Manchester United shares are off to a rough start this morning following news that Alex Ferguson will resign as manager of the club, a post he took in 1986.
The stock fell as low as $17.73 – down 5.5% – shortly after the opening bell in New York. It has since bounced back a bit and is currently trading at $18.38, down 2.1%.
Miller Tabak Chief Economic Strategist Andrew Wilkinson highlights the story in a note today (it's a pretty slow week) and warns that shares could see rising volatility ahead:
The 2012 IPO raised $233 million by slicing off a small chunk of the 135-year old team at $14.00 per share.
At the time of the IPO Soros Fund Management took a $47.5mm stake in the company buying 3.397mm shares, which if still owned would be worth $63.78mm. Soros Fund Management remained a holder as at the end of December 2012 according to its 13F filing. In a 2010 debt offering the prospectus cited the potential departure of Fergie as a risk factor that might put into jeopardy the success of the club, highlighting the instability of investments in sports franchises revolving around specific individuals.
While Sir Alex is heading from the dressing room to the boardroom, he leaves behind a lucrative trophy cabinet containing 13 Premier League titles, two European Cup victories, five FA cup wins and four League Cup wins. Still, with an average squad age of 23 years old, the prospects remain bright for the club. However, those players will have to prove that a team is only as good as its manager. With the season culminating this weekend, shares in the company could witness rising volatility at least until a new successor is signed and even then the Premier League is closed for the summer.
The chart below shows Man U's share performance since the club's stock began trading in August.
Click to enlarge
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