It's been three and a half years since U.K. soccer club Manchester United (MANU) went public, in what I view as one of the more interesting IPOs of the past several years. As a sports fan, the ability to take a financial interest, however small, in a professional sports team is fairly rare. Many of the teams that have gone public have not stayed that way.
Basketball's Boston Celtics had an IPO in 1986, before ultimately going private in 2002. That 16-year run as a publicly traded company was quite long compared to some of the more recent sports-franchise offerings.
In 1998, baseball's Cleveland Indians went public at $15 a share, but following the initial fanfare that followed from a Major League Baseball team offering shares to the public, the stock fell to $6 per share. Doing the math at that time revealed an insanely low valuation placed on the team, a situation that was not to last. In 1999, the team was sold for $320 million, a record at that time, and shareholders received around $22.50 a share, a nice premium especially for those that scooped up shares for $6.
Professional hockey's Florida Panthers went public in late 1996 at $10 a share. But as the company expanded into other business ventures, the name was changed to Boca Resorts in 1999, and it sold the Panthers in 2001.
Perhaps the only thing that these three former publicly traded sports franchises now have in common is that their cancelled stock certificates are highly prized collectibles.
In Manchester United's case, the shares topped out at about $19 a share in 2014, a level they again reached last fall. But since then, it's been all downhill. Since late November, MANU shares have fallen 27%, and now trade just below the IPO price. With the decline, the company's current enterprise value (market cap minus cash plus debt), is now $2.75 billion. Over the long term, that may prove to be a small price to pay for one of professional sports' most valuable, and recognized franchises.
In fact, in December, Manchester United was named the sixth most valuable sports team in Forbes annual survey, with a value of $3.1 billion. Since most of the teams that made that list are privately held, and there's no way to trade small pieces of ownership as in the case with MANU, I'd suggest that all else being equal, that should increase MANU's value.
However, at this point, markets are sour on MANU, and the team's poor recent performance has been a drag on revenue. But team performance is transient; it can change. That being said, this may be an interesting time to consider one of sports' most well-known franchises, one that has a major reach worldwide, including within China.
Now, If only the Philadelphia Phillies would go public. Yes, that's the same 0-3 Phillies that I predicted would surprise everyone by winning an National League wildcard spot.
