Say NO to Manchester United

Below is a letter by Narayana Narayana to the press appealing against the listing of this IPO in our stock market. I fully agree with his view and how the football racket is robbing the innocent sports fans and investors through their outrageous compensation scheme. This is no different from the thieves in Wall Streets and other financial institutions, turning innocent investors money placed in their hands into their own personal accounts.

Stock exchanges have behaved irresponsibly in many countries by recklessly accepting IPO listings to improve their own bottom lines and leaving the innocent investors clean and dry for failed and dubious companies. The way the football clubs are paying themselves crazy, like the fund managers and bankers of Wall Street tells one thing, their business is not sustainable.

Any institutions, govt agencies, that pay themselves crazy are suspects as they need to find more and more money to do that. The more they pay themselves, the more money they need to patch up the holes.

The Mailbag Editor,
The Business Times,

6th September 2011


The projected US$1 billion Manchester United IPO has come in for regular discussion in your columns recently, with a fair
amount of speculation on what the terms of public subscription will likely be. SGX has categorically put to rest the suggestion
of a dual-class share structure.So far so good.

It is obviously premature at this still early stage to comment on how the IPO.will be pitched.

But what seems undeniable is that the pressing purpose of the IPO is to raise US$1 billion, and asap, 'to reduce the club's
debt burden and finance player purchases' (BT 26 Aug 2011) It was also reported that the club had 'successfully raised L504m
just last year and further piled up L478m in debt by March' (this year). That is no small beer. Intending subscribers are likely to
seriously ponder how that money was spent. An adviser on IPOs of other football clubs has offered the insightful explanation of
"(Man U's) massive debt burden, the massive payroll, and the need to replace certain ageing players'.

Against such a background, it would be interesting, and prudent for nvestors to learn what returns &/or investment merits the
IPO.will offer them.

In this context it may be relevant, and instructive, to revisit the history of IPOs in Singapore.

It was 60 years ago that the first of them, Metal Box, came on the scene. It was in fact a private placing by Fraser & Co., then
indubitably Numero Uno among stockbrokers in Singapore/Malaya. Far from a desperate need for capital, the issue, at $1.20,
promised a dividend of 10 cents or a return on capital of 8.33%. Banks then lent money at no more than 5% p.a., and the
premium effectively made up for putting money into equity stocks, then termed 'risk capital'..

Other well-established British companies trickled in, but uniformly and in common, they all promisd, and faithfully delivered,
handsome returns well over what banks offered for deposits, as well as they themselves lent out. By and large, those
early IPOs all offered good Investment opportunities from companies of repute.

In recent years, the tendency however has been to offer 'growth' as pitted against 'return', with IPOs pitched to 'what the
market would comfortably (or even uncomfortably?)' bear'. The focus of subscribers too has changed from 'return on
invested capital' to 'capital appreciation' with that last hopefully fast and large, yield be hanged..Abysmal and historically
low interest rates too have been a catalyst in promoting a 'how much can I lose after all?' mindset.

One could say that public appetite for IPOs has waned appreciably in recent months.In the particular case of Man U and
its IPO, media hype has focused on the club's large 'Asian fan support base' estimated at some 190 million. How mamy of
them are knowledgeble of stocks and the stock market to apply for IPO shares is arguably a separate issue. Sentiment
could no doubt sway some committed fans, but hard-nosed investors are likely to adopt a more sober stance.

There appears to be jubilation in some camps that Singapore has again stolen a march on its arch rival Hongkong.in this issue.

Similar euphoria erupted just a few months back when SGX landed Hutchison Port Holdings' IPO in preference to its home
base of Hongkong. However taking into consideration its subsequent lack-lustre performance, and that its current market
price is languishing one-third below its IPO price (without even factoring in another 5% depreciation through currency loss) it
can only be seen as a Pyrrhic victory.What was then touted as a 'plum catch' has in the event turned out to be a 'sour plum'
at least where the investing public are concerend. But seen from the other side of the fence, it was a veritable coup for the
promoters and all others involved in the IPO, and of course SGX as well.

Given the size of the Man U IPO, it looks as if strong institutional support will be required, as generally 'sentiment' by itself is not
a particularly strong point among retail investors. Whether the magnet behind the brand name of 'Man U' will of itself pull in
sufficient numbers will be seen when the IPO rolls out.

Yours etc.,

Narayana Narayana
Singapore 469297
Tel: 64461342


Anonymous said...


MU choose Singapore over Hong Kong was what they have been trumpeting.

I am sure there are many who will say 'yes'. Maybe more than those who say 'no'.

'Innocent Investors' lured by greed should not blame anyone nor claim ignorance should they lose their pants. Nobody put a gun to their heads.

Anonymous said...

This is likely to be another case of selling poison willingly for a few cents in commission.

Anonymous said...

Is it true that HK rejected ManU IPO cos it is loss-making? HK only accepts IPOs if the company is profitable? This should be the case. SGX & ManU trying to suck $$$ from unsuspecting, naive, greedy S'poreans. Very unethical.

Anonymous said...

Singapore is different. As long as the people went in with eyes wide open, selling poison is fair game. The smarter the customers, the richer they are, the more poison can be sold to them.

It is a conman's paradise.

Anonymous said...

Many people claim that we are discreetly already a Hub for dirty money. Some now claim we are a Hub for vice. For a small dot, we are already a gambling Hub. No fish prawn also can lah for economic growth!

We Singaporeans may complain about the high cost of health care, but that is because they are trying very hard to build up a medical HUB for the rich.

As for being an education Hub, some foreigners and locals have learned some very expensive lessons after being 'Hubbed' by unscrupulous education providers.

So, whether we are a Star Hub, Spa Hub, or whatever Hub, we must be careful ourselves. Complaining to deaf frogs is of no use. What they want is nothing but 'Hubs' all round.

So, will innocent investors here now get 'Hubbed' big time when red dot is trying to be the IPO Hub?

Chua Chin Leng aka redbean said...

The business model of professional football clubs is to make suckers of the fans to pay them crazy salaries to kick a ball. Singaporean investors should not end up paying for their happy time.

Let them go somewhere, in some third world football crazy countries, where they don't mind emptying their pockets for some street punks to play football and to party every night.

The clubs will be run at a loss, while the players and staff will be laughing all the way to the banks. And they will go around looking for new suckers to foot their bills.

Anonymous said...

The asses in the exchange only think about the listing fees and whatever little fees they could get. Can't they see how farcical are the football league companies? For the exchange to earn a few tea money, the small investors are going to lose hundreds of millions.

Where is the conscience?

Carlos said...

This is likely to be another case of selling poison willingly for a few cents in commission.