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Man United share float looks set for success

Football News 24/7
Manchester United are hardly likely to worry too much about calls to boycott their sponsors. Recent surveys show United have over 650 million followers worldwide. Manchester United Supporters Trust (MUST) who number 180,000 members may be a vocal opposition group against United's owners - the Glazier family - but their numbers are a mere drop in the ocean compared to United's world-wide appeal.

They have over 70 major sponsorship deals in place and the proposal to sell 10% of the company in an Initial Public Offering (IPO) on the New York Stock Exchange will still leave the Glazier's with 98% of the shares but cash to offset debt and help develop the team. United look set to spend upwards of £40 million already before the season starts

MUST argue the boycott strategy is intended to send a loud and clear message to the Glazer family and club sponsors that without the support and purchasing power of the fans - the global strength of the Manchester United brand doesn't actually exist they said in a press statement.
 
MUST has accused the American Glazers of hurting the team's performance by saddling it with debt in a 790 million pound ($1.23 billion) takeover in 2005.
  
"It is hoped sponsors will put pressure on the Glazer family to reconsider their plans," MUST added.
 
But, the power of its brand was illustrated this week when it agreed the deal with General Motors to have the Chevrolet name on its shirts from 2014. Whilst no figures were released it is believed to be the most lucrative shirt deal yet in the Premier League.
 
MUST chief executive Duncan Drasdo said: "The Glazer family sell the rights to our loyalty and devotion for the club to sponsors for many millions but then use that money to pay off their self imposed debt. It has to stop. We want the IPO shelved and a proper fan ownership model put in place - one share, one vote."

Although the IPO has been planned for some time, the Glazer family originally claimed all the proceeds would go towards United's massive debt, which presently stands at £423million.

It now transpires this is not the case and only around £75million will go towards the debt, with an equal amount being kept by the family themselves. That has triggered MUST - who masterminded the memorable green and gold campaign - into action.

"Our actions are no different to the marketing tactics used by all the clubs sponsors - we're just executing it in another way," Drasdo said. "Their efforts are mostly about brand switching and ours are too - we're just saying more overtly - don't use those sponsors products - and the sample of fans we've spoken to around the world believe this is the right approach.

"Even without this approach, allowing the Glazers to continue running the club unchecked is bad news for sponsors. Less funds for the club (because of servicing current debt levels) means less investment in the team and that could impact on sponsors being associated with a winning, successful team."

But leading experts in the USA can see why this route appeals to the Glaziers:

"This may seem like an odd time to launch an IPO in the U.S. after the high-profile failures of Zynga and Facebook," said Scott Rosner, a sports business professor at the Wharton School, University of Pennsylvania.

"But the attraction for the Glazers lies in the 'dual-class' ownership structure allowed on the NYSE." American regulators' light-touch permits the Glazers to retain 10 votes for every share they hold, while awarding merely a single vote to each new share, a structure which allows them to sell 10 percent of their holding yet retain 98 percent of the voting power.It has also been angered after the Glazers said they would raise up to $167 million themselves in the flotation after initially saying all the proceeds would be used to cut the debt.'

Such is the pulling power of United world wide and on the back of a major deal with one of the USA's leading companies the sale has every chance of success judging by the American response so far.

JB

 

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