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Can an investment banker and a hedgie save Man Utd?

Robert Peston | 10:55 UK time, Tuesday, 2 March 2010

Even as an Arsenal supporter, it's difficult not to feel the pain of Man Utd fans for the supposed devastation wreaked by the Glazers at the club they bought at the end of 2004/5 season.

Let's look at the record of shame and degradation.

Since the Glazers bought Man U, the team has won the Premier League three times (in successive seasons), they've won the League Cup three times, they've won the Champions League, and they've won the Fifa Club World Cup.

United Trinity statue of Best, Law and Charlton

Let's not beat about the bush: the takeover has been an unmitigated disaster.

Not.

Some might say that the Glazers are entitled to ask why on earth they are detested by fans even more than most owners of clubs (and for reasons that are slightly unclear, football is the probably the last home of explicit class warfare and 1930s socialism, in that fans are rarely enamoured of proprietors).

Of course, the resonant issue about the Glazers is whether the debt they've heaped on the club - some £700m odd through the complicated corporate structure they've created - will curtail its success in the future. This was an issue I raised here back in early January (see Can Man Utd Spend?).

And there's a related question - which has gained considerable traction as a result of the diligent analysis of contractual details in Man Utd's recent £500m bond issue by the Andersred blog - about whether the Glazers are planning to maximise the financial squeeze on the club by draining every last penny of available cash for their own benefit.

The problem for the publicity-hating Glazers is that the principle of "beyond reasonable doubt" simply doesn't apply to their trial on the terraces. In the absence of any public statements by them, it is simply assumed that they are planning to rape the club in a financial sense and leave it destitute.

So what is the verdict of today's authoritative survey of football club finances by the accounting firm Deloitte? Well Man Utd fell from second to third in Deloitte's league table of clubs ranked by revenues.

But there is a slightly spurious element to the gap that has opened between the turnover of Man Utd versus that of Real Madrid and Barcelona - which is that (as you probably noticed) the pound has weakened considerably against the euro in the relevant period, which benefits the Spanish clubs when translating income into a common currency.

All that said, the debt-heavy financial structural of Man Utd does look unfortunate.

In the run-up to the credit crunch of 2007, leveraging up - loading up a business with debt - was the financial structure of choice for all manner of financial organisations.

As readers of this column will be only too aware, the rising leverage of banks, non-financial businesses, households and governments all made their contribution to the worst recession the UK (and the world) has seen since the 1930s.

And it has become something of cliche that we have to start saving more and get the debt down - which will become something of an imperative when central banks cease their emergency help for the global economy and start raising interest rates back to more normal levels.

So many would say that Man Utd, like the British government, would probably be advised to start making plans to reduce its indebtedness.

Which brings me to an initiative by a senior Goldman Sachs partner and one of London's most successful hedge fund managers to rally to the alleged cause of true Man Utd fans and organise a buyout of Man Utd.

This is one of those "you couldn't make it up" moments.

The heroes of the moment, Jim O'Neill of Goldman and Paul Marshall of Marshall Wace, have made colossal personal fortunes over the past few years thanks to their firms' use of leverage or debt.

There are some who believe that the likes of Goldman and Marshall Wace - even when operating on reduced leverage or borrowing ratios - still pose a threat to the stability of the global economy.

But - apparently - it's the leverage ratios of Man Utd and its stability which is rather more important.

It is also worth noting that although they've mooted a price of £1bn to acquire the club, no detail has been provided about how much of that would be funded by debt and how much by equity.

So Man Utd fans should ask to see the small print before rallying to their cause, because there would be no benefit to them of replacing one debt-heavy financial structure for another.

Also, it's incredibly early days for these buyout plans: there's been one meeting of the putative bidders and a barrage of media hysteria.

And, to state the bloomin' obvious, the Glazers don't have to sell and have shown no inclination to do so.

Man Utd is an important business for the UK, generating considerable overseas earnings and international goodwill for this country.

But the Glazers own it. And the last time I checked, the protection of property rights - even at football clubs - was a not unimportant pillar of our capitalist democracy.

PS For more on this and other aspects of football finance, tune in to our live debate at 8pm on Radio 5 Live and the BBC News channel.

Comments

  • Comment number 1.

    Is it true that the £700m debt quoted above is on the Glazer's corporate structure and not on Man Utd itself ?
    And that the club has a smaller and more manageable debt of £300m ?
    Can somebody clarify.

  • Comment number 2.

    They can't raise the money needed to prise it from the Glaziers.

    The only way would be to take on more debt - a situation worse than the current debt mountain.

    This story is nonsense, put about by your 'city friends' who want to get publicity to create a fans revolt - hitting revenue and forcing the sale for a lower price.

    Relaly - the BBC should be wary of these 'fake stories' by now - I mean you've been victim enough times already!

    If Man. Utd fans (I mean the real ones) think about it for a minute, the city boys have made their wedge from Government subsidy - i.e. taxpayers money.
    Therefore they would be encouraging the private purchase of their club with their money!

    The irony of it will not be lost on the true Man. Utd Fans - who after all live in the birthplace of the chartist movement which promoted democracy and fairness for all people, no matter their wealth.

  • Comment number 3.

    Surely the reason Man Utd fans don't like what is going on isn't to do with the numerous trophies they've won since the Glazers took over.

    Its the fear that they are "doing a Portsmouth", but just on a much much larger scale - accumulating massive debt to fund achievements on the pitch... debt that might one day cause serious problems (and perhaps even administration)?

    Personally I'm surprised that so many football supporters are as sophisticated as this - to ignore the trophies and worry about the debt. If only Portsmouth fans had been so savvy!

  • Comment number 4.

    This entire business of football finance has an air of distinct absurdity about it.

    Back in the late 1880s football finance for my great-grandfather and his workmates at Woolwich Arsenal was clubbing together to buy a football and subscribe to the renting of a pitch. They did it for fun.

    Now we have these complex financial structures which fund huge wage-bills for players and staff, operate massive properties which are almost a running project and travel all over the world for whatever competitive reason. Awe-inspiring, yes. Economically necessary, no.

    If it all ended tomorrow could it restart like it did in the late nineteenth century? Yes it could, as it is all about 23 blokes running about a field with whitelines on it and goalposts at either end. In the end it is about the spirit and joy of the game. The finance is secondary.

    I do wonder at the Glazers of this world and the vanity of their sporting empire? All that money to worry about losing.

  • Comment number 5.

    Can't even write an article about football without mentioning bankers.

    GC

  • Comment number 6.

    Robert, I can see the line of your argument but I think that United fans' concerns primarily relate to the future success of the club being undermined by the level of debt. I think that most would agree that if United were to have a hugely successful season (ie League & Champs League) this year it would be in spite of having the Glazers as owners rather than thanks to them. Taking £10m pounds of personal loans from the club for the Glazer children at a time when they were attempting to renegotiate the club's debts shows that the Glazers ARE out to milk United for whatever they can get.

  • Comment number 7.

    The problem facing United is not really one of money. They have enough income. What they face sooner or later is the fact that they probably have the best manager any club could have. Whoever follows Alex Ferguson, by definition, can't be as good therefore most United fans dread his leaving. They know that day is coming. The second factor for a Manchester team is to have no real competition in Manchester but that too has now changed. I can only see a gentle decline in results for United over the next few years unless that can find another manger like Mr Ferguson.

    That then leads us into the subject of United' debt. Can it be funded without continuous success. The answer looks I would say is no.

  • Comment number 8.

    2. At 11:44am on 02 Mar 2010, writingsonthewall wrote:

    "The irony of it will not be lost on the true Man. Utd Fans - who after all live in the birthplace of the chartist movement which promoted democracy and fairness for all people, no matter their wealth."

    Surrey?

  • Comment number 9.

    Robert,

    Instead of wasting time on this non-story - maybe you could do some proper business stories and report on the state of the car manufacturing industry.

    Toyota, Nissan and now GM - all with rather large recalls. This on top of other smaller recalls - all coming as we entered recession.

    Is this further evidence of the tendency for profit to diminish? I mean it's pretty clear that when margins are squeezed - quality often drops. In addition the relative falling wages of car production workers does not improve their dedication to their job (in fact the opposite).

    Could this be a real business story - and not just a pointless hedge fund sponsored gamble - which is what this story is?

    Robert, I am most disappointed in you.

  • Comment number 10.

    Since the Glazers bought Man U, the team has won the Premier League three times (in successive seasons), they've won the League Cup three times, they've won the Champions League, and they've won the Fifa Club World Cup.
    -----------------------

    Robert we were a very successful team before the Glazers took over. They haven't brought success to the club, it was already there. It's not like City who have new owners who might in the future turn them into a club who will win things after so long with out. Had we not won anything for so long, then the Glazers took over and we won things, I'm sure the fans feelings would be different.

  • Comment number 11.

    I personally think that Man Utd will be owned by a Chinese businessman (or consortium of Chinese businessmen) within 3 years.

  • Comment number 12.

    Ok as a United fan here's my bit:

    Some of the guys who've been quoted as being interested in helping purchase the club are football people others are not.

    United fans have shown with the Sky thing and the organisation of this protest that actually has the Glazers and the board scared because they know the extents we will go to, to save the club - just have to look at OT on any home match and it's awash with green and yellow scarves.

    The fans are highly organised and are not to be messed with as can be seen in gropus like MUST anyone buying the club knows they can only do so with the co-operation of the fans.

    Therefore I don't think anyone with a correct financial mind is going to see United as a good investment to do what they want with.

  • Comment number 13.

    Can someone put the whole situation into laymans terms that the average Utd fan would understand?

    Best/worst case scenarios. What impact does the current debt have on the clubs ability to function and make purchases?

    While I understand all of the financial terms and jargon that Robert loves to flex, some of my fellow football fans won't.

  • Comment number 14.

    The best way to unwind too much borrowing is NOT to borrow more...

    MU should first be let go bust if its present owners cannot service their debts (there seems to be not question of this happening however) and then the name sold by the administrators/receivers...

    But to seek to borrow even more to rescue a business in the current environment from too much borrowing is not a rational or financially advisable strategy.

  • Comment number 15.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 16.

    Ok I admit I never understood football or football fans.

    Why do they place so much emotional value in getting together every week with other nutters and cheering on overpaid kids kicking a ball around?

    I mean it's not as if its a working class game anymore is it ? Its just a business and badly run ones will eventually go bust no matter how much you cry.

  • Comment number 17.

    No, and why would you want to save it?

  • Comment number 18.

    "Since the Glazers bought Man U, the team has won the Premier League three times (in successive seasons), they've won the League Cup three times, they've won the Champions League, and they've won the Fifa Club World Cup."

    The three most important players (Rooney, Rio and Ronaldo) were all bought before the Glazers took over (8 Jun-05). I fail to see how their takeover can be considered beneficial when a very successful team simply carried on being very successful with the same core players following the acquisition.

    I think this is a slightly myopic take on things.

    Football clubs are materially different to American sport franchises that the Glazers are used to and as yet no-one from the Glazer family has done anything to refute suggestions that they view the club as a financial asset that's wealth can be stripped away at a profit leaving a shell to implode and the Glazers free to walk away.

  • Comment number 19.

    Perhaps Jim and Paul should look at helping to fund another northern football club (the original first team to play in red and black). The beautiful game is still played at Sheffield FC, the old football club in the world, established in 1857. It has no debts or an excessive wage bill.

    Having retained its amateur status for 153 years, Sheffield FC is enjoying playing football at the highest level of the grassroots game, in the Unibond League Division One South. A level that has never been as strong in England with over 2 million fans nationwide taking part in competitive amateur football every week.

    The founding principles of ‘the beautiful game’ Integrity, Respect and Community are ingrained into our club.

    On the football side still Sheffield FC puts out 20 teams every week (almost a many teams as ManU have players)and has the FIFA Centennial Order of Merit (match only by Real Madrid).

    Sheffield FC encourages players and fans from all walks of life to come together and simply enjoy all that is good about the game of football. The club are proud to include a very spirited Ladies team, a Disability squad and hundreds of very enthusiastic boys and girls from 8 years old upwards, who represent the junior teams, not to mention the association we have with over 40 schools providing a range of coaching programmes to teach skills and values that Sheffield FC hope will stay with our future generations for the rest of their lives.

    Take a look at our website https://www.sheffieldfc.com

  • Comment number 20.

    "In the absence of any public statements by them, it is simply assumed that they are planning to rape the club in a financial sense and leave it destitute."

    A bit red top for you Robert, i'm sure your journalistic juices could've phrased that a bit better.

  • Comment number 21.

    Robert, you say "there would be no benefit to them of replacing one debt-heavy financial structure for another."

    This is not correct. Without a sugar-daddy like Abramovic it may not be possible for United to be bought without debt. What matters is that the club's income is used to pay down that debt towards supporter/benevolent ownership (in some form), rather than being used to pay down debts of owners who simply want to use the club to make profit for themselves.

  • Comment number 22.

    If I may say so Robert you are missing the point.

    To the average Man. Utd. supporter, and to most people in general, they cannot see why the Glazers have the club. They borrowed other peoples money to buy the club, then paid it back by borrowing against the property of the club. In effect most people see it as Man.Utd have brought themselves, and given ownership to the Glazers. To help the finances the ticket prices were also hiked up considerabley. So the fans are helping the Glazers buy it as well. Meanwhile they are taking a very nice 'fee' for themselves every year.

    All of United success over the last few years was down to steady investment and patience of previous years. Nothing to do with the Glazers.

    Added to that, the fans do not see the Glazer's as being part of the football family. They have no love for the game, for Manchester, the club and its traditions. The fans fear that when they have screwed the club for every last penny, or they can make a killing, they will just walk away without a backward glance. They are not selling due to the fact there is a lot more money to be extracted, not because they have any emotional attachment to the club or its fans. They are not one of us. The Chelsea owner is accepted because he clearly has a love for the game and has heavily invested his own money into the club.

    Man. Utd. fans consider that their beloved club has been taken over by some sharp accounting practices and that the Glazers are nothing but parasites. Nothing to do with class.

  • Comment number 23.

    8. At 12:13pm on 02 Mar 2010, Horned_Devil

    I said:

    "The irony of it will not be lost on the true Man. Utd Fans"

    ...not the prawn sandwich eaters - that is who the Red knights are!

  • Comment number 24.

    This is how football is run - like a bank!

    "Lawyers told the court that Portsmouth's debts stood at £86m, £8m higher than the figure given by the administrator on Sunday. They valued the squad at £21m, £17m less that Peter Storrie's estimation last week."

    Overvalued assets, under estimated debts - next they will want to price their players in a'mark to fantasy' system where Kieron Dyer suddenly becomes worth millions and the 6 month layoff for Aaron Ramsey makes no difference to his current value (poor kid, my sympathy goes out to him)

    This is exactly why football clubs are heading down the tubes - there is a limited number of prizes to win each season and failure to do so hits the clubs where it really hurts - TV money. However there are an increasing number of teams gambling on that success - making more and more likely there will be more failures to come.

  • Comment number 25.

    hi robert,

    please understand what we are fighting to save before you write garbage about a club you dont even support. anyone who suggests we are fickle and only care about trophys not our debt, our future and our stability and our traditions is insulting our campaign. LUHG.

  • Comment number 26.

    @trusted - there is a slightly unhelpful answer to that one, which is yes in some ways and no in others. Legally the debt is in separate places, so in theory the holding company could go bust while the club (the operating company) could continue to operate, ignoring league rules so as to only deal with the structure question.

    No matter how it is set up legally the economic reality is that the whole debt wherever it happens to sit has to be serviced by the same revenue pool though.

    And now to possibly make myself the most unpopular person on this board...

    a question or two....
    - do people really not understand that football clubs simply pay their players (and just about everyone else on the professional / managerial side) too much? All of the amazing revenue increases that the change in TV rights brought (in England with the premier league etc) have gone down that drain
    - why on earth do fans think they have more rights than the customers of any other business? that's all we are despite the fact we are the only ones left who seem actually to care about the clubs as anything other than possible money machines

  • Comment number 27.

    Sorry but is the take over about the debt or the club? The players and management are any club, when they are good they are good. When they are bad, then they play at a slightly lower league.

    Maybe the Glazers are not bothered about the debt and have other plans?
    A nice housing estate in the ground and melt down down all the old cups for scrap?

    All a lot of worry about nothing really, sorry and all that but it is only football

  • Comment number 28.

    For most let us not bother ourselves with this folly of rich men making footballers of various talents rich while the poor fan supports such folly.

    Let us concern ourselves more with the potential of these organisations to avoid paying taxes as due through "close to the mark" legal niceties. Are we sure they pay for the costs they create in policing and other ways?

  • Comment number 29.

    Football clubs are a terrible investment. United would have made a £40m+ loss last year had it not been for the Ronaldo sale. This happened in a year when the won the premiership and carling cup as well as being finalists in the Champions League.

    Why are the investors even bothering with looking at Man Utd, they could get much better returns elsewhere

  • Comment number 30.

    This whole thing is bonkers for me...

    The Glaziers have let Ferguson spend what he wanted to create the largest squad in the UK and to become a virtual monopoly in the UK.

    A Shareholder will expect a return either through dividends or through capital appreciation and later sale or both. Currently the Glaziers have focussed on capital appreciation and that by the Team winning everything this will increase fan base and revenues.

    The money that was spent on interest would not necessarily have gone on players and could have gone on dividends or in in infrastructure development if there was no debt.

    A new owner would most likely have a significant amount of debt and any in addition require a dividend....so there is no silver bullet to this situation.

    Ferguson has no problem with the Glaziers...maybe the fans etc. should believe him because on the pitch they are the business and will continue to be for the foreseeable future (damn!)

  • Comment number 31.

    What is it with Football fans.... the FA bends you over, the Owners bend you over and the Players bend you over.....

    I'm surprised you have time to sit on it for 90 mins to watch a game!

  • Comment number 32.

    £1bn for the club. Spending that money means they would have a plan to recoup it and make a profit (on any exit, be it IPO or another buyer).

    However, what kind of person would buy a club with that sort of money, when it looks like the reason for Man U's success (Sir Alex) is coming to the end of his reign.

    Medium > long term , this has disaster written over it. That 1bn (1000 million pounds) will have to come from somewhere. And if the next manager or two (just look at chelsea post mourinho) doesn't win things, then that shortfall in revenue will be even greater.

  • Comment number 33.

    While it true that on the pitch we have done phenomenally well during the Glazer’s time at the club the worry is the debt levels will reach the point where players are sold to help balance the books. Also if the rumoured 11% increase on season ticket prices does go ahead I and number of loyal fans, who’ve been going for years will be priced out of the market and here lies the route of fans concerns.

  • Comment number 34.

    "Since the Glazers bought Man U, the team has won the Premier League three times (in successive seasons), they've won the League Cup three times, they've won the Champions League, and they've won the Fifa Club World Cup.

    Let's not beat about the bush: the takeover has been an unmitigated disaster.

    Not"

    Robert, as the central tenet of your argument for keeping the Glazers as owners maybe you can enlighten as to how the Glazers improved the situation rather than a happy coincidence that the Glazers took advantage of, as did you for the purposes of your argument!

    A bit too much of the gooner hat on in your assesment Mr Peston! We know how bitter yet another trophiless season must make you feel.

    It would be nice though if you could solve the riddle of us making a loss, had we not sold Ronaldo, last year having just won the premiership and reached the Champions League final. After such a hugely successful season why on earth would we not make a healthy profit?

    Move away from the populist standpoint and engage the facts! Could do better...

  • Comment number 35.

    Investment advise from Goldman......what a great recent track record for that group......must be planning to purchase at over-priced and ask the government for a bail-out, thus making it taxpayer owned, but no rewards will be given to the taxpayers for the investment, yet the initial investor will walk off with millions. I think we have seen this movie before.

  • Comment number 36.

    Why don't football clubs simply consolidate their loans into one affordable monthly payment?

  • Comment number 37.

    Robert,

    As one experienced, and wise old investor once said "Watch football....don't invest in it!"

  • Comment number 38.

    Posts 2, 8 & 23. It seems to be getting a bit personal chaps.

    A couple of poachers may well make ideal gamekeepers whether they live in Surrey, eat prawn sandwiches or are flat cap wearing whippet owners from Salford it isn't really important.

    The key thing is do they have the clubs best interest at heart and are they able to run the club better than the Glazier's have.

  • Comment number 39.

    Personally I think it's ludicrous that the Glazers were allowed to buy United with the level of debt they did, THEN load that debt on to the club. This means that they could sell Red Holding for £1 and walk away with any debts being acquired by the buyer. Meaning that the Glazers would have collected massive cash inflow whilst not having anything to do with the debt they placed the club under. If the club is sold, then the Glazers MUST foot the bill for the debt, nobody else. This is the principal reason they won't sell at the moment.

    The bond offer is also a bad way to raise income. I'm of the view that Manchester United should never have been taken off the stock market by the Glazers. If the club is worth an estimated £1bn, they could re-float the club on the exchange with a healthy share price, sell 49% of the shares and raise more than enough to pay the debts off in full. But they won't do that because it raises the possibility of hostile takeovers.

    All in all, the Glazers need to be removed from United before they destroy it. And to the person who suggested football clubs aren't a wise investment - before United got bought out, they would regularly turn in vast profits at the end of each tax year.

  • Comment number 40.

    Quick everyone - grab your scarf - there might be a run at Old Trafford -Peston is about.

    --- Manchester United were floated for what 40 million? and bought out for urmmm 700 million?

    Terrible investment that - Not.



  • Comment number 41.

    I am confused by this.

    It seems that actually the Glazers are currently significantly reducing the debt they placed on Man U, while their recent successful bond issue has reduced the levels of interest the club pays on its remaining debt. This has to be good news for the club. Man U is the second biggest club in the world in terms of turnover and seems capable of paying for its debt. I'm not sure how being bought out by a bunch of city bankers for even more money will actually benefit the club.

    Surely the real issue is the utterly unrealistic business model being pursued by football clubs, and the ridiculous notion of fans that owners should somehow continually bankroll clubs by giving them free money. The only way for clubs to have genuine security is for them to be run as real businesses that don't lose millions every year.

  • Comment number 42.

    The takeover has been a disaster. What has happened on the field has nothing to do with the Glazers and everything to do with SAF and the players.
    As for all those trophies you list? It was great winning them but itll mean nothing to me and any other like minded fans if in 2-3 years United go belly up because the Glazers have ran out of ways to re-mortgage without spending a dollar.

    Rooney, Ronaldo, Ferdinand, Scholes, Neville, Giggs, Fletcher were all at United before Glazer. All key players in our success from 2006 onwards.

    As for you Johnny Rotten? Blissfully unaware of the facts is an understatement!
    Allowed SAF to buy whoever he wants?!? Not quite true that is it. Just because SAF and Gill come out say the Glazers will hnad over money doesnt make it true.
    The facts are there in black and white. If we dont sell Ronaldo for 80 mill we make a multi million pound loss.
    Thats why we could only go to X amount in pursuit of Benzema. Anymore and we make a loss.
    What happens this summer? Who do we sell because we certainly aint gonna make up a 535 mill shortfall in profits to break even.

    Plus if you really knew the facts yould realise that the Glazers havent spent a penny on players, its the profit that United makes that allows money to be spent. They are actually taking money out of the club!

  • Comment number 43.

    That is it now, I'm finished with this blog.

    I have long considered that this blog is merely a distraction by the BBC for people who have been hurt by the financial crisis, ie the savers and pensioners etc, who did not jump on the credit boom band wagon. We have been shafted and are continuing to be shafted not only by the bankers or politicians but also by BBC commentators who think the plight of Man. Utd is a serious issue.

    Robert, do yourself a favour and regain the credibility that you earned 18 months ago by raising important questions as to why we are in this mess.

  • Comment number 44.

    38. At 2:25pm on 02 Mar 2010, Ian_the_chopper wrote:

    "The key thing is do they have the clubs best interest at heart and are they able to run the club better than the Glazier's have. "

    ....because they have the clubs interests at heart? - how naieve are you. Most of the owners of the clubs are merely there because they feel there is profit to make.
    That's why the Glazers are there - that's why the Red knights want it.

    Real football fans cannot afford to buy clubs - they're the one's who are scraping the £50 a match together to watch them.

    When will football fans work out that the model of 'rich owner(s)' is not good for their club - no matter how good their sheeps clothing is.

    Are you trying to suggest that the Red knights are long time Man Utd fans (who happen to work in the city) who really want to take ownership of the club to improve it - no matter what the cast to them?

    ...if so, then you have a lot to learn about business...it's not personal....it's business...

  • Comment number 45.

    41. At 3:03pm on 02 Mar 2010, Lionzinho wrote:

    "while their recent successful bond issue"

    What paper are you reading?

    https://www.telegraph.co.uk/sport/football/leagues/premierleague/manutd/7148080/Manchester-United-bond-issue-falls-flat.html

    Sure it went well on the issue - but look at the price now. Similar to Greece - all the speculators dived in at issue on a rumour the bonds would be popular - and once again they were wrong.

    Speculators eh? Morons in suits.

  • Comment number 46.

    I managed to keep a straight face right up until this statement:

    "And the last time I checked, the protection of property rights .... was a not unimportant pillar of our capitalist democracy."

  • Comment number 47.

    Personally I prefer motorsport because it requires more than one ball.

  • Comment number 48.

    Robert

    You seem to have missed a fundamental point;

    The Glazer's have saturated the club with debt and the associated crippling interest (interest only) of approximately £40million per year. You are correct that Man Utd have enjoyed considerable success since the Glazer's took over. However- EVEN with this level of success (which is very unlikely to be sustainable) they only managed to achieve a loss last year and a timid profit of £6million this year.

    If you can't turn a profit with all that prize money then what's it going to be like when the trophies stop coming in??

  • Comment number 49.

    "even as an Arsenal fan its difficult not to feel the pain for United"
    ha ha ha ha ha ha your not a very good Arsenal fan Eh if it was the gunners in such a mess every Man United connection arround would be gloating they would wishing the end of them through financial ruin,this muppet is a closet United fan without doubt....
    £716.5m in debt MAY IT WELL RISE AND DESTROY THE MAFIA'S OF FOOTBALL,THE BIGGEST DIVINE RIGHTEOUS CLUB OF ALL TIME THE SOONER THE BETTER I SAY,DONT FEEL SORRY FOR THEM BECAUSE THEY HAVE BROUGHT IT ON THEMSELVES BECAUSE OF PAST GREED!!!!!!! AND NOW THEY ARE PAYING THE PRICE ha ha ha ha ha ha ha

  • Comment number 50.

    Remember the quote from Greek Mythology -----
    THE MONSTER THAT BECOME SO BIG IT ATE ITSELF!!!!!!!
    Man Utd are doing exactly that.Forget about what they have done on the pitch the plain fact of the matter that wont count for anything because I think they are about to eaten ooooohhhhh I cant wait!

  • Comment number 51.

    Robert where were you on this story? Have you not seen the financial results for UTD who have knocked 200mil of their debt? Not that i'd expect facts to get in the way of an Arsenal fan having a pop at UTD, but i thought the BBC were supposed to be unbiased!

    Also as you are now a footie fan, name one big name player bought post glazier who has done the businees for UTD? We didn't spend a penny of Ronaldos 80MILLION and got a crocked owen on a free instead! It's obvious to anyone who doesn't believe the owners spin that SAF hasn't had that money to spend, just like I don't know a single arsenal fan who actually believed that if Wenger went to the board and asked for 30mil for Villa (or someone else) he'd actually get it. Good as wenger is at nurturing talent until about 4/5 years ago he was still also willing to spend to strengthen. It is obvious that the strain of paying for the emirates is why.

  • Comment number 52.

    It's clearly a money tap for too few people. Turn the tap off by just not paying any attention to it.

    Go and watch the local pubs teams for a month or two. play at 'being hard to get' and watch the teams, the money men dance to your tune for a change!

  • Comment number 53.

    ~4. stalinic

    Have to agree with you - but this is how far sport has taken us.

    I can't get much interest up for the game myself - organised a cricket match for local youngsters few years ago - only cost a bag of sweets to the winner - but it was some game. They still remember it - came down to one run at the end - so they shared the sweets.

    This is what sport should be about.

  • Comment number 54.

    I wonder just how much of an Arsenal fan Peston is. Or a fan of football at all. He brings to a football dispute the mind of a balance sheet.

    So much debt vs so many trophies = where's the problem?

    The Glazers haven't put one penny of money into Manchester United so it's difficult to see how their ownership of the club can claim any credit for the winning of silverware.

    The debt may well be sustainable but the whacking great interest payments are funded by further tightening the financial screw on football fans who aren't consumers/customers - they're a captive audience.

    Peston falls for the old lie that footbal is like any other business. There wouldn't be a football club left in existence if any of them had to survive by the normal economic rules. The owners know that the fans won't disappear down the road to a competitor, which is why they get away with serving up a poor product while hiking the prices.

  • Comment number 55.

    This comment was removed because the moderators found it broke the house rules. Explain.

  • Comment number 56.

    Like bankers here is another sector of society that just don`t get it!
    Footballers have been paid way over the odds for a long time, I mean kicking a leather football around is not going to build a strong economy.
    As advertising revenues fall as companies cut back the salaries being paid are way out of wack with what the clubs can afford.
    All we need now is a stimulus package to really rub salt into the wounds!
    Time for a reality check guys the good times are over, but the contracts will be written that tight they will take the clubs down with them.
    Bearing in mind the average Joe in the stands is having no pay rise, paying more taxes, and not allowed to retire until he is 70 its a bit rich carrying on as normal!

  • Comment number 57.

    The initial takeover of Manchester United was a genius move at the time as they secured a company with little to no debt, strong cash flows and paid relatively little for it. Unfortunately the last point is also the main problem as it seems they were too over-leveraged for this deal.

    Football is a very different business to many others and the Glazers should not be allowed to take so much money out of a club if it is detrimental (in the future) to the club's performance. Those running blue chip companies would not be allowed to take a very large dividend if it meant the company's annual profit then became an annual loss.

    One hopes that the new team of white knights will be able to put the club on a more sound footing although the Glazers will not sell at a low price, especially when they can extract such huge profits.

  • Comment number 58.

    I'm planning to buy the club for a billion myself, using the club as my collateral (why not--my purchase just proved its worth that much). I'll loot it for all it's worth, pay myself an enormous bonus for my rare financial acumen (I couldn't risk losing me to another club), and then ask for a taxpayer bailout owing to the bad economy. Then I'll sell it to the highest bidder, pocket the money, and leave the debt for the club.

  • Comment number 59.

    39. At 2:58pm on 02 Mar 2010, Steve wrote:

    Personally I think it's ludicrous that the Glazers were allowed to buy United with the level of debt they did, THEN load that debt on to the club. This means that they could sell Red Holding for £1 and walk away with any debts being acquired by the buyer. Meaning that the Glazers would have collected massive cash inflow whilst not having anything to do with the debt they placed the club under. If the club is sold, then the Glazers MUST foot the bill for the debt, nobody else. This is the principal reason they won't sell at the moment.
    ====

    Welcome to the world of Private Equity.

    You can substitute Manchester United for other well known and previously well run British Businesses like Boots the Chemist and Debenhams. Both have been raped by Private Equity, and the operating company (not the private equity vehicle) is now stuck with the crippling leveraged purchase debts, which servicing is killing the business.

  • Comment number 60.

    I think it should be renamed Rooney FC he is all that seems to be keeping them from battling for the 4th spot with half a dozen other clubs. The interesting point is that Arsenal and Chelsea are also not firing on all cylinders, otherwise with 6 defeats, (as in previous seasons) they wouldn't be in the running. How long can Rooney continue carrying them? Or can the Glazers fund new buys? I might offer 80 Million for Rooney, but I wouldn't go near a Billion for Utd as it stands, in fact, it HAS to be Bankers looking to pay a Billion, only they could be that daft!

    (PS Come back to Everton Wayne, you could get us up to the same position United are in, and we'd love you more than Ronaldo, we don't hate you, we love you really, but jealousy is such a green eyed monster, it hurts seeing United benefit from an Evertonian with such talent, you could eclipse Dixie Dean! Still there is always England, you nearly won us a European Championship (are Portuguese players always destined to wreck your dreams?!) Although it seems your own team mates are trying their best to wreck the dream now - bring us back the world cup, you can do it)

  • Comment number 61.

    As an ex-ST / Shareholder I walked away in 2005 & played my part in the founding of FCUM. The future of football lies in fan-ownership. The present system is flawed & may be about to fail big style. The PL is going nowhere with it's £1,200m salary bill; it's £3,100m of bad debt. What was the R5 programme about tonight? Fans who will always be there when the fat greedy business men have walked away were largely ignored. Questions asked were blanked; cut away to news & South Africa. I am a BBC licence payer & I expect to see & hear unbiased, well-researched news & topical issues. This was, as others in the last few weeks have been, a disgrace. When the PL mandarins & journos with vested interest in their particular troughs can railroad programmes then it's time we abolished the licence fee. When wilol we see / hear some objextive, balanced debate on the terible issue of debt within football?

  • Comment number 62.

    Guys who are the Glaziers? United Dreamer - for that is what you are - Manchester United have won what they've won DESPITE the Glazers not because of them.
    Pre-Glazers - United had dividend payouts in keeping with their means to raise money & make a profit. Within the club they had a player budget of £100m+, no debt, didn't owe anybody anything; didn't pay 'management fees', etc. Now they have no player budget, owe £770m, owe £45m/yr on a bond, Glazers have taken out £37m in management fees & LV's(?); ticket prices have doubled while inflation is at about 7.86% over the 5 yrs, the waiting list for The Waiting List has disappeared as has the Waiting List - MUFC do the PR hard sell before games to see how many seats they can sell. The bond allows them to convert the non-distributable dividend to distributable so that over the next 5 yrs they can take out another £400m without putting anything in. By then we will be over £1,000m in the red; will still have the bond to repay along with the interest on it & will still be stuck with these leeches. In 5 yrs United's book to asset value of £1,700m will be equalised.............unless the FA gets a backbone & stops it now then there will be more Portsmouth's. (I'm not too sure on the exact figuresd but read andersred blog)

    Now ticket

  • Comment number 63.

    I must admit I did laugh when the Goldman Sachs man Jim O Neil of the Red Knights said there was far too much leverage at Man U, this is the same Goldman Sachs along with the JP Morgans Lehman et al who were leveraged up to the hilt in casino banking, who are now sucking up all the money from the tax payer, who are now holding countries to ransom.
    So the Glaziers need to roll over their debt, hmm where to they go to get their money ????? would not be beyond the realms that the money boys of the big firms get together squeeze them out, make out they are saving Man U and get their hands on the assets and the big money that is generated from the match day attendances

  • Comment number 64.

    some will say that the Red Knights are acting in a personal capacity, this is the same companies who would take money from investors and then short their own customers on the business side compared to their retail side of the business , I know who I would trust, not

  • Comment number 65.

    "they've mooted a price of £1bn to acquire the club" - which has debts of £700m? Does this only make sense to bankers?

  • Comment number 66.

    #22 (Kevin)
    has the part of the story you missed. You should add a P.S./update
    The Glasers bought Man U. and used Man U's chequebook to pay the bill.
    They have been drawing out fat 'fees' ever since, and the new offering is intended to maintain that.
    They are not sports fans, this is purely a business venture for their own benefit.
    Nothing wrong with that I suppose, if you have the brass neck to get away with it, and your customers don't protest loudly enough.

    The number of green & yellow scarves at Wembley on Sunday suggest much disquiet on the terraces however.

    I would suggest that the Glasers, mindful of the eventual departure of the human hair-dryer himself and the decline of the club, will shape up to sell the company to the far-east. Gordo the Great will help that sale by the tanking of our currency.

    Football was stolen from the fans decades ago, accepted; but now the pillaging is blatant.

    Regards,

  • Comment number 67.

    "62. At 11:47pm on 02 Mar 2010, 12thMay2005 wrote:
    Guys who are the Glaziers? United Dreamer - for that is what you are - Manchester United have won what they've won DESPITE the Glazers not because of them.
    "

    Glad to see you agree with me!

  • Comment number 68.

    Apart from providing a few of the basic facts there is very little point to this blog, least of all Peston's self publicist opinion. Is he suggesting that United fans should take a wait and see approach with the Glazers?

    The warning signs are clear for everyone to see, with the macro example of the global economy, and throughout football itself. The Red Knights are only providing greater momentum to take action against a very concerning situation. They have asked for no commitment other than for fans to sign up to M.U.S.T SO so they can garner the potential numbers of support out there. They make it crystal clear that discussions are at a very early stage, so why Peston suggests we should look to see the small print first is mystifying.

    The simple fact is that United fans have to take action now and explore all options. The Red Knights have drawn further publicity to the cause and that can only be a good thing. Surely, better to continue discussions with them than "do a Nero" Mr. Peston?

  • Comment number 69.

    A few disjointed comments

    Big up to RP to get the catchphrase worst ressecion since 1930'3 into a football story

    Sorry guys, but the prawn sandwich eaters and people from surrey are also the real Man U supporters in the modern world. TV revenue and merchandise dwarfs gates receipts. I used to feel going to WHL made me me moreof a supporter, its more comfortable to watch from home and generates more revenue plus were on telly virtually every week

    For once i have to agree with WOTH, these supporter buy-outs stories come up from time to time, frankly the money is never really there and supporters in the UK have usually been very bad at running clubs

    Alex Fersguson and team have far more impact on the success of the club than the Glazers

    The Glazers don't really have a sensible option to "rape and leave destitute", to maximise value it is in their interest for the club to be sucessful, in other words the value of Manu is greater than the sum of its parts. I no doubt they would sell on the club as somebody's plaything if the situation arose though.

    Its not as if man u are going to be outbid for players, at least from UK competitors, the best players only want to play champions league and with the exception of Chelsea their main rivals have serious debt problems.

    Two of the biggest problems in football are players wages contracts and the big clubs "rapeing" smaller clubs by taking any talented players on the cheap while they are young.

    sorry RP but i feel this highlights a current problem with the BBC, only talk of subjects of "red top" immediate interest and only look at the worst case scenario. Man U is still very much a sucessful business model

  • Comment number 70.

    In the end Man.U. is just another asset to be tossed around by rich billionaire's whose only real interest is the price they can sell it for, not the price they pay to buy it.

    Given it's the world's best known football club, that's the issue, the story should really only be about what happens on the pitch.

    That there are these large corporate raider types over-shadowing the club only really reflects two things, the greed and vanity of these individuals. Such people are NOT heroes, (no decent example to the rest of humanity.) When the going gets tough, they stand by no one, only think about themselves and although responsible for the mess they just walk away and buy their way out of having to take any responsibility for anything, (what nice people, maybe not!)

    The Man.U fans, from the start, always suspected the Glazers would show no interest in the game, the club's past and traditions and consequently show no respect for the terraces. If you were to take the club's tour you would discover these things are what the club says matters to them. It's a shame the owner's couldn't care less about the heritage of the asset they own - but it's hardly surprising. The fans were right to be suspicious. It was not the first time a rich person came along wanting to buy a football club, not for the love of the game and the history of the club, but for the cashflow.

    This is one part of the club's history which will be more embarassing to them than the Galatasary loss! If I were talking to the Glazers, I'd tell them they've had their pound of flesh, time to pack their bags.

  • Comment number 71.

    69. At 10:04am on 03 Mar 2010, Kudospeter wrote:

    "Sorry guys, but the prawn sandwich eaters and people from surrey are also the real Man U supporters in the modern world. TV revenue and merchandise dwarfs gates receipts."

    This is true (about the TV + Merchandise) - but they are also the most fickle of the revenue streams. I mean how many have cancelled their Sky subscription due to the recession? How many have cut their sports packages down to save costs? Is the Sky money going to be the same next time round?

    The international merchandise market is a big income stream for big clubs - and what effect will the recession in the Far East have - especially in big revenue contributers like South Korea, Singapore, Malaysia etc.?

    When people start losing their jobs - they tend to stop buying replica shirts first.

    When Leeds failed, it was the ticket receipts of the loyal fans which kept them alive - not the absent shirt buyers, because once they stopped appearing in the Champions league, everyone outside of Britain forgot about them.

  • Comment number 72.

    "This is one part of the club's history which will be more embarassing to them than the Galatasary loss! If I were talking to the Glazers, I'd tell them they've had their pound of flesh, time to pack their bags."

    #71 - and their response would be, "why?". We need to give them a reason. As it goes I personally think they are taking what they can out now and moving as much of the debt onto United books so that they can walk sooner rather than later, playing hard to get merely to up the price. The reason? Because they realise that long term success is unlikely with the burden they have already placed on the club and that the main factor for our success, Ferguson, will be retiring soon. They are just looking to maximise their return. Gate receipts are already dropping through their insensitive ticket rises and compulsory cup ticket purchase scheme not to mention the reduction in our power in the transfer market.

    As other posters have mentioned this is what happens to business all the time and in a sense, given the high profile nature of the club, it should wake us all up to the burden that private equity, especially through foreign ownership where their returns are not benefitting the country, is placing on the economy.

  • Comment number 73.

    "United fans have shown with the Sky thing and the organisation of this protest that actually has the Glazers and the board scared because they know the extents we will go to, to save the club - just have to look at OT on any home match and it's awash with green and yellow scarves."

    Well someone is making a nice profit then on those new scarves - how can you be sure they aren't sourced by a Glazer-owned company ?

  • Comment number 74.

    There was a comment earlier about men in the 19th century clubbing together to buy a ball and setting up what became Woolwich Arsenal. This was compared with today's football.

    It is a valid point, but we shouldn't forget that most of the clubs we have today have not survived unscathed. Woolwich Arsenal, for example, went into administration 100 years ago, almost to the day (see the book "Making the Arsenal" for all the details.

    100 years ago the club was bought out by the owner of Fulham who tried to merge the clubs - a different sort of approach, but there are comparisons to today. Henry Norris owned Fulham, and he wanted to maximise his investment, so having teams playing alternate saturdays was not a bad idea.

    But when that approach failed he didn't then get involved in a scheme like Man U's - he spent half his not inconsiderable fortune building a ground at Highbury.

    The man putting his own money into a club has a long history in this country - the approach that is alien to us is not that - it is the bankers approach of "Other People's Money". That's the scam.

  • Comment number 75.

    72. At 11:11am on 03 Mar 2010, United Dreamer wrote:

    #71 - and their response would be, "why?".

    Yes, good point, exactly.

    Problem is it's multi-millionaires that you're dealing with, who are still multi-millionaires, even after buying Man.U. So dislodging them from something they own and don't have to offload, fire-sale style, is hardly going to be the right pitch. But rich people like this are very public and if you can't take away their assets you can damage their vanity and undermine their pride.

    Shaming them is one of the things the anti-glazer supporters are doing. Attacking their shameful vanity. Making them look like foolish oafs amongst their "friends" in the billionaire set will probably be pretty irritating!

    The risk to the club is the high levels of debt. Weak supporters or even casual observers will understandably view the actions of the "real support" as a suicidal attempt to wreck the club!

    But it's the club's real supporters who are heroically attempting to take back their club from an unwanted misanthropic millionaire. They will have to go futher and risk taking the club to the edge of destruction if, as they see it, the Glazers are just in it for the money. Cancelling Sky subscriptions will be another useful tactic, as will not buying club merchandise. On the face of it the fan's "civil disobedience" may not get quick results but they have to appreciate the Glazers can play a waiting game. So the real fans will have to be patient.

    The Glazers may own the club, but their problem is they don't own the Fans and their "Core Values." The real supporters civil disobedience may well have to last for the long term, they have to expect to be opposed from all sorts of angles and at times to be very unpopular! (Much like a difficult Man.U. opponent on the pitch?)

    It's all about the real support winning back the respect they deserve. THEY and their forebears are what made the club. The value in the club is NOT something that you can pick up and wander off with. If there are no fans, no people - there is no club. The Glazers do not understand this. Times are tough and when things get tough, people go back to their core values and what they truly care about. The Glazers were tolerated, now they're not, because they're not Man.U. The Glazers have had it!

    At times like this, if the club's debts do wreck the club, which could happen even without the actions of the real support, who is it who will be left? That is left to re-build the club? The Glazers? Nope! The real support will be there. If they have to raise the club from the ashes they will! And the respect they will earn for that, for decades, will be priceless.

  • Comment number 76.

    Yawn.
    For Man Utd see the BBC...or are they ''too big to fail'' ??

    In the posh schools of Britain the schoolkids get back to the usual taunts before the Easter break...

    My Dad's credit is bigger and cheaper than your Dad's credit !!
    Yawn.

  • Comment number 77.

    I'm a lifelong Southern Red and whilst I have some sympathy with the Green and Yellow "Glazers - Forever in your debt" campaign, I don't think its entirely well placed. As Robert noted, increased leverage of debt was de-rigeur pre financial meltdown, and it isn't just Man U who are in high levels of debt.

    Further, I'd far rather have a legitimate businessman owning our club than some dodgy Russian who earnt his billions ripping off the Russian people of their own oil reserves. The Glazers are shrewd investors who aren't tainted with dirty Russian oil money. Or what about our neighbours' recent Thai owner who's in deep trouble with his own country. And then there's our great rivals owners who apparently don't speak to each other and can't get the new stadium their fans deserve. Oh, and to top it off, our other London rivals owners never seem able to provide their manager with enough cash to properly compete with the big boys.

    I'm sure others here have also made the point that Man U never has been owned by its fans... not in the modern era, anyhow. As soon as the decision was taken to float it on the stockmarket back in the early 90s, it was inevitable that someone could come along and snap it up. The finances of a club are never "owned by the fans", however well wishing and utopian that idea might be.

    If I were the Glazers, I'd largely ignore this furore and get on with ensuring the club's debt is properly structured. Which is what they've done. They had no trouble obtaining a better interest rate with the recent bond issue, so all is seemingly good. They don't mess with the football side of the club, which is entirely to their credit. If they felt like defending themselves and antagonising the anti-Glazer campaign, they could change the away strip to green and yellow... :)

    Just as Greece is too big to fail, imho, Man U is far too big to fail. If the debt ever did become unservicable there are plenty of people out there who would happily snap up the asset. And to compare it to Portsmouth is a joke. Who ever heard of Portsmouth football club? Walk into any village in China, Indonesia or deepest Africa and I bet you you'll see a replica Man U shirt and kids screaming Rooney's name. Its an institution and as such would never be allowed to fail.

    Long live Sir Alex!

  • Comment number 78.

    Robert, it is disappointing that someone renowned for their sophisticated commentary on business issues should revert to type here with the usual drearily partisan "Man U" moans and your analysis as a consequence was distinctly lowest common denominator. Football clubs may now be run and managed as businesses but to conflate Manchester United - any football club for that matter - and the emotional attachment that fans have to their football club with say Tesco or Cadbury is astonishingly facile. Add this to the offensively one-sided debate hosted by Mark Pougatch the other evening where various functionaries were allowed to spew the usual corporate drivel and trite sanctimonies whilst real fans, passionate and educated about the problems faced by their club and other clubs in England, had their input truncated or in one case were shouted down by their host and you have the BBCs credibility on this matter heading the same way as my beloved club.

  • Comment number 79.

    "Since the Glazers bought Man U, the team has won the Premier League three times (in successive seasons), they've won the League Cup three times, they've won the Champions League, and they've won the Fifa Club World Cup.

    Let's not beat about the bush: the takeover has been an unmitigated disaster.

    Not"

    United Dreamer - this is your comment to which I disagreed. I did therefore not agree with you as you seem to think it has not been an unmitigated disaster whereas I do.

    Who are Man U? man u? Do you mean Manchester United? Anyone on here heard of West H? West B? Man C?

    G&Y scarf on Dancing on ice tonight.

    Anyone wearing a G&Y scarf next season is clueless if inside OT.

    Safe Hands reckons club is bewing well-run by the Gnome & that they are not for sale - well they wouldn't be if they can still remove another £400m from it in next 4 years; default on Bond payments & add that to interest accrual, etc. Of course they aren't interested selling their Cash Cow until they have bled it dry. £1,000m for Manchester United? No. £1,300m has been mentioned & they seem to be interested. Of course they're not for selling but then they've not been offered a sum they can't resist. Now if they really were being offered a £1billion (£1million million) & that was me I'd have signed in a flash...........

 

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