Manchester United shares recover after Ferguson quits
NEWS of Alex Ferguson's retirement caused an initial dip in Manchester United's share price on the New York Stock Exchange yesterday, but by the close of trading it had bounced back.
From an opening price of 18.77 US dollars, the shares fell by as much as 4.5 per cent to under the 18-dollar mark and then revived significantly.
The value of a share at the close of trading was 18.44 dollars, 33 cents down - a 1.76 per cent drop - and still higher than the share price on Friday last week.
United's overall market value fell from 3.09 billion dollars (£1.98 billion) to 3.04 billion dollars (£1.95 billion) - a fall of 50 million dollars (£32 million).
The shares initially fell in New York amid fears over the impact that Ferguson's departure will have on the club.
The opening bell on Wall Street saw shares down by three per cent, driven lower by worries over whether the club can appoint the right replacement for the most successful manager in English football history.
His successor will be the key figure at a business laden with almost £370 million of debt and tightly controlled by its US majority owners, the Glazer family.
The club, which trades under the MANU ticker on Wall Street, announced his departure while US markets were closed, but shares slipped on opening as investors digested the impact of the 71-year-old's departure on one of sport's most successful franchises.
In the prospectus to its 2012 stock market flotation, Manchester United warned: "We are highly dependent on members of our management, coaching staff and our players.
"Any successor to our current manager may not be as successful as our current manager."
Shares in the club have surged 34 per cent since floating in August at 14 US dollars (£9) per share, closing on Tuesday evening at 18.77 US dollars (£12.11).
The flotation allowed the Glazer family to sell 16.7 million shares - equal to a 10 per cent stake.
The Glazers bought the Premier League football club for £790 million in 2005 in a controversial deal that enraged fans because they put in just £300 million of their own money and loaded the club with debt.
The club's most recent annual results showed total revenues of £320.3 million for the year to the end of June 2012, down 3.3% on a year earlier.
But Hargreaves Lansdown head of equities Richard Hunter said: "The Manchester United merchandising machine will not grind to a halt overnight.
"The company is thinly traded and researched on Wall Street, but of the handful of analysts which cover the stock, the consensus of the shares as a buy is likely to remain intact, despite the inevitably difficult transition phase to a new chapter in the club's history."
United made £4.7 million pre-tax losses in its latest financial year, down from £12 million profits a year earlier, pushed into the red by higher expenses and weaker revenues.
United had debt of £367.6 million at the end of March.
The club has signed a series of lucrative deals in recent years, including US car giant General Motors agreeing to pay 559 million US dollars (£360 million) over seven years to have its Chevrolet name on United's shirts from 2014.
It recently signed an eight-year contract for present shirt sponsor AON to put its name to the club's state-of-the-art Carrington training ground. From July 1, Carrington will be known as the AON Training Complex - a deal said to be worth less than £20 million.
United also last year bought out DHL's naming rights to its training shirts - prematurely ending a four-year £40 million deal - as it banks on signing an even more lucrative deal.
It will also benefit from surging Premier League and Champions League TV cash.
Plans to expand into Asia could also involve floating on the Singapore stock market, which analysts believe would multiply the club's value.
United is keen to grow in Asia where it claims 325 million of its 659 million global followers are based.
Sir Alex paid tribute to the Glazers. He said: "Over the past decade, the Glazer family have provided me with the platform to manage Manchester United to the best of my ability."
The announcement of Sir Alex's departure follows news of chief executive David Gill's exit, who is standing down in June after 10 years to be replaced by vice chairman Ed Woodward.
Ferguson is tipped to be replaced by Everton boss David Moyes.
The Scot, who is staying on as a director and ambassador, said the club is in the "strongest possible shape", with a balanced squad, quality youth set-up and training facilities and a leading sporting venue in Old Trafford.