San Diego Flash To Take Club Public [UPDATED]

ORIGINAL POST:

SDSP Soccer Marketing, Inc. have filed paperwork with the SEC indicating an intention to take the San Diego Flash public.* If successful, the Flash would be the first American soccer club to be publicly traded. As it stands, Manchester United are also tradeable in the US as are a handful of other clubs on lesser foreign exchanges.

The club has 50 or so investors, but at this stage it is unclear exactly how what a  public offering would provide the club. Initially, I expect the club to see a nice boost in publicity and possibly have a successful public debut – but, a brief look at the long term history of other publicly traded clubs paints a much starker picture. To be fair, comparing some of these offerings to the others is apples and oranges in some ways, but I think there is enough evidence to be cautious about how the Flash would be any different over the long term.

UPDATE: 

I’m no financial analyst, but something seemed fishy about this story as I read about it. Upon researching this story a bit further, it appears that SDSP Soccer Marketing, Inc. (San Diego Flash) has not in fact filed any paperwork with the Securities and Exchange Commission (SEC).

The filing referenced in the original post is a filing made on behalf of a company called All In Blind, Inc. and run by Adri Chimberoff, (President, Secretary, Treasurer and Director). Per the filing, On 15 January,  2014, SDSP Soccer Marketing, Inc. entered an agreement with All in Blind, Inc. where in SDSP would be acquired by All in Blind in exchange for 12,000,000 shares of All in Blind. Going forward, SDSP will operate as a wholly owned subsidiary of All in Blind.

This transaction does place SDSP within what is technically a public company, albeit one that is nearly 100% owned by Adri Chimberhoff. Per All in Blind, Inc.’s S-1 filing:

 

There is no public market for our common stock. Our common stock is currently held by one shareholder. Therefore, the current and potential market for our common stock is limited and the liquidity of our shares may be severely limited. Other than pursuant to certain exemptions permitted by Rule 419, no trading in our common stock being offered will be permitted until the completion of a business combination meeting the requirements of Rule 419. To date, we have made no effort to obtain listing or quotation of our securities on a national stock exchange or association.

 

With the “acquisition” of SDSP, it would seem that shares of common stock in All in Blind will be held now by multiple shareholders. Still, extracting any value out of these holdings is nearly impossible, unless the one of the shareholders were to buy the other out.

If the stock ever becomes tradable, the trading price of our common stock could be subject to wide fluctuations in response to various events or factors, many of which are beyond our control. As a result, investors may be unable to sell their shares at or greater than the price at which they are being offered.

Feel free to wade through All in Blind’s S-1 for more information. The gist of it all can be summed up in this sentence though…

Prior to this offering, there has been no public market for All In Blind, Inc.’s common stock. The Company is a development stage company which currently has limited operations and has not generated any revenue. Therefore, any investment involves a high degree of risk.

Not only has the company not generated any revenue, their year-end 2013 “financials” show an accumulated deficit of $18,500.

Finally, the S-1 also contained this additional statement:

 

In addition to his positions with the Company, Mrs. Chimberoff has worked at Penny Lane the Salon for 13 years as a Cosmetologist and Salon Manager.   Mrs. Chimberoff’s management experience allows for a basic understanding of the financials and operations of a business which will give Mrs. Chimberoff a basis for evaluating potential merger/acquisition candidates.

 

It is difficult to say what or whether there are really any broader implications for the filing as by Chimberhoff’s own description in the S-1, the shares are essentially valueless. But it seems to me that All In Blind is an aptly named for a blank check IPO company, especially one based in Las Vegas. I truly wonder if Flash shareholders have any idea who they’ve hitched their wagon to.

 

*Denotes information in the original post that has been updated below.

Footy + IPO’s

Just over five months have elapsed since Manchester United ($MANU) began publicly trading on the New York Stock exchange. After debuting a $14 per share, the stock slid slowly to a low of $12 before rebounding and stabilizing to its current price in the ballpark of $15.50 per share. The IPO seems to have provided the debt-heavy club a modest amount of liquidity, yet it remains to be seen from their Q4 2012 numbers weather or not the reduction of leverage is of any real importance.

Manchester United was one of the more heavily publicized IPOs of late, and for good reason. It is not often that one of the most popular sporting clubs in the world exposes itself the wiles and scrutiny of markets and analysts, necessitating that it focus just as much, if not more, on business than on sport in an effort to maintain profitability and fulfill its obligation to shareholders. Few other widely recognized sports teams will even have such an opportunity. The New York Yankees and Los Angeles Lakers, while on the receiving end of far-reaching global acclaim, find themselves participants in the prevalent socialistic franchise system that so closely controls professional sports in the United States. This, while slightly off-topic, should be recognized with a sense of irony when compared to the highly capitalistic nature and beliefs of the US government – and contrasted with the more socialistic nature of enterprise throughout Europe and their extremely capitalistic pro-sport structure.

Nevertheless, Manchester United is not the only football club to have made a public offering for investment. Listed below are football clubs that also trade on the exchanges (not meant to be exhaustive). Note that each of the clubs listed below are, or were recently, among the top performers in their respective leagues. Also of note is that most of these teams trade over-the-counter/via pink sheets (an option that does not require them to regularly report financial information the way a listing on the NYSE would).

Tottenham Hotspur – $TTTHF debuted in 2008 around $3.10 per share. Since then, the stock has lost nearly all of it’s value closing at $0.0001 per share in May of 2012. It does not appear that Tottenham actively reports share prices anymore, however it does appear that shares of the club are still tradable.

Borussia Dortmund (BVB) – The on-again-off-again German powerhouse was, and remains, the only publicly traded club in the Bundesliga. Initially trading on the Frankfurt Stock Exchange, it appears that a financial crisis within the club result in the stock losing much of its value, resulting in delisting from the FRA. Borussia Dortmund now trades via pink sheets and it’s share price is reported through the London Stock Exchange’s Eurpopean Trade Reporting service. BVB is currently traded at $2.90 per share.

Juventus – Famed Italian club went public on the Borsa Itaina exchange in December of 2001. The club’s IPO fell flat, and has remained so ever since, most recently trading at at $0.29 per share.

AS Roma – AS Roma Also IPO’d on the Borsa Italiana, but did so a year and a half earlier than Juventus. Roma’s story on the public market followed the same trajectory as Juventus. After reaching a high of over $6 per share, the stuck took a prolonged tumble to its current per share value of $0.51

Celtic FC- Following a takeover in 1994 by Fergus McCann, the Scottish club enjoyed a massive turnaround from a highly leveraged organization to one that has recently been brought to profitability. Part of McCann’s turnaround included re-structuring the club into a public limited company – allowing members of the public to buy shares in the club. Recent share offerings (following another leadership/majority ownership change) since the “IPO” have included special offers to current owners and season ticket holders of the club. (Note: Fellow Scottish Premier League club Rangers FC is also publicly traded.)

AFC Ajax – Perennial Dutch powerhouse club Ajax is traded publicly on the Amsterdam Internet Exchange. Ajax went public in 1999 for around $7.50 per share. Over the past 10+ years the club’s share price has followed a roller coaster-like trajectory, but has managed to retain most of its value, currently trading at $6.25 per share.

Of the clubs listed above, only one trades trades on a regulated  exchange. This does raise questions on the benefit of IPOs to football clubs.

In the case of Manchester United, an IPO was a logical next step. The club clearly had global brand recognition as well as adequate demand from both institutional and retail investors. Basically, Manchester United would have been leaving cash/liquidity on the table by not taking the club public.

A big thanks to @rethansmith for contributing today’s post.  If you’re into start-up/finance culture check him out on thestartupist, or on thejawn if fashion is more your thing.

Grand Theft Cascadia

Continuing on yesterdays post ‘Controversy in Cascadia’, I felt obliged to note the release of an official statement by MLS regarding the pending Cascadia Cup trademark application.  Essentially, MLS is claiming that it has applied for the trademark in order to, “protect the brand from exploitation by parties unaffiliated with the League and its supporters.”  It also noted that MLS plans to “meet soon with the leaders of the three teams’ supporters groups to discuss the topic together.”  The full release can be read here courtesy of Alexi Lalas.

MLS is claiming that their actions are in the best interest of the supporters; the language that is used in the statement belies their true intentions.

MLS slyly refers to the Cascadia Cup as a ‘brand’ to be ‘protected’.  That is corporate speak, not supporter colloquialism or fan hyperbole.

Next notice who the ‘brand’ needs protected from: those unaffiliated with the League (MLS).  This disregards the fact that the cup originated and existed outside of and not in affiliation with the ‘League’ for most of its history.  Further, what would happen if the supporters were to decide to add another team outside of MLS to the Cup?  Would they be subject to a final ruling by MLS?  And what about supporter scarves and apparel?  Would they also have to buy officially ‘branded’ apparel and purchase from an ‘authorized’ retailer? 

Last, notice which entity the supporters are assumed to support; the ever ubiquitous ‘League’.  This belies the obvious fact that MLS views its franchised ‘clubs’ as nothing more than different heads of the same corporate leviathan.  

MLS beware: these supporters existed before the teams joined MLS.  They support MLS because they support clubs which are now a part of MLS.  These groups are your greatest asset in spreading the MLS gospel.  Don’t piss them off and risk turning them into your greatest foe.

Controversy in Cascadia

In a post I wrote just over a month ago titled ‘Saving the Soul of Soccer’ I made the comment that, “Many clubs have not been able to attract and engage fans without promotional gimmicks – and fail to realize that the clubs that DO attract at the gate do so BECAUSE of the supporters, not the ‘clubs’.”  And if any more evidence was needed to support this, look no further than the recent attempt by MLS to trademark the Cascadia Cup – a supporter cup which has been going on longer than any of its participants have been members in MLS.  

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Many casual fans may not find this particularly newsworthy.  But the fact of the matter is that MLS is attempting to commandeer a supporter initiative and turn it into another brand label.  IF the cup was a club based initiative, MLS could rightly as the parent company steal it away for its own asset portfolio.  But its not.  The competition was created in 2004 as an combined effort of the supporters groups from Portland, Vancouver, and Seattle.  The derby format and rules were agreed upon and set by the supporters groups, and the actual trophy was designed and paid for by the supporters groups.  Each year, the cup is awarded the supporters group of the winner by the supporters group of the previous years winner.  If anyone ‘owns’ the Cascadia Cup trademark it is the collective supporters groups of Portland, Vancouver, and Seattle.  

So why would MLS risk raising hell from some of the leagues most ardent supporters?  One can only assume it is once again the money factor.  For despite claiming to ‘grow the game’ and all talk of ‘grassroots initiatives’ what we have consistently seen is a trade corporation leveraging any and all assets to increase the bottom line.  And this time, that includes robbing the passionate fans and supporters of one of America’s only true derby competitions (I say ‘true’ because I reject the majority of derbies in MLS as artificially staged. They are failed attempts to tap into the resources of supporters, by constructing a cheap alternative to the story, history, and drama of the derbies in Europe.)  

I don’t believe that the MLS trademark bid will be allowed to stand.  But I am appalled that they would even try.

Footy + Finance: What you need to know about Man U.’s IPO

Hours after the U.S. financial markets went on their Independence Day holiday, the news broke that Manchester United finally found their bourse du choix upon which they will stage their IPO. While the IPO marks a historic milestone for the 134 year old club, it is no reason for us all to get our knickers in a bunch. Feel free to bore yourself reading the Wall Street Journal’s, Telegraph’s, or Forbes’ boring coverage – OR – get a grip on what Man. U.’s IPO means for the future of football and for you the fan.

1. The IPO is still very preliminary. The club’s F-1 filing reads more like a letter of intent than it does a financial document. Many of the key spaces on the document that would disclose the specifics of the filing (target share price range, number of shares to be offered, and proposed ticker symbol) were left blank.

2. $100,000,000. The document does disclose a maximum aggregate offering price of $100,000,000. That is, Manchester United is hoping to raise $100M from their IPO. First, this $100MM is just an estimation (primarily to come up with a calculation of a registration fee). Second, $100M is really not all that much money. The world’s premier football players have been bought and sold for more. After speculation that Man. U. would IPO in Singapore or Hong Kong for north of $1B, $100M is quite a step back – yet $100M is a much more reasonable amount in proportion to the company’s revenue figures.

3. It’s about the brand. If the proposed IPO amount of $100M wasn’t already any indication, perhaps the club’s [parent company’s] classification of itself as a media company is. Based upon the terms and language in the F-1, voting rights for shareholders will be very limited and the structure of Manchester United the company basically relieves shareholders of any rights to make or vote on decisions that would affect team personnel, etc. The IPO is less about the Manchester United that the fans watch, and more about the Manchester United that solicits sponsors, TV deals, mobile applications, and product licensing deals. Of course, this is not to say that Man. U. wouldn’t use some of the proceeds of the offering to secure key world class players.

In terms of the club’s history and the history of the sport, Manchester United’s IPO is a big deal. At the same time, it’s also not such a big deal. When such a prolific brand and entity reaches a point of global recognition and finds itself spread across many different platforms and media, a natural next step is to capitalize and finance the growth while setting systems in place to turn the growth into long term profitability.

For those of you nerdy or ambitions enough, you can read the full copy of Manchester United’s SEC F-1 filing.

A big thanks to @rethansmith for contributing today’s post.  If it goes well, we may make the ‘Footy + Finance’ a regular column on the blog.  If you’re into start-up/finance culture check him out on thestartupist, on thejawn for some awesome jawn ideas, or here for his personal rants and ramblings.