1.3.2. Ipo prospects

The Glazer family, whose ownership of Manchester United has brought unprecedented success on the field and loud protests off it, are examining proposals to raise $1bn (£600m) by floating a substantial stake on the Singapore stock exchange.

The future intentions of the Glazers, who took the club private after they bought it in a deal that valued it at £790m in 2005, have long been the subject of speculation. They are believed to be in talks with Credit Suisse to handle the initial public offering (IPO), which could take place before the end of the year. No final decision has yet been made.

Given the allure of the Manchester United brand in Asia, and successful attempts to drive global commercial revenues, analysts said the move could allow the Glazers to establish a true market value for the club, reduce debt and realize cash for use within the business or elsewhere.

Any IPO could raise up to $1bn, reports in Asia suggested, which would be an ambitious valuation if the Glazers were to stick to plans to float a stake of between 25% and 30%. The family is believed to value the club at more than £2bn.

The Premier League champions carry about £500m in bond debt, acquired in 2010 when the Glazers launched a bond issue to pay off existing loans taken out to facilitate the leveraged buyout. The bond issue sparked protests from some supporters because it laid bare the extent to which the Glazers had funded the interest payments from the club's cash flow and built in the ability to draw dividends in future.

But David Gill, the club's chief executive, has insisted that it can easily absorb the £45m-a-year interest payments attached to the bond while competing on the pitch with European rivals. Trophies and a more active position in the transfer market have helped to quell fans' anger, though protest groups remain active.

Last year the Glazers paid off the £225m high-interest, payment-in-kind hedge fund loans they took out in an earlier refinancing round, which did not sit on the club's balance sheet but were housed by their parent company and accrued interest at 16.25% a year. They have never revealed where they found the money to do so. If they borrowed it, they could use the proceeds of an IPO to repay that loan.

The Glazers could also pay down some of the bond debt, plough some proceeds back into the club or take cash out for use elsewhere in their business empire.

It emerged this year that Wall Street financiers were talking to the Glazers, who also own the Tampa Bay Buccaneers and a string of shopping centres in the US, about a possible IPO in Hong Kong. However, attention has switched to the Singapore exchange, which has been competing with Hong Kong for international listings and would see the Manchester United name as a major coup.

It is not thought likely that the "Red Knights", a group of wealthy supporters angry about the Glazers' business model, would be interested in a minority stake. They withdrew from the fray despite preparing a £1bn takeover bid, insisting that the Glazers were overvaluing the club.

The Glazers have continued to insist the club is not for sale, despite rumors about the interest of the Qatari sovereign wealth fund, which denied claims it had tabled a £1.5bn offer before going on to buy the French club Paris St Germain.

The London-based commercial arm launched by the Glazers, headed by chief of staff Edward Woodward, has succeeded in substantially growing overseas sponsorship revenues. It is targeting another steep rise in shirt sponsorship income, worth £20m a season from Aon, when the current deal expires in 2014.

The market for overseas broadcast rights, valued at £1.3bn over three years, could outstrip that for domestic rights, valued at about £2.1bn, when the next round of collective Premier League deals are negotiated next year. The popularity of the Premier League overseas has also fuelled commercial growth. As it had told before Forbes survey this year named Manchester United as the most valuable sports franchise in the world, calculating that the club is worth £1.13bn.

Yet Manchester United last year racked up a record annual pre-tax loss of £109m, though much of that was attributable to one-off costs associated with the £500m bond issue.

Its most recent quarterly results showed that while matchday and media income had remained largely flat, annnual commercial income was on course to top £100m for the first time. Since the Glazers bought the club, annual turnover has doubled to £300m.

The results, for the nine months to 31 March 2011, showed that the club had £113m in the bank. That was on course to swell to more than £170m after season ticket income had been banked, notwithstanding more than £50m spent on summer transfers.

A Manchester United spokesman said: "We don't comment on speculation." A Credit Suisse spokeswoman also declined to comment. The club's results are due in October, when it will be expected to clarify its future plans to bondholders.