transfer market," he said.
'Exception to the rule'
Stefan Syzmanski, a professor of sport management at the University of Michigan, said that the debut was "not exactly awe inspiring" but it "hadn't sunk without trace".
"The performance of a stock once it has floated is about how ambitious the seller was in the pricing. The Glazers have not done themselves any favours with that," said Mr Syzmanksi.
"We've only ever had one phase where we've had a few football teams floating, between 1995-1998 and they were catastrophic - investors lost pretty much everything.
"That said, this club has always been the exception to the rule. They are the only club in the last 30 years that have done well on the pitch and turned a decent profit," he added.
The Glazers believe that the broadcasting income is growing fast internationally and should prove attractive to US investors, who know little about football, but know that Manchester United is "the most valuable, most global sports asset around", Mr Syzmanksi told BBC News.
"So there is not very much for those investors to get excited about - they'll buy the shares, hold them for a while, and see what happens," he added.
Big deal?Big deal?
Around half of the money raised will go to paying off the club's debts, with the rest going to the Glazers. Manchester United executives, including members of the controlling Glazer family, rang the opening bell on the exchange, while some traders sported the club's shirts.
The New York Stock Exchange marked the occasion by laying astroturf on the trading floor.
The flotation values the club at more than $2bn, making it one of the biggest sports clubs in the world.
Around half of the $233m raised will go to paying off the club's debts, with the rest going to the club's owners, the Glazers.
Supporters had hoped that all of the money raised would go towards paying down its debts, which the club says currently stand at £423m.
The shares do not pay a dividend to investors, leading some to analysts have warn the shares offer little value to investors.The shares do not pay a dividend to investors, leading some to analysts have warn the shares offer little value to investors.
Mike Jarman, chief market strategist for H20 Markets - a former professional footballer and a Manchester United fan himself, drew parallels with the recent stockmarket float of social media giant Facebook.
Facebook shares started trading in May with a guide price of $38, but they are currently changing hands at around $21.
"Son of Facebook? I wish it was - but it's even worse than that. It's priced to fail," said Mr Jarman.
The club cancelled plans to list the shares in Singapore earlier this year, citing difficult economic conditions.The club cancelled plans to list the shares in Singapore earlier this year, citing difficult economic conditions.
Underlying valueUnderlying value
Despite the scepticism voiced by some analysts, the club itself maintains it is strong financially with good growth prospects. Despite the scepticism voiced by some, the club itself maintains it is strong financially with good growth prospects.
Its commercial revenue increased from £66m in 2009 to £103m in 2011, thanks to sponsorship and merchandising deals.Its commercial revenue increased from £66m in 2009 to £103m in 2011, thanks to sponsorship and merchandising deals.
It made a profit of £13m on continuing operations in 2011. It estimates that it will have made profits of £23m in 2012, but this includes a tax credit of almost £30m.It made a profit of £13m on continuing operations in 2011. It estimates that it will have made profits of £23m in 2012, but this includes a tax credit of almost £30m.
Without the credit the club would have made a loss, it said.Without the credit the club would have made a loss, it said.
The Old Trafford club said it intended to increase revenue and profits in the coming years from sponsorship deals, sales of Manchester United branded products, broadcasting rights and improving its new media and mobile offerings.The Old Trafford club said it intended to increase revenue and profits in the coming years from sponsorship deals, sales of Manchester United branded products, broadcasting rights and improving its new media and mobile offerings.