Uh, this is not what we had in mind. Manchester United, the Premiere League football club, will have an IPO in the USA using the relaxed provisions of the JOBS Act. As Michael Bertin writes for ESPN, apparently the Glazer family that owns the top team “fancy Manchester United as a bit of a startup.” What’s going on here?
Here’s a snapshot of what the JOBS Act is meant to be, pulled directly from the website of the US Government Printing Office:
For the purposes of the JOBS Act an emerging growth company is one that has less than $1 billion in revenues prior to going public. This is the only condition that must be fulfilled. Man U fits the bill as far as that technical metric is concerned, but how does the company actually describe itself in its prospectus?
We are one of the most popular and successful sports teams in the world, playing one of the most popular spectator sports on Earth. Through our 134-year heritage we have won 60 trophies, enabling us to develop what we believe is one of the world’s leading brands and a global community of 659 million followers. Our large, passionate community provides Manchester United with a worldwide platform to generate significant revenue from multiple sources, including sponsorship, merchandising, product licensing, new media & mobile, broadcasting and matchday. We attract leading companies such as Nike, Aon and DHL that want access and exposure to our community of followers and association with our brand.
Only the most cynical investor relations flunkie could label this an “emerging growth” company while keeping a straight face. And who wants to bet on the number of American jobs that Man U might create post-IPO?
Our principal executive office is located at Old Trafford, Manchester M16 0RA, United Kingdom and our telephone number is +44 (0) 161 868 8000.
Let’s just say it won’t exactly be a British invasion.
Bottom line: Man U is looking out for Man U. Why is it making use of the JOBS Act in the first place?
[W]e intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”).
As critics of the JOBS Act feared, Man U is among the first of a wave of companies that will use the JOBS Act to avoid onerous reporting requirements. The kind of requirements that critics think will make it easier for unscrupulous companies to bilk their investors. This legislation was meant to help small companies to raise capital, to grow and to hire, but there’s no real way to police who will make use of it and for what reasons.
As this blog has often chronicled, for-profit institutions have every incentive to stay one step ahead of regulators. Typically they have to work quite hard to find the various loopholes that allow them to do so — not so with the JOBS Act. In fact it makes it rather easy.
Category: Shareholder rights