News today that Manchester United has chosen to list in Singapore. The English Premier League football champions hope to raise around $1 billion.
Manchester United is one of the most storied football clubs in Britain. It is an institution. Which is why many people are asking why it's listing in Singapore, of all places. Why not on the London Stock Exchange, where the company's shares traded between 1991 and 2005, when it was bought out and taken private by Malcolm Glazer?
The Financial Times interviewed a spokesperson for the Independent Manchester United Supporters Association, who expressed fustration at the way the club's owners are handling the float. "We welcome the IPO in the sense that it gives fans a chance to buy shares in the club," he said. "But the decision to float in Singapore is just an extension of the fact that the Glazers have always refused to engage with [UK] fans."
But just as Manchester United looks a lot more multinational on the pitch than in it did in 1991, so looks much less British in the boardroom and in the stands. Malcolm Glazer is an American shopping mall-magnate, who owns the Tampa Bay Buccaneers NFL team. Manchester United has as many as 333 million supporters in at least 24 countries, and it sells merchandise in licensed stores and Hard Rock Cafe-style branded restaurants all over the world.
Manchester United has been playing in Asia since 1974, so it has strong connections to that part of the world. The club's Commercial Director Richard Arnold told Reuters that there are 190 million United supporters in Asia alone. But United isn't listing in Singapore because it thinks every one of those fans will want to buy a piece of the club, or because Asia is a particularly lucrative market for its merchandise. Much of the United merch on sale in Bankok, Beijing, Hong Kong and Singapore is fake, and it makes far less in TV rights overseas than it does at home.
The truth is, United is listing in Singapore because the club is likely to get a far better valuation in Asia than at home in the UK. Asia is, after all, where the money is. Whether it be China, Taiwan, Hong Kong, Korea or Singapore, the region is awash in cash looking for a home. Private equity- and venture capital-backed initial public offerings in Asia have surged 77 percent in the year to date to the highest level ever, according to Thomson Reuters.
Malcolm Glazer bought Manchester United in a leveraged buyout (which means he used lots of debt to do it) and he has loaded it with even more debt over the last few years, earning him the emnity of fans all over the world. The club's gross debt stands at roughly $800 million. To keep servicing that debt, Glazer needs cash. He's not going to get it in Britain, which is pretty much broke. Asia looks like his only option.
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