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Tuesday, Aug. 21, 2012

History is littered with rich men making trophy investments in sports … but he seems too canny an investor to put his money in a loss-making plaything

LONDON — Crashing out of Europe can mean very different things to different people. Manchester United’s early exit last year from the Champions League, the continent’s top soccer tournament, spelled a big hit to revenue and pride. George Soros, in contrast, made his name, and perhaps a billion pounds, when his Quantum fund bet that Britain would have to leave the European Exchange-Rate Mechanism in 1992. The octogenarian financier has now turned his attention to the soccer club. That could help lift investor sentiment about the recently floated Red Devils.

A Securities and Exchange Commission filing shows Soros’s fund bought more than 3.1 million Manchester United shares on Aug. 9, the day of the listing. That $44 million outlay bought 7.85% of the club’s publicly traded Class A shares.

Of course, history is littered with rich men making trophy investments in sports. To Soros, whom Forbes reckons is worth about US$20 billion, this stake is peanuts. And he can do what he wishes after cashing out the outside investors in his funds last year. But he seems too canny an investor to put his money in a loss-making plaything.

More likely his fund, which Thomson Reuters data shows has disclosed stakes in Wal-Mart, PepsiCo, General Electric, and more than 160 other companies, saw an opportunity to build a significant stake in an unusual business. Few sports clubs could claim to match Manchester United’s global standing and Midas touch with commercial partners. And none of those are listed.

Of course the stock’s drawbacks are still clear: the Glazer family retains near-total voting and board control; the club must take on rivals backed by Russian oligarchs and oil money; and the valuation is not obviously cheap. Moreover, plumping for a U.S. listing as an “emerging growth company,” far away from the fan base, still looks cynical.

Nonetheless, it always helps to have one of the world’s most successful investors in your corner. For a stock that debuted at $14 a share, against a $16 to $20 target, and has since drifted closer to $13, Soros is a supporter worth having.

CONTEXT NEWS

- On Aug. 20, George Soros, the billionaire money manager, reported a near 2% stake in Manchester United Plc, the English soccer club that floated on the New York Stock Exchange earlier this month. Soros Fund Management LLC holds 7.85% of the club’s Class A shares, or about 1.9% of the entire club, according to a filing with the U.S. Securities and Exchange Commission.

- Shares in Manchester United closed at $13.06. The initial public offering, which concluded on Aug. 9, priced at $14 a share, below the original $16 to $20 range. The Glazer family, which took the club private in 2005 for 790 million pounds, have kept tight control with a dual-class share system.

- Soros oversees about $25 billion in assets. He returned money to outside investors last year, converting his fund into a family office that mainly manages money for the Soros family and his foundation. In March, Forbes magazine estimated he was worth $20 billion, making him the 22nd richest person in the world.

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