Increasingly at
Manchester United matches these days, green and yellow are in evidence. Normally the fans wear red but many of them have taken to donning the colours of the original Newton Heath club that went on to become Manchester United — in protest at the continued presence at the club of the owning Glazer family.
This deepening row at the football club is a mirror for elsewhere. The Manchester United supporters have had enough. They've seen slick financiers advise an obscure bunch of Americans on a cunning way of taking over their favourite side, using borrowed money. From having no debts in 2005, Manchester United is now in hock for £700 million. Some of that burden, £500 million, has been rescheduled in a bond issue.
One of the advisers on that refinancing was Goldman Sachs, which is sharing an estimated £15 million in fees for its work. That didn't stop the bank's chief economist Jim O'Neill, a lifelong Red, voicing his personal opposition to the issue: “There's too much leverage going on with Manchester United.” O'Neill's views were echoed by Paul Marshall, the Marshall Wace hedge fund founder and also a Manchester United follower: “A good rule of thumb in finance is that debt anywhere above five times underlying profits should be treated as junk'. Manchester United's current bond issue is junk. On that basis, the debts of the Glazer holding companies are beyond junk.”
If the banks had any PR nous (God forbid), they might consider how they could turn the Man Utd debacle round — to improve their battered images to a degree that would go far beyond the relatively measly fees they earned.
The best way to achieve this would be to finance on generous terms a takeover of the club by the fans. Manchester United would become a club owned by the people — as occurs in other countries, most notably in Spain, where Barcelona does not belong to a single tycoon but is widely held and still manages to perform consistently at an exalted level.
It's not just Manchester United where a return to common ownership is being mooted. We've gone from a period that saw community and mutuality disregarded as unfashionable and weak, to one, thanks to the excesses and failures of a few, where they're in vogue.
O'Neill and Marshall are rich. They are not alone — indeed, given the passion the team engenders, there are bound to be numerous multi-millionaires who are Man Utd fans. They could group together to buy the lion's share of the club, leaving the less well-off supporters to mop up the rest.
Something like this is being worked upon. Keith Harris, the head of investment bank Seymour Pierce and a broker of several football club sales, says he has been approached by wealthy Reds who want to “explore” the possibility of buying out the Glazers. The Manchester United Supporters' Trust, which is publicly heading the anti-Glazer push, is also involved.
The Glazers paid £800 million for the club in 2005. However, much of that money was not theirs but borrowed. Forbes, the US business magazine, has estimated Manchester United's worth at £1.3 billion.
That may be its value at present but football is not known for its certainty of future earnings. The club is saddled with debt, its value is dependent on the team continuing to do well (which is not guaranteed, particularly as veteran manager Sir Alex Ferguson cannot postpone the inevitable, and must retire at some point). If the team did not qualify for the Champions League and crowds fell (this season Old Trafford has been noticeably not full for matches against unglamorous opponents that Manchester United are expected to beat easily), what then? How would the borrowings be serviced, let alone repaid?
The chances of financial ruin are very real and while I'm not a Red (I'm a season ticket holder at mighty Fulham) I would hate to see that occur.
According to David Gill, the club's chief executive, the owners are not sellers: “The Glazer family bought the Tampa Bay Buccaneers in 1995 and, 15 years later, they still own that — they are in it for the long term.”
Yes, but how much public loathing and abuse can they take? (Angry football fans are not noted for their politeness). If they could sell for £1 billion right now, in this climate, and against the backdrop of their American businesses having to contend with the US recession, they would be foolish not to.
For the fans, that seems a tall order. But 50 Red Knights each putting in £15 million is £750 million. The supporters could stump up for the remaining £250 million. The backers would be paid a modest return but, most importantly, Manchester United would be debt-free (after the bond issue, the club's annual interest charges alone are £60 million) and no single individual or their relatives would have control. There's a lot to be said for it — and not just at Manchester United.
Reported by: Chris Blackhurst
