Man United New York float could free up cash for players

Manchester United plans to cut its debt with a New York flotation that should free up cash for top players after a barren season in which it was replaced at the top of English soccer by rich rivals Manchester City.

The American Glazer family, owner of the NFL team Tampa Bay Buccaneers, will keep its grip on the 19-times English champions after the planned U.S. float by using a dual share structure.

The club has filed to raise up to $100 million to reduce its debt pile of 423 million pounds ($663.20 million). That is a provisional figure and the size of the issue could yet increase.

United ditched plans to raise up to $1 billion in Asia, home to many of United's 659 million global fans, and the move to North America, where English soccer has a much smaller following, was surprising when flagged last month.

However, market volatility has delayed a number of flotations in Asia in recent months, including the Formula One motor racing business.

U.S. investors are also familiar with the dual-class structure planned for United. The class A shares to be issued will have only a tenth of the voting rights of the ones held by the Glazer family who bought the club in 2005 for 790 million pounds.

"In the Premier League, recent investment from wealthy team owners has led to teams with deep financial backing that are able to acquire top players and coaching staff, which could result in improved performance from those teams in domestic and European competitions," United said in its Securities and Exchange Commission filing on Tuesday.

Formed in 1878, United, whose past players include George Best, Bobby Charlton and David Beckham, issued a hefty preliminary prospectus but has not yet given details on the timing of the float and the precise size.

The club had revenues of 331 million pounds last year but incurred finance costs of 51 million pounds after the Glazer takeover loaded the club with debt.

TV WINDFALL

United was recently ranked by Forbes as the world's most highly valued sports team. As well as winning a record number of English titles, they have been European champions three times.

That success has allowed the club to sell its brand around the world. It has commercial partners in 72 countries, working with companies including U.S. sportswear company Nike, shirt sponsor Aon, Turkish Airlines and Singha beer.

In its filing, United said it did not plan to pay dividends to shareholders for now, reducing one incentive to buy.

"Some investors will of course buy shares simply to own a piece of Manchester United, but most investors will be speculating that the value of the club is going to rise," said Karish Andrews, a lawyer with Lewis Silkin who specialises in the sports industry.

"Given the recent auction of the Premier League TV rights and the related windfall it has provided, it would seem to be good timing by the Glazers to encourage investors that the only way is up in terms of share price," he added.

The 20-team Premier League has negotiated a 70 percent rise in its next domestic television deal, sealing a three-year agreement worth more than 3 billion pounds.

United lost their league crown to City in May, a club bankrolled by Sheikh Mansour Bin Zayed Al Nahyan of Abu Dhabi. They also made an early exit from the European Champions' League, denting earnings in a first trophyless season since 2005.

Fans are hoping the flotation will help the club get back to its previous dominant form.

"If it turns out that the vast majority of the proceeds are used to pay off the debt that is certainly something MUST would welcome and entirely vindicates our longstanding position that their debt was damaging our club," said Duncan Drasdo, head of the Manchester United Supporters' Trust (MUST), a lobby group.

FERGUSON FACTOR

United were one of a number of soccer clubs listed on the London Stock Exchange in the 1990s but investor interest quickly waned because of the volatility of a results-driven industry.

The club's most recent successes on the field have been inspired by manager Alex Ferguson, a tough Scot who has been in charge since 1986 and is now 70.

"Any successor to our current manager may not be as successful as our current manager," the filing said, signaling the difficulty they will have in eventually replacing Ferguson when he retires.

Succession was an issue in the Formula One flotation where the sport's commercial chief Bernie Ecclestone, aged 81, is seen as hard to replace after decades of building the business.

After the deal, the club's main shareholder will still be a company owned and controlled by the six children of 84-year-old Malcolm Glazer.

A newly formed holding company has been registered in the Cayman Islands, making a hostile takeover more difficult.

"Any merger, consolidation or amalgamation of the company would require the active consent of our board of directors, the filing said.

Joel and Avram Glazer, sons of Malcolm, are joint executive chairman of the club. CEO David Gill is a Briton who has been in charge since 2003 and was previously United's finance director.

The filing reveals the Glazers borrowed 10 million pounds from the club in December 2008, money which was repaid in April.

"We believe the terms of the loans were at least as favorable to us as compared to terms that we would have received in connection with a loan to an independent third party," the filing said.

(Editing by Anna Willard and Jon Loades-Carter)

By Keith Weir

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