A remarkable alliance of Manchester United fans and businessmen could yet unseat the Glazer family
Of all the extraordinary aspects to Manchester United supporters’ green and gold campaign, in alliance with the “Red Knight” financiers planning to buy the club from the Florida-based Glazer family, the most striking is how widespread the outpouring has become. The idea for fans to wear green and gold, the colours of Newton Heath, the original club formed in 1878 by workers on the Lancashire and Yorkshire Railway, was initially suggested by a fan on a messageboard.
His was just one small voice in the enormous outcry which followed the January publication of the Glazers’ prospectus for United to borrow £500million. It was the second time since they bought United in 2005 that the mountainous debt, which their own takeover imposed on the club, has been refinanced.
Strictly speaking, some of what the Glazers set out in that prospectus was not new – but the power was in it all being published together and the fact that the Glazers themselves had to set it all out. It had been known since 2005 that the family’s takeover was a “leveraged buyout”– meaning they borrowed most of the money to buy United, with £275m of the £559m coming from hedge funds at steepling rates of interest – making the club responsible for paying off the debt.
The price of everything at 76,000-seat Old Trafford has increased and, since 2005, United’s ticket prices have gone up by between 45 and 63 per cent.
The interest charged to United, together with professional fees and other payments, has been unprecedented – and all of it to pay for a takeover nobody at the club wanted.
The Manchester United Supporters Trust (MUST) campaigned hard against it, warning that the Glazers were only interested in making money for themselves and were bringing only debt to the club. The Independent Manchester United Supporters Association fought bitterly too, and many of their members formed a new supporter-owned club, FC United.
Even directors, who included David Gill – the chief executive who now works for the Glazers – issued a statement opposing the takeover, arguing that the business plan was “aggressive” and “contains more leverage than the board would consider prudent, and that as a consequence there is likely to be significant financial strain on the business”.
After the prospectus was launched, Gill defended it for the Glazers – the family members themselves, including the five sons and one daughter of Malcolm Glazer, never speak publicly. Gill argued that the takeover had become acceptable because the structure had changed in ways he did not explain, and he said the finances are sustainable and United could service the debts, despite the interest having pushed United into losses – £44.8m in 2007-08, for example.
The prospectus did expose a fuller picture, revealing that in 2008-09, United – who were Premier League champions for the third time and Champions League Finalists – had earned a record £278m, but that the interest payable, £67m, would have pushed them into another loss had it not been for the £81m sale of Cristiano Ronaldo to Real Madrid.
The total fees incurred in the original takeover and refinancings since, plus £35m which the prospectus revealed United lost in debt-hedging arrangements, added up to a total of £120m having left the club since 2005. The total interest – some, on the bulk of the borrowings, actually paid out by the club; the rest, on what is £200m of hedge fund debts, “rolled up” and accumulating – amounted to £344m.
So, altogether, the takeover by the Glazer family, described as billionaires when they arrived, has cost United £464m in four years.
A shocking picture
“It is staggering, a shocking picture,” laments Nick Towle, chair of MUST. “So much money has gone out of the club – which could have been used to keep ticket prices affordable or invested in the team – purely to pay for this family’s ownership of the club.”
Page 82 of the 322-page prospectus, which further sparked the Old Trafford counter-revolution, was short but direct: Glazer family companies had, since July 1, 2006, been paid £10m in management fees. There was also an agreement to pay a further maximum £2.9m consultancy fee to a family company, and the six Glazer siblings, all directors, had personally borrowed £1.66m each – a total of £10m – from the club. For billionaires, this is unusual practice.
The purpose of the bond issue could be picked out from the small print; it was to release £70m so that the Glazers could pay off some of the prodigiously expensive hedge fund debt. That therefore steamrollered the contention, made by Alex Ferguson repeatedly, that the money from selling Ronaldo was there for him to spend if he wanted to.
The prospectus gave the Glazers the right to take almost £130m out of United immediately.
Fans latched onto the green and gold idea in huge, wildfire numbers, claiming it as a uniform of protest, of adherence to the original collective values of a working-class club and a celebration of United itself. MUST invited people to register their names when logging on to the website and within weeks they had 160,000 members.
Then the Red Knights gathered; rich men of finance, United fans, some with unfinished business, having in the case of Jim O’Neill – who is chief economist at Goldman Sachs – been on the United board when it failed to stop the Glazer takeover. They talked of a part-philanthropic takeover in which around 70 wealthy individuals would buy the club from the Glazers, for a small personal return, and reserve a 25 per cent stake for MUST to hold democratically.
The idea of supporter ownership had finally punched through to mainstream thinking, with years of profiteering takeovers having taken their toll. At the end of March, the government revealed it was planning an election pledge to require all clubs to provide 25 per cent stakes to fans’ mutual bodies. O’Neill and his associates seemed motivated by that ideal, seeing football clubs as social bodies of belonging, not companies that were there for financial exploitation, and they seemed partly to be salving their consciences about what their day jobs involve.
Much remained to be done, with one question in particular asked from the beginning: with Manchester United, despite the fans’ protests, raining cash and promising more in the future, why would the Glazers sell when their only other apparent businesses are the Tampa Bay Buccaneers’ NFL franchise and a recession-vulnerable shopping mall real estate company?
That raised the further question of tactics and whether the supporters, led by MUST, would be prepared to use the one lever which could really rattle the Glazers: refusing, in sufficient numbers, to hand their money over.
In tandem with a substantial Red Knights offer, that could yet work.
However, whether it does or not, a green and gold phenomenon has appeared to wash away English football’s complacency that clubs are commercial businesses which should be open to takeovers from anywhere.
For the first time since 1992, when Manchester United first realised the game’s growing earning potential, it feels as though a real change is in the air.