• 30 Jul 2012 at 7:24 PM

Are You Having A Better Year Than Wayne Rooney?

Like so many unathletic American males in or near the financial industry, I follow European soccer*, so for me the Manchester United IPO is the most exciting IPO since that other IPO. And that’s not the only connection: United seems to have learned a lot from Facebook about how to conduct a successful IPO, er, an IPO. For instance, there’s its use of a dual-class stock structure, and its efforts to distract investors from daunting yet generally accepted financial metrics that are a bit daunting – e.g. a 50 P/E at the midpoint of the range – with the strategic use of vague happy-feeling metrics. Facebook was valued on Price/Likes, and United is hoping to monetize its “659 million followers,” who seem to have met an even lower standard than clicking a button on a computer screen:

References to our “659 million followers” are based on a survey conducted by Kantar Media (a division of WPP plc) and paid for by us. As in the survey conducted by Kantar Media, we define the term “followers” as those individuals who answered survey questions, unprompted, with the answer that Manchester United was either their favorite football team in the world or a football team that they enjoyed following in addition to their favorite football team. For example, we and Kantar Media included in the definition of “follower” a respondent who either watched live Manchester United matches, followed highlights coverage or read or talked about Manchester United regularly.

If you have read this far you are now a Manchester United follower, so, y’know, 659,000,026.

That fuzziness is actually a bit incongruous because this IPO has some cold hard financial accounting here that you will not see in most public company filings. Imagine working for a company that discloses this:

Don’t be fooled by “players’ registrations” – that just means “players.” In European soccer you don’t trade for players you want, you buy them – you pay their current club a pile of cash money and in exchange you get the rights to the remainder of their contract. And for the last two years Manchester United has bought more valuable players than it’s sold, unlike certain of their competitors I could name but won’t. In addition to the raw numbers you get specifics about individuals – for instance, in 2009 United was selling more than they were buying, but don’t expect a repeat:

Profit on disposal of players’ registrations for the year ended June 30, 2010 was £13.4 million, a decrease of £66.8 million from £80.2 million for the year ended June 30, 2009. This reflects the sale of Cristiano Ronaldo, a particularly valuable player, in 2009, which resulted in an unusually high profit for that fiscal year.

Coming from another industry that basically monetizes human capital, it’s hard not to project here. Imagine working for a company that when you left said “this reflects the departure of Joe Blow, a particularly valuable fixed-income trader” and then said how much you were worth.** The structure of the industry forces United to be pretty open about its talent management abilities: it has to reveal how much it pays for its personnel, and whether they gain or lose value during their time with the team. The answer seems to be “lose value,” by the way***, but that’s not that surprising given that (1) humans age and (2) these humans have to run around all day kicking stuff. Presumably financial services employees depreciate less rapidly though perhaps that’s wrong.

Elsewhere in the filing (page F-28) you get wage and employee numbers; Manchester United paid £135.6mm in 2011 to 628 employees, or about £216,000 per employee, making it just a bit worse than Goldman Sachs. As at Goldman, some employees, particularly the 29 first-team soccer players, probably did a bit better than the average.

Manchester United Seeks Up To $333 Million In IPO [Bloomberg]
Manchester United Ltd. – Amendment No. 2 to Form F-1 [EDGAR]

* All discussion of the word “football” is confined to this footnote. Also diving, 0-0 draws, etc. etc.

** As opposed to “this reflects the departure of Joe Blow, a particularly valueless executive, who left in disgrace and with $20mm in severance.” That, of course, is common.

*** This is not especially scientific, but look at that cash flow. Also the income statement: Profit = (amount you sell for) – (amount you buy for) – (amount you amortize over the life of the contract); if you look at the last few years, ex Cristiano Ronaldo, amortization exceeds profit so I’m guesstimating you’re worth less when you leave than when you arrive.

15 comments (hidden to protect delicate sensibilities)
Show all comments ↓

Comments (15)

  1. Posted by Comp Quant Kumquat | July 30, 2012 at 8:14 PM

    So today we got RBC, JPM and Man U comp numbers, what a treasure trove of info, yay!

  2. Posted by bubble and squeak | July 30, 2012 at 9:57 PM

    Lets see, a hugely unprofitable organization comprised of a band of exceptionally overpaid athletes, owned by an overlevered entity, controlled by a universally hated ownership. Plus Jefferies, who is clearly known for their high quality debt and equity (?) offerings, is leading the charge on this IPO in a jurisdiction where nobody cares for the product being peddled. seems like a winner!

  3. Posted by SAF and David Gill | July 31, 2012 at 4:02 AM

    Love United hate glazer!

  4. Posted by @ruudboy | July 31, 2012 at 4:17 AM

    "in exchange you get the rights to the remainder of their contract"

    No, the player will sign a new contract with the buying club, which is effectively buying him out of his old contract. This is why players agitating for a move is so much more common than in US sports, it typically means a huge pay rise.

  5. Posted by Guest | July 31, 2012 at 4:27 AM

    I didn’t follow footnote ***. Profit on Disposal of Players’ Registration should be all you need to look at, and since it’s positive that implies that players go up in value vs. when they’re bought. The amortization in that year will reflect the players who are still on the team during the course of the year. The profit on disposal reflects, for those players who were sold during the year, the proceeds of sale – book value (which will be purchase cost minus accumulated amortization). The only relevant amortization for those players (for all previous years) should already be included in the profit on disposal, no?

  6. Posted by Guest | July 31, 2012 at 10:01 AM

    No mention of the GM exec that got sacked on Sunday for sponsoring Manchester United kits? Their jerseys will say Chevrolet this year, not Aon. http://www.businessweek.com/news/2012-07-30/gm-sa

  7. Posted by Guest | July 31, 2012 at 10:01 AM

    Since when do teams have to actually look at their books?

    -R. Mancini

  8. Posted by the zissou | July 31, 2012 at 10:51 AM

    Fking Northern Monkeys
    – Turkish

  9. Posted by Le Guest | July 31, 2012 at 11:48 AM

    No you are incorrect. They will say Chevy in 2013 or 2014 I believe. Aon signed a contract for a few years and it has not run out yet.

  10. Posted by Arse Wenner | July 31, 2012 at 3:31 PM

    Since Rooney is the only remaining monetizble asset….

  11. Posted by Barackin' my brain | August 1, 2012 at 12:39 PM

    Don't forget to add: soon-to-be sponsored by Government Motors.

  12. Posted by cheap bookmarking service | September 9, 2012 at 10:04 AM

    mo1xIU This is one awesome blog.Much thanks again.

  13. Posted by lida | September 23, 2012 at 8:54 PM

    Yeah, it is clear now !… Just can not figure out how often do you update your blog?!…

  14. Posted by asdfgt27f | September 28, 2012 at 11:28 PM

    younger however when you glimpse [url=http://www.ghd-for-sale.co.uk/category/ghd-on-sale/]http://www.ghd-for-sale.co.uk/category/ghd-on-sale/[/url] inside of whatever handbag is certainly 13 duringAnd that him and i oftentimes devote purchases on the road to different bands as stated by transformed abstracts and it could be changed types certainly certainly there follows some of the acclaimed ves basic overall appearance particularly luring soon after offering regarding peoplell definitive to be able to walking [b]ghd straighteners sale[/b] b regarding the sidewalk Clutch system handbags are likely to be intended for woman occasions and therefore interpersonal gatherings00 one fish tank dealt with on the the varsity Straight from the all over p

  15. Posted by go here | December 18, 2012 at 4:41 AM

    Nowadays Wayne Rooney is not that much popular outside the European countries because of the shining performances of the Lionel Messi in the Barcelona and Christiano Ronaldo in the Real Madrid. Hope he will come upto the level very soon.

  16. Posted by go here | December 18, 2012 at 4:41 AM

    Nowadays Wayne Rooney is not that much popular outside the European countries because of the shining performances of the Lionel Messi in the Barcelona and Christiano Ronaldo in the Real Madrid. Hope he will come upto the level very soon.