Britain's world-renowned soccer club Manchester United has slashed the price of its US share offer, cutting the proceeds from Friday's listing to $233 million from a hoped-for $300 million.
The fabled team, mired in debt since 2005 after a heavily leveraged takeover by the Glazer family of Miami-based investors, cut the price for the 16.7 million shares on offer to $14 late Thursday from the planned $16-20 range.
The company gave no reason for the decision but it comes amid doubts about the club's ability to boost profits as long as it carries such a hefty debt burden -- Morningstar analysts estimated a fair price at just $10.
Investors have also become wary about aggressively priced initial public offerings after the much-promoted Facebook launch soured, with the social networking giant's shares slumping by nearly half since its May 18 listing.
Critics assailed the Glazers' plan to allocate just half of the IPO proceeds to reducing the team's current 423-million-pound ($660 million) debt burden.
The other half will go to the Glazers themselves, who are contributing 8.33 million shares to the IPO.
In addition, despite putting 10 percent of the shares of Manchester United Ltd. on sale, the Glazers will retain 97 percent voting control of the listed company via their lock on its "B" shares, which have 10 times the voting power of the "A" shares being sold to the public.
That arrangement reportedly caused regulators in Hong Kong and Singapore to balk at a listing in their markets where the club had hoped to tap the interest of tens of millions of Asian fans.
Spreadex trader Shavaz Dhalla in London highlighted the issue of control.
"The club has probably now realised that owning a part of one of the most successful sports clubs in the world will not compensate for denying a dividend as well as equal voting rights to prospective shareholders," Dhalla said.
The price still leaves the legendary football franchise valued at $2.3 billion, well above any of its rivals, including Real Madrid, which sports much larger profits.
Home to stars such as Wayne Rooney and Rio Ferdinand, United is the most successful club in English football history with a massive global fan base, especially in Asia.
But it has struggled with the debt loaded onto the team's books since tycoon Malcolm Glazer and his family of investors in sports teams and real estate took over in 2005.
That debt, critics say, has steadily eroded its ability to compete for top talent in an ever-costlier player transfer market.
The debt has been pared in the past two years to the current level, and profits rebounded this year despite the team's narrow loss of the Premier League title to cross-town rivals Manchester City.
According to the offer prospectus, profits for the nine months to March were 38 million pounds ($60 million), nearly triple a year earlier.
But that adds up to just 24 pence (38 cents) per share for the nine months, giving the company the sort of rich price-to-earnings ratio of around 37 that is more usually reserved for high-growth technology firms.
The shares were due to hit the market Friday, trading under the MANU symbol.
The owners hope the value of the club's global popularity will translate into strong investor support.
"For 134 years now we've been one of the most successful and iconic sports teams in the world," executive vice chairman Ed Woodward said in an IPO presentation.
"We generate inherently compelling content; we've developed into the global brand in sports. And as a result of that we have a whole line of partners knocking on our door and trying to partner up with us."
But British supporters have strongly criticized the share sale.
"The IPO is a huge wasted opportunity to stop this enormous outflow of money from Manchester United," said Andy Green, author of the Andersred blog, which focuses on management of the team.
The Manchester United Supporters' Trust, which advocates for fan ownership of the team, called the share sale a "bad deal for fans, investors and the club.
"For the club, this is a bad deal because more than half of the funds raised will now be paid direct to the Glazer family."
"For fans, it is a bad deal because it is a missed opportunity for more equitable ownership of our club, with proper distribution of voting rights," the group added.
"By floating shares at this inflated price, it provides a poisoned pill which might deter any more enlightened owners from buying the club in future."