Sunday Times trashes Glazers’ Manchester United IPO prospectus

Every United supporter (and any potential MUFC share purchaser) should get a copy of the Sunday Times today - business section:

The Sunday Times July 29, 2012 at 7:06 am 

 
Michael Moritz is a top Silicon Valley investor — and a Manchester United fan. He offers an alternative reading of its float prospectus
 
WE recently changed our corporate name from Red Football LLC to Manchester United Ltd because we thought the former might be considered un-American and confuse prospective purchasers of our shares with the former Soviet Union’s national team.
 
Our business is a globally recognised brand and we estimate 10% of the world’s population follow our football team. For our entire 2011 fiscal year our revenue was $513m (£326m) — roughly equivalent to the revenue Google generates every five days.
 
Our club is being listed in New York because legal and regulatory restrictions are more favourable to people who place enormous amounts of debt on companies than in other venues we have considered — such as London, Singapore and Hong Kong.
 
We have more than $1 billion of debt due within the next 220 weeks that we have no means of repaying. All the assets of the club have been mortgaged against these debts, including our training ground and even our interest in a small freight warehouse.
 
Since July 2008, we have paid $792m in interest and other finance costs which is more than Sir Alex Ferguson, our distinguished manager, has paid for all the players he has purchased during the past 20 years.
 
Because we are so desperate to raise money, our corporate tax rate will rise from the 27% levied in the UK to the 35% required in America.
 
Our legal structure ensures the Glazer family, our main shareholder, will maintain absolute control over the company after the offering. Between 2001 and 2009 our club paid the Glazers a total of $25m in fees and gave them a $15m loan.
 
Our executive co-chairman, Avram Glazer, was previously the chief executive of Zapata Corp, a fish-oil producer, that once attempted to become an internet company by changing its name to Zap.com. Zapata was bought in 2009 by Philip Falcone of Harbinger Capital who, last month, was charged with securities fraud by the Securities and Exchange Commission.
 
Our business model is to help the Glazer family, our controlling shareholder, stay one step ahead of the banks. We employ a variety of approaches to achieve this including:
 
  • Raising ticket prices. Between 2005 and 2011 we were able to raise the average ticket price by almost 6% a year, which was almost double the rate of inflation in the UK during the same period.
     
  • Increasing sponsorship revenue. Guests of our corporate sponsors, such as Nike, DHL, Aon or Turkish Airlines, will soon be able to view our players’ private training sessions. We used to conduct these activities in strict privacy.

  • Boosting merchandise sales. Our new team shirts (which differ for home and away games) sell for $85. We sell many other branded products including car air fresheners, short nighties for women, four-poster bed canopies and a special men’s fragrance — Eau de Sport.
 
The competition for player and management talent in the Premier League is intense and our rival owners includes Russian oligarchs, Middle Eastern sovereigns, Indian chicken farmers and American hedge fund managers. Some of these have access to cash — which, unless this offering is successful, we do not.
 
Fortunately we don’t have to comply with the same reporting obligations as other public companies because our business qualifies in America under the newly passed Jobs Act as an “emerging growth company”. We emerged 134 years ago and in the past nine months our growth was 6%. The word “company” does apply to our club — although in a limited manner.
 
Old Trafford, our home ground, is called “The Theatre of Dreams”. Prospective purchasers of our stock will understand why.
 
  • Michael Moritz is chairman of Sequoia Capital
 

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