If there was one thing that Facebook's IPO taught us, it's that just because a company is a popular global brand that your mother talks about, that doesn't make it a stellar investment.
Still, that probably won't stop at least some of the world's sports freaks from throwing their money at much beloved English soccer club Manchester United's proposed public offering. According to reports yesterday, the team's owners have decided to move the franchise's IPO from Singapore to the United States, where investors are more accustomed to the sort of two-tier stock structure management is pushing. (It'd be the same stock model that Facebook used in its big sale).
The Red Devils claim an estimated 330 million (often frighteningly rabid) fans across the globe -- more than the population of the United States. Clearly Manchester's owners are hoping all that enthusiasm translates into a desire for equity.
The idea of a sports team going public might seem foreign to some Americans, but it's not altogether unheard of here in the U.S. The Green Bay Packers issue stock, although it doesn't appreciate and can't be sold. The Boston Celtics have been a public company at various times in their history. So were the Cleveland Indians at one point. But in the end, these were really investments for people who cared more about love of the game than the best place to put their money.
In Europe, though, publicly traded sports teams, especially in soccer, are much more the norm. According to this paper by a group of French and Belgian academics, more than 40 clubs have offered stock since 1983, though they don't generally seem to fare much better on the market than their American counterparts. As the paper notes, their returns tend to be meager, they vary wildly, and are a bit too closely connected with success or failure on the field (which, as any sports fan knows involves more than a little dumb luck). Unsurprisingly, many teams have ended up de-listing.
In short, buying stock in one of them has pretty much been equivalent to a version of sports gambling. And this year it's certainly been a losers bet. The STOXX Europe Football Index, which tracks a collection of these teams' shares, is down 53 percent over the last year. The Bloomberg European Football Club Index, which focuses more on English and Scottish clubs, is down about 6 percent.
With all of this said, Manchester United isn't just any ordinary soccer team. Forbes recently ranked them as the most valuable athletic franchise in the world, pegging their value at $2.24 billion, up 20 percent from a year ago. They dust the New York Yankees and Dallas Cowboys by more than $385 million. They're successful on the field year in and year out, and their large Asian fan-base gives them an enormous global footprint along with the potential to become a real international media brand. Others have suggested the team might be worth less than Forbes' estimate, and note that it's still saddled with debt from when its American owners took it over in 2005. But ultimately, I'll leave the valuation to the analysts.
Bottom line: Sports aren't usually much more than a novelty investment. But for a fan, what else could demonstrate devotion quite like lining up for an IPO?