- Late Decision To "Discount" Shares to $14, Valuation Remains Rich; Order Book Closed Early Amid Strong Demand Among Retail Investors / Fans As Emotional Value Drives Interest; but "Winning teams don't necessarily make winning investments" - PrivCo
August 9, 2012 3:30 pm EST – August 9, 2012 6:35 pm EST – Manchester United (PrivCo Private Company Ticker: MANUP) [NYSE:MANU Pending], now officially the world's most valuable professional sports team, just set its final IPO price at $14 per share (£8.96) (€11.34).
- Manchester United 's IPO totaled $233.3 Million (£149.3 M) by offering 16.67 Million shares.
- Net IPO proceeds to Manchester United (after underwriters fees) are $109.6 Million (£70.1 M) per PrivCo data from the team's issuance of 8.3 Million new shares to IPO investors (with the remainder of the proceeds going directly to current owners the Glazer Family as selling stockholders)
- At a price of $14 per share, Manchester United musters an enterprise valuation of $2.86 Billion (£1.83 B) (and an equity market cap of $2.3 Billion).
- The billionaire Glazer Family's 89.8% stake in Manchester United is now worth $2.1 Billion (£1.3B) at the IPO price.
- At a $2.86B valuation, Manchester United is not only the most valuable sports team on this planet, but by all material financial metrics, the company's valuation at IPO is likely highly overvalued, with a rich earnings multiple of some 130x earnings (based on Enterprise-Value-to-Net-Income multiple). And as a point also valued at 6 times its rival, UK soccer/football club Liverpool FC, which sold in 2010 for $480 million.
- Manchester United is using all of the proceeds of the offering to pay down some of its $683 Million (£437 M) in debt, still leaving the team with $573 Million (£366 M) in debt, a substantially high number for professional soccer teams that could adversely impact ManU's competitive position vis a vis rival teams in bidding on star players.
- PrivCo concludes that Manchester United's IPO price and expected opening trading levels do not provide investors an attractive valuation, a valuation which cannot be justified by any of the objective financial metrics applied by PrivCo to ManU (both as a company and even relative to its comparable peers). PrivCo cautions potential investors in ManU against making an investment decision based upon emotions or team loyalty, beyond a few shares for one's wall or children as collectibles. As PrivCo Founder & CEO Sam Hamadeh said in a statement today: "Winning teams don't necessarily make winning investments."
Breakdown of Manchester United's Valuation:
Shares Outstanding: 163,685,700
Share Price: $14
Market Value of Equity: $2,291,599,800
Net Debt: $574,000,000
Enterprise Value: $2,865,599,800 (Market Value Of Equity + Net Debt)
PrivCo's Breakdown of Key Financial Metrics of Manchester United's IPO:
MANCHESTER UNITED (PrivCo Private Company Ticker: MANUP)
Offering Size: 16.67 Million Shares (50% Primary, 50% Secondary)
IPO Price: $14
Revenue: £331M (2011), £286M (2010), £278M (2009)
1 Year Revenue Growth: 15.7%
Offering Amount: $233 Million
Trading Begins: August 10th
Selling Shareholders: Glazer Family