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Quantum Football

21 August 2012 By Quentin Webb

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 percent 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 $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.

 

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