Date: Thursday 05 Jul 2012
In the Financial Times, the Lex column takes a quick look at the proposed listing of Manchester United in New York. The initial public offering is currently targeting 100m dollars but Lex thinks this is a 'nominal' amount, with the actual amount likely to be higher.
The finances of football are interesting. The wage-to-revenue ratio of the English Premiership is 70% versus just 53% for the less avaricious Germans, while Man U has a whopping debt of £425m, nearly four times last year’s earnings before interest tax, depreciation and amortisation. Lex doesn’t give direct buying advice but notes there is value in Man United, as one of the world’s most successful sports clubs, but with a structure giving the new shares 10 time less voting rights than the Glazers, if you buy don’t kid yourself you’ll have any influence.
In mulling Britain’s second biggest housebuilder, Taylor Wimpey, the Tempus column in The Times makes the point that the UK is building only around half the homes the population needs. This is a good thing for Taylor Wimpey as it means even though mortgages are hard to come by, there are still enough buyers for its properties.
The firm is also beginning to benefit from having bought cheap land after the crash of 2008, from which it makes more profits. Neither of these factors is enough for a buy recommendation though. Taylor Wimpey trades at around 80% of net asset value, Tempus believes this is simply “up with events” so leave for now.
Tempus also struggles to get excited about Tullow Oil. It has some decent prospects in Africa, currently Kenya’s looking interesting, but the firm is fighting with the Ugandan authorities over a tax bill that could come in somewhere between $473m or $142m. Without a confirmed, major find the shares seem about right at £15.02. Hold off for now.
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