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Manchester United: George Soros invests in football club | Manchester United: George Soros invests in football club |
(about 6 hours later) | |
The billionaire investor George Soros has bought a stake in Manchester United football club, a US regulatory filing showed. | The billionaire investor George Soros has bought a stake in Manchester United football club, a US regulatory filing showed. |
Mr Soros' investment fund bought a 7.85% stake in Class A shares - about 3.1 million - in the club, according to the Securities and Exchange Commission. | |
Class A shares carry less voting power than Class B shares. | Class A shares carry less voting power than Class B shares. |
His shares equate to a 1.9% stake in the entire club, worth about $40.7m (£25.8m) at Monday's closing price. | His shares equate to a 1.9% stake in the entire club, worth about $40.7m (£25.8m) at Monday's closing price. |
Manchester United floated on the US stock market earlier this month, at $14 a share, valuing the club at more than $2.3bn (£1.46bn), making it one of the biggest sports clubs in the world. | |
But since its 10 August listing, its share price has fallen 6.7%. Its share price was up 1.6% to $13.26 in London afternoon trading, a day after hitting a fresh low of $12.91. | |
Manchester United has been controlled since 2005 by the Glazer family, the billionaire US sports investors who also own the Tampa Bay Buccaneers American football franchise. | Manchester United has been controlled since 2005 by the Glazer family, the billionaire US sports investors who also own the Tampa Bay Buccaneers American football franchise. |
About half of the $233m that the club raised from its flotation will go to paying off the club's debts - of about some £417m - with the rest going to the Glazers. | |
The Glazers have voting control over the club through their ownership of Class B shares that enjoy 10 times the voting rights of Class A stock that are sold to the public, of which Mr Soros' investment fund took out the 7.85% stake. | |
That means Mr Soros and his fund do not have voting power nor can benefit from payouts, as Manchester United does not issue dividends. | |
Mr Soros was unavailable for comment. | |
Football investment | Football investment |
The 82-year-old investor, who oversees $25bn in assets through his Soros Fund Management LLC, has in the past eyed other football clubs as lucrative investments. | The 82-year-old investor, who oversees $25bn in assets through his Soros Fund Management LLC, has in the past eyed other football clubs as lucrative investments. |
He considered a takeover of Italian club AS Roma in 2008 but decided against it due to the club's debt problems. | He considered a takeover of Italian club AS Roma in 2008 but decided against it due to the club's debt problems. |
Mr Soros was likely attracted to Manchester United because of the team's profitable media rights deals. | Mr Soros was likely attracted to Manchester United because of the team's profitable media rights deals. |
"This could be a play by Soros on the strength of Manchester United's brand and the English Premier League's growing media rights," said Philip Hall, a partner at Inner Circle Sports, an investment bank focused on the sports industry. | "This could be a play by Soros on the strength of Manchester United's brand and the English Premier League's growing media rights," said Philip Hall, a partner at Inner Circle Sports, an investment bank focused on the sports industry. |
"The domestic rights are set to increase 70% for the 2013-2014 season and the international media rights, set to be announced in late October or early November, are also expected to come in at a very robust uplift," he added. | "The domestic rights are set to increase 70% for the 2013-2014 season and the international media rights, set to be announced in late October or early November, are also expected to come in at a very robust uplift," he added. |
Richard Hunter, head of equities at Hargreaves Lansdown, told the BBC that Mr Soros is banking on the club's ability to become a "merchandising machine" through its fanbase, estimated to be 700 million worldwide. | Richard Hunter, head of equities at Hargreaves Lansdown, told the BBC that Mr Soros is banking on the club's ability to become a "merchandising machine" through its fanbase, estimated to be 700 million worldwide. |
Another factor behind Mr Soros' decision could be the growing popularity of football in the US, which was given a boost thanks to the gold medal-winning US women's football team during the Olympics. | Another factor behind Mr Soros' decision could be the growing popularity of football in the US, which was given a boost thanks to the gold medal-winning US women's football team during the Olympics. |
"Given that it is still a long way behind the three major sports in the States (American football, baseball and basketball), I can only imagine that is the attraction for him," Mr Hunter said. | "Given that it is still a long way behind the three major sports in the States (American football, baseball and basketball), I can only imagine that is the attraction for him," Mr Hunter said. |
But football clubs in general are notoriously difficult investments, he said, adding: "Ultimately although United has a track record, their fortunes are very much tied to what's going on on the pitch. If United has a few poor seasons, clearly that would start eating into their income. It's a high-risk investment strategy." | But football clubs in general are notoriously difficult investments, he said, adding: "Ultimately although United has a track record, their fortunes are very much tied to what's going on on the pitch. If United has a few poor seasons, clearly that would start eating into their income. It's a high-risk investment strategy." |
Mr Soros became prominent in 1992 when he successfully bet on the devaluation of the British pound, netting about $1bn in the process and earning him the moniker: "The man who broke the Bank of England". | Mr Soros became prominent in 1992 when he successfully bet on the devaluation of the British pound, netting about $1bn in the process and earning him the moniker: "The man who broke the Bank of England". |