Manchester United will this week report record operating profits of more than £100m and are set to use Thursday's financial results as a springboard for a bid to raise up to $1bn (£614m) by floating a minority stake in Singapore.
An increase in revenues, understood to have topped £300m for the first time from last year's figure of £286.4m, has been driven by new overseas sponsorship deals that are likely to have pushed commercial income above £100m for the first time.
That figure does not include the £10m a year DHL training kit sponsorship deal or other recently signed contracts. The club is likely to point out that operating profits have more than doubled from £43m since the Glazers took over in 2005. In contrast to last year's record losses of £83.3m, driven by one-off costs related to a £526m bond issue, the club is expected to record a net profit for the year ending June 2011. But campaigners against the Glazer regime will point to the impact of £45m in annual interest repayments on the club's bottom line.
They calculate that £434m has flowed out of the club in interest, fees and debt repayment since 2005. The chief executive, David Gill, has repeatedly insisted the club can shoulder the interest burden and still compete for the best players. For the ambitious flotation scheme to succeed when it goes ahead in mid-October, Manchester United will have to overcome doubts about the way it is structured. It is understood that the club will pursue a dual share structure, whereby investors will have to purchase one "non-voting" share for every voting share, allowing the Glazers to raise funds while staying in control of the club.
Sources argue it is modelled on the US sports model, where clubs in the NFL and the NBA must have a single designated owner, and will allow for strategic long-term planning and swift decision making. "This structure works best for the club, Manchester United as a company and shareholders and the evidence is the club's results in the last five years," a source said. "It is what works well in football given the rapid nature of decisions required and specialist knowledge of the football transfer market."
But corporate governance experts said it was out of step with best practice and increasingly frowned upon by investors.
A spokesman for the Association of British Insurers said: "Investors in the UK market in particular, and to a lesser extent across Europe, do not favour dual share structures. There is a common idea of one share, one vote, so that your economic interests are the same as your voting interests."
Corporate governance consultancy PIRC said it "approves of the 'one share, one vote' structure for companies share capital, and generally disapproves of dual class stock structures which have varying voting and dividend payments rights".
A spokesman added: "In our view, shareowners who have the same financial commitment to the company should have the same rights. Where a company is creating a new class of shares, or seeking an increase in the number of shares of the class of stock that has superior voting rights, we will usually oppose the capital restructuring."
At the height of the hacking scandal, there was much criticism from shareholders of News Corporation's dual share structure.
Anne Simpson, the corporate governance chief at the California Public Employees' Retirement System (CalPERS), said last month that not having one vote for each share was "a corruption of the corporate governance system".
She added: "We believe that the control of a company should reflect its ownership. That's capitalism."{jcomments on}
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