Manchester United IPO and the Green Bay Packers

A number of valuation experts believe that the price of shares in the Manchester United (NASDAQ: MANU) initial public offering have been set far too high. The IPO has been described at the “next Facebook.” Word is that the IPO will raise $333 million. One of the objections to the transaction is that the Glazer family, which controls the sports team, will cash in some of its shares. If the soccer company is worth so much, why would they sell, skeptics say.

As is always the case, shares are worth what people will pay for them. The Facebook (NASDAQ: FB) IPO was an awful reminder of that, except perhaps for people who wanted to hold stock in the once-in-a-lifetime transaction for a company with nearly a billion customers. Some of the same sort of investors may put money into Manchester United. For a kind of parallel, one only needs to look at a much smaller investor base — the group that owns the Green Bay Packers. Most of them are fans, and many live in Green Bay.

Manchester United has won 19 national championships to Green Bay’s four Super Bowls, including the first two. The Packers also have a record 13 NFL championships and they won the league title in the two years before the Super Bowl was created. The Super Bowl trophy is named after legendary Packers coach Vince Lombardi, a man who many believe was the greatest coach in the history of the game.

The Green Bay Packers Inc. has been a public firm since 1923. The team has raised money five times — in 1923, 1935, 1950, 1997 and 2011. In its most recent stock sales, the company added 250,000 shareholders. Much of the money raised in 2011 will go toward the expansion of Lambeau Field, a $143 million project. Based on the share structure and use of capital, it is unlikely Packer stockholders will get their money back. The shares also trade only rarely.

Manchester United claims it has 600 million fans worldwide. It is impossible to prove whether that number is true. Soccer is as global a sport as exists, so maybe the number is right. If not, the fan base is certainly huge. What is the Packer fan base? Over 111 million Americans watched the most recent Super Bowl. That does not count viewers from overseas. When Green Bay is in the championship game, a great majority of viewers do not care about the teams. They just want to see the half-time show. Packers fans are only a part of the tens of millions of people who tune into the show.

However many people follow the Packers or are rabid fans, there is a lesson in its odd status as a public company. Some shareholders just want a piece of the legend. What they pay, within reason, or what the future value of the shares might be, is not why they buy them.

Douglas A. McIntyre