|Back to main|
Manchester United Latest Sports Stock Flop?
8/24/2012 4:23:00 PM
By: Wyatt Investment Research
Man U's stock has fallen 5% from its $14 IPO price. Considering that the initial public offering was $2 cheaper than its expected $16-$20 range, the drop in price since is not a good sign.
Manchester United wouldn't be the first sports stock to fail, should things continue this way. The two most recent sports franchises to go public on a U.S. market also failed.
Baseball's Cleveland Indians were the last team to try it, listing on the Nasdaq exchange in June of 1998. The stock went public at $15 a share but quickly fell to single digits within a matter of months.
In November of 1999, the team was sold to current owner Larry Dolan, which drove the stock price up above $20 a share. Dolan took the team private again in February of 2000, with the stock closing at $22.61 a share.
That means Indians shares gained roughly 50% in the nearly two years that the team was publicly owned. Sounds like a pretty hefty return, right? Not when you consider that the team's public reign came during one of the biggest market booms in recent memory.
While the Indians' 50% gains sound impressive, they paled in comparison to the Nasdaq's 123% surge during that same time span.
Prior to that, the NHL's Florida Panthers went public, in 1996. The stock tripled out of the gates in the first two months of trading, but eventually fizzled. Overall, the stock grew during its five-year stint on the market, but was outpaced by the market itself.
Those are the two most recent examples of sports teams going public on American exchanges. The Boston Celtics also went public in the '80s, but that sports stock also had a short shelf life.
In fairness, Manchester United is a way bigger brand than either the Indians or the Panthers even in the notoriously soccer-averse U.S. market. The Indians are a mid-market team that hasn't won a World Series since 1948. The Panthers are an expansion hockey team that plays in Florida. Enough said.
It's too early to bury MANU stock just yet. Given its global following, it should have more staying power than the last two U.S. sports stocks.
But it's off to a rather ominous start.