One of the largest and richest football clubs in the world later this year plans to debut on the dance floor. It reminds me a little IPO Facebook. MU is a great brand recognized by nearly all - the problem is that I do not see how the club can create value for shareholders in the long run.
The business model of football clubs are rarely based on the generation of profits, and if it makes money, the fans usually ask for them for the purchase of new soccer stars.
This is not the first public offering of Manchester. Club was on the stock market in the years 1992-2005, and through a leveraged buyout became the new owner of the Glazer family. For MU paid $ 1.2 billion, of which 790 million was financed by debt. This increased level of debt the club and significantly affected the financial results. Currently, the owners intend to raise $ 1 billion and pay off the bonds. Although the official documents do not exist, and still do not know where the stock market will be a club, it is said that the owners are considering publication of the 30 percent. shares. So how does it look from the perspective of value?
What value of
It is clear that selling less than 50 percent. shares, the current owners maintain control of the club. Assuming that will offer 30 percent. shares, the value of the whole of Manchester will be around 3.3 billion dollars. It's about $ 1.1 billion more than the Glazer family paid in 2005 and translates into a market value of the order of 19.2 times EBITDA recently published. That's pretty high! And due to the fact that the salary / contract riders are subject to amortization and are an important part of the cost, the market price to earnings could amount to about 50 - expensive, taking into account the relatively low growth rate of earnings (see table below).
What about revenue growth and to whom addressed will offer?
I doubt that large institutional investors rushed to the football club shares, even if it is Manchester United. Football business model is based solely on the results on the pitch. One bad season (such as ineligibility for the Champions League) can have a huge impact on financial results. This was the case of FC Copenhagen (Parken Sport & Entertainment), who published a warning about the results after they failed to qualify for European competition.
In 2011, Manchester United's revenue growth was around 5 percent. r / r Basically, the items were higher revenues from product sales and receipts from the media than the earnings for the stadium.
If you check my theory and institutional investors will find this kind of business model, the base inwestorska will be based on individual investors. Here, you can count on the most faithful fans, who want to be able to say that they are "owners" of their favorite football club. To me, it is rather just another way to tell the club donations.
In summary, it is difficult to predict how a valuation of Manchester after publicity, especially given the current stock market situation. Certainly not a cheap investment, and revenue growth seems to be very limited. So, rather it is not a good investment. Nevertheless, the present owners will certainly count on the loyalty of fans on the dance floor.