* UK soccer club's IPO oversubscribed
* U.S. investors appear most receptive
* Man Utd more than a sports franchise-banks
* Club pitched as media, retail, e-commerce brand
By Olivia Oran and Sinead Cruise
NEW YORK/LONDON Aug 8 An unusual sight greeted
guests at New York's posh St. Regis hotel on Monday: dozens of
investors trickled out carrying red Manchester United hats and
soccer balls after a marketing event for the British soccer
club's upcoming initial public offering.
Soccer, as Americans call the kind of football played in
Europe and elsewhere, is not a particularly popular sport in the
United States. The U.S. chapter of Manchester United's official
fan club has only 5,000 paid members and even the presence of
David Beckham on the Los Angeles Galaxy roster has failed to
ignite widespread U.S. fan interest.
But U.S. investors may turn out to be the ones who help the
club and its owners, the Glazer family, raise up to $333 million
in the offering.
A source close to the deal said on Tuesday the IPO, which is
expected to price on Thursday evening, is already oversubscribed
and two other sources said bankers on the last leg of a two-week
global marketing effort are finding Americans particularly
receptive to the IPO.
The unexpected American support for the IPO adds to the
intrigue and controversy surrounding the Glazers' stewardship of
the club and its second attempt to go public.
The Glazers, an American family with business interests
ranging from shopping centers to the Tampa Bay Buccaneers
football team, have been reviled by Manchester United fans since
they took the club private in 2005 in a leveraged buyout.
Fans say the Glazers saddled the club with debt, hurting its
ability to buy players and win matches. The team holds a record
19 English championships, but failed to win a trophy last season
for the first time since 2005.
Some investors and experts also say the club's proposed
valuation - $3.3 billion at the high end of the $16-to-$20 per
share range - is hard to justify, especially given the volatile
nature of its business.
Without other listed sports teams with which to compare
Manchester United, the club's valuation has been a source of
consternation for potential investors. That was one reason why
Morgan Stanley dropped out of the underwriting syndicate
after plans to list the club in Singapore were abandoned.
Club officials and the banks involved in the IPO are trying
to convince potential investors across the globe that Manchester
United should be seen as a powerful global brand and not just a
sports team with fickle fortunes that shift on the outcome of
Jefferies Group Inc, the lead underwriter, is
positioning the club as a high-growth consumer brand, comparing
it to retailers like Michael Kors Holdings Ltd and
Lululemon Athletica Inc, sources said.
JPMorgan Chase & Co and Credit Suisse Group AG
are marketing it as an e-commerce company, comparing
it to online giant Amazon.com Inc. Deutsche Bank AG
sees it as a media company, comparing it to companies
like Walt Disney Co, sources said.
"I think it is very interesting how they have been shopping
this around the world, first in Asia, now the U.S. Why not list
in London where people actually know something about the
business?" said James Clunie, head of equities at Scottish
Widows Investment Partnership, a British fund management house
overseeing 142 billion pounds ($222.24 billion) in assets.
"I suspect the reason is that they think they can get a
higher price from foreign investors than they can in the UK.
That makes me very cautious as an investor. They are trying to
get the higher price instead of a fair price," Clunie said.
Manchester United officials declined to comment.
GETTING THE RIGHT VALUE
The comparisons are crucial to a valuation analysis.
Manchester United will be valued at around 26 times its adjusted
earnings before interest, tax, depreciation and amortization
(EBITDA) in the 12 months through June 30, if valued at the high
end of its pricing range.
That compares with 49 times last 12 months EBITDA for
Amazon, 29 times for Michael Kors and 19 times for Lululemon.
Disney trades at around 10 times, Thomson Reuters data shows.
The banks are using Manchester United's earnings projections
for 2014 in their valuation analysis, but that figure could not
JPMorgan, Credit Suisse and Deutsche Bank officials declined
to comment. Officials with Jefferies could not be reached for
Still, U.S. value investors who look at such multiples are
largely staying away from the IPO, a source said. Instead,
potential investors include hedge funds and mid-cap-focused
funds betting on the club's growth prospects, a source said.
One fund manager who attended the marketing roadshow in New
York said he sees the club as a media company, but "only
better," because it engenders strong brand loyalty around the
world. The club's push in emerging markets where it has plenty
of room to grow is also attractive, he said.
"With Disney, you're not going to go see a movie or buy
merchandise because you have any sense of loyalty to the
company," he said. "But with Manchester United, you have a huge
global base of fans."