Singapore - Much more than a case of raising funds where
cash is plentiful, English soccer club Manchester United's plan to seek $1bn on
Singapore's stock market is a marrying of financial sense and global supporter
sentiment - and a resounding indication of where the club sees future growth.
The English Premier League club, de-listed from London's
stock exchange in 2005 when it was bought by the American Glazer family, is now
saddled with a debt pile that has led to a vilification of the Glazers among
fans.
It has also left United in danger of struggling to meet
Financial Fair Play rules put forward by soccer's European governing body Uefa.
And while the Glazers have made it clear they have no
intention of selling, a flotation in Singapore makes perfect sense on many
fronts: it will help reduce the debt burden, it targets Asia's strong economic
and investing growth and, crucially, it will deepen United's links with a
region ripe for expanding its powerful global brand.
"With two-thirds of their fans residing in Asia,
two-thirds of the world living in Asia... there's an attractive audience base
to tap into," Singapore-based sports sponsorship expert Ben Heyhoe Flint
told Reuters.
"Couple that with high growth markets and high growth
brands, and there's a valid commercial reason (for listing in Singapore) in
that they are getting closer to potential sponsors in Asia where they've had
success before," said Flint, head of Asia-Pacific for sponsorship
consultants Fuse.
Biggest sporting IPO
At an estimated $1bn, the IPO of Manchester United would be
the world's largest for a sports organisation, but small compared to other
businesses. Companies typically sell a quarter to a third of their shares in an
IPO, giving Manchester United a potential value of up to $4bn.
"Will people invest? If they open up the IPO to
individual investors, and not institutional as is rumoured, then I think you'll
find that yes, fans will be drawn into making an emotional investment into
their beloved club," Flint said.
"From an institutional point of view, we've seen
serious interest in ownership of EPL (English Premier League) clubs from
Singapore and Thailand recently so I'm sure it will also draw interest at that
level."
Last year Singapore billionaire Peter Lim made a $525.5m bid
to buy Liverpool Football Club, but later withdrew the offer after the club
went into the hands of New England Sports Ventures following a court ruling.
Lim separately has exclusive rights to own and operate a
chain of Manchester United-themed restaurants and bars in Asia.
Not everyone is so confident investors will be eager to pour
their money into England's most successful soccer club, however.
"I guess Manchester United is trying to ride their
popularity in Asia," said Roger Tan, head of research at SIAS Research.
"Frankly I do hear that football clubs are not usually
profitable so if they are really listing in Singapore, I would suggest
potential investors look closely at the numbers. Investing in a club is very
different from supporting a club."
United's 2010 full-year results showed gross debt attached
to the club of £522m, with a net loss of £84m.
Hong Kong, which had been touted as an alternative listing venue, bars unprofitable companies from listing on its exchange.
Soccer-mad Singapore
Soccer enjoys a massive following among Singapore's 5.1
million inhabitants. The EPL is a huge draw on cable TV and there are scores of
Liverpool and Manchester United fan clubs across the island.
Wearing the red United shirt to one of dozens of Singapore
bars broadcasting United's matches is very different to plunging savings into
the club, though.
"Of course not," said Manchester United fan Ernest
Teng, a sales manager in an IT firm in Singapore when asked if he would buy
shares.
"The $4bn valuation is crazy. Bottom line is the
Glazers will still be in control. All I want to see is for them to sell out and
not burden the club with so much debt."
The IPO of a globally recognised brand such as Manchester
United would be a coup for Singapore, which has been competing with Hong Kong
for international listings.
"Obviously it's a big brand name - there will be some
novelty effect, but whether investors will go for it will depend on the offer
price, whether they have some dividend yield guaranteed," said Andrew
Chow, head of research at UOB Kay Hian.
"People will be interested to listen to what they have
got to offer, but whether people will want to put their money in is a different
ball game."
Home to one of the world's busiest container ports, the city-state is known for its business-friendly environment and as a financial centre, especially for private wealth management.
'Two-way relationship'
It is also seeking to put its imprint on the global sports
scene - for the past three years it has immaculately hosted the only night-time
F1 Grand Prix.
English soccer clubs flirting with the region is nothing
new; it was, after all, English engineers, builders and bricklayers who helped
create the foundations of so many overseas clubs and leagues that made soccer a
truly global game in the late 19th and early 20th centuries.
Today, the trail-blazing is a little different, based on a
multi-billion pound, dollar, yen or won consumer market.
The Premier League has been aware of the riches that await
in Asia, instigating the officially-sanctioned Premier League Asia Trophy in
2003 and holding it every two years since then.
Apart from that tournament, record 19-times English champions Manchester United, Chelsea, Arsenal, Liverpool and others have all toured Asia, playing to huge crowds, spreading the word, selling replica shirts and reaping huge profits.
Clubs have also scouted for the best Asian players who have,
in cases like Park Ji-sung at United or Chung Lee-yong at Bolton, forced their
way into the first teams back in England.
Premier League CEO Richard Scudamore makes no secret of the importance Asia plays in the Premier League's financial success story.
"The passion for soccer and especially the Premier
League in Asia is as intense as it is back in England, if not more so," he
said in recent roundtable meetings.
"The reason our clubs go to Asia and we hold the Asian
tournament is for them to see their heroes live and for the clubs to exploit
their market potential as much as they can. It is a natural two-way
relationship."