The red devil in the detail

The FT has some detail on the Manchester United FC IPO today. This must be one of the worst IPO opportunities in modern times. Lest we forget;

• The Glazers maintain 99% of the voting rights by issuing the new deceptively titled "A Shares" with only 1/10th the voting power of the greater "B Share". This is typical newspeak from a people that tried to nuance the meaning of things like used cars by calling them "preowned" as if this endowed some exclusivity.
• The Glazers couldn't even flog the stock to Asian investors (twice!) who actually know that Manchester United play football as opposed to 'soccer'.
• The IPO has fallen off the bottom of the range and is still a rip off. 4.6x estimated Sales when you can buy Junventus for 0.5x according to Bloomberg (I am sure Juve have more debt though). I mean would you pay 230x trailing P/E to own a powerless share in a highly fickle and cyclical business which is run expressely for the enrichment of players and their agents. Even the trailing P/E of facebook at the moment is a modest 45x.
• These kind of big name IPOs are always a sign of the times as owners try to cash out ahead of a substantial deceleration in their business prospects. This is no different from Facebook this year, Blackstone in 2007 or Petrobras in 2009.

The fact this deal has gone through at all is proof that American investors will buy just about anything.

My favourite titbit from the FT was the following;

"Also, the company has indicated that it may provide limited financial disclosure for US investors as it is raising capital as an “emerging growth” company under the recently passed US legislation Jumpstart Our Business Startups, or Jobs Act.

The law means a company can be exempted from attesting to its internal financial controls and will not be required to file quarterly reports or release information under generally accepted accounting principles for five years."

Governments set themselves up to get exploited in this way. As if a 100 year old UK based football club employing a bunch of young men on £30m a year a-piece is doing anything to jumpstart US business growth or secure new jobs. Football clubs are a funnel for dumping investors cash into Bentley dealerships via a select number of prima donna blokes in shorts who kick balls about.

On this news I would be;

• Short: MANU, Americans
• Long: Asian investors, VW (Bentley/Porsche/Audi Q7)