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Red Knights in retreat

Robert Peston | 11:02 UK time, Tuesday, 25 May 2010

The original Red Knight idea, that a bunch of well-heeled Man Utd supporters would club together to buy out the club, looks more-or-less dead.

I've spoken to a number of the potential investors and they all say the same thing: they can't see how to do it without paying more than the club is worth; and they don't want to throw their money away.

Old Trafford football stadium

Why their pessimism?

Well, they'd need to find considerably more than £1bn in equity and debt to provide a return to the Glazers, the not-universally-popular current owners.

Which was always going to be challenging.

Even if the Red Knights had kept Man Utd's £500m of bond finance in place, they would still have had to find perhaps £600m of risk capital.

At, say, a £15m contribution per deep-pocketed fan, it required 40-odd Knights to dig into their respective treasure chests.

That wouldn't have been a doddle even in the balmy (or should that be barmy?) market climate of 2007. In the current volatile conditions of tumbling share prices and concerns about the risks of a lurch back into recession caused by the eurozone's woes, it's harder than breaking through Inter's defence.

So I would say that the prospect of an offer being made to the Glazers by a bunch of "ordinary" fans, who just happen to be worth a bob or two, is as likely as Blackpool winning the Premier League next year.

It's not going to happen.

Does that mean there'll be no takeover bid for Man Utd?

I am not quite saying that.

The Red Knights, advised by Nomura, is scouring the globe for the (you guessed it) inordinately wealthy investor with so much money that he or she can take an improbably long view of when ownership of Man Utd could deliver a profit.

Whether Man Utd's un-monied fans would believe that replacing the Glazers with a more conventional sugar daddy would be progress, I cannot say.

But, of course, with the Glazers having said all along that they don't want to sell, the clever money probably says there won't be a takeover of any kind any time soon.

Update 1500: My colleague David Bond has written a post called Glazers in no rush to pay off Man Utd debt.


  • Comment number 1.

    Anyone with any sense could see this coming. The Glazers are unwilling sellers so like their fellow Americans at Liverpool they want a return on their investment for piling the club high with debt and taking millions out in "dividends".
    Faced with an unwilling seller you have to pay a premium price and the long and the short of it is that the economics of the bid simply don't add up if a prremium price is paid.
    For disheartened United fans expect to see the Glazers in situ for a couple of years at least unless either of the following happen.
    a) A super rich foreigner comes in with an offer they simply can't refuse much like Abu Dhabi and Harrods.
    b) The Glazers hit a personal credit crunch and become forced sellers as they have to liquidate assets that can be easily realised.

  • Comment number 2.

    Red Knights in retreat and Glazers in advance. The terms of the £500m bond are reported to allow the glazers over £120m next year ( cash reserves of £70 and dividend of £25m plus c£10m for advice) , then £9m p.a paid to group companies and owners for advice, plus dividends seemingly around £25m pa. The cost of the loan around 9% or £45m to investers p.a.

    as WOTW may say, where is the value added here

  • Comment number 3.

    I think all these plots are signs of antisemitism in our midst. The Glazers can do as they please, and that's that. If you don't like it, support City, which is owned by Arabs.

  • Comment number 4.

    2. At 11:48am on 25 May 2010, Kudospeter wrote:

    "as WOTW may say, where is the value added here"

    There is no value in football I'm afraid, the only buyers are those who believe they can extend the debt further into the future - more than it currently is - this goes for all football clubs.

    Unfortunately the new market paradigm is putting a stop to that.

    It's like pass the parcel - the music just stopped - and now these 'investors' are lumbered with it.

    Liverpool, Man Utd, Portsmouth, Hull - all great clubs which are going to be in the news for their finances more than their results next season.

    Robert has got it about right - you couldn't pull off this deal in the good times - what chance is there in the bad?

    Falling mechandise sales are the achillies heel in the big clubs - nobody predicted a 'simultaneous worlwide downturn' in sales when they put their half baked business plans together.

    "it will never happen" must be on a lot of 'hastily reviewed' business plans on banks desks these days.

  • Comment number 5.

    British football clubs are like British house prices - they only ever go up! Right?

    Nah, truth is that the economics of UK footie clubs and house prices are the economics of the bubble, the madhouse and the inevitable collapse!

  • Comment number 6.

    Careful Robert. Blackpool FC confounded the pundits and naysayers by not only staying in the Championship but managed to secure their (deserved) place in the Premier League with a rout of stronger contenders Nottingham Forest in the playoff - and so so Cardiff City in the Wembley Final. Hopes are high they will up the ante in 2011 so a punt on Bloomfield Road instead of 'down the road' might be a smart bet.

  • Comment number 7.

    You are a bit slow John, this was last week's news. See the response from 5 days ago from MUST at

  • Comment number 8.

    Meanwhile - back in the real world....

    It looks like the energy sector is being liquidated - I wonder why that might be - and more importantly who is doing it.

  • Comment number 9.

    The solution is relatively simple: Hit Glazers where it hurts = financially.

    But requires supporters to really back the need for change.
    This can be achieved by :
    - Refusal to renew Season tickets, match tickets and merchandise
    - An army of protestors to remind those who are not supporting the club on match day
    - A register of season ticket protestors - so equity can be restored following the recovery of the club
    Glazers will be gone within a month or two of next season, and
    supporters/red knights/others can recover the club at appropriate rate.
    MU Supporters power can prevail.

  • Comment number 10.

    Being a York City fan, a club of untold wealth and success who were robbed of a place in the Football League by Oxford United a week ago I can safely say - WHO CARES!!

  • Comment number 11.

    Why would the Glazers want to shoot the goose that lays them the golden egg every season?

    Ain't gonna happen.

  • Comment number 12.

    #4 writingsonthewall. Oh come on, there is massive value in football clubs - value almost beyond computation.

    Suppose, for example, that you had been born and raised in a communist state. Simply by dint of hard work you managed to earn a little more than your compatriots - say about GBP 11 billion more. Just imagine the jealousy and envy of those who were too lazy to work as hard as you. Some of them may even want to rob you of your earthly possessions. What better way to invest a little bit, and put it beyond the reach of the jealous and envious, than invest in a football club.

    Suppose you had grown up in Uzbekistan and were subject to all manner of unfounded rumours. Why not spend a few GBP 10´s of millions on a harmless diversion.

    Alternatively suppose that you were the former Prime Minister of a far away country in SE Asia. Suppose that communists and agitators like say Amnesty International accused you of all manner of human rights abuses. What better way to seek diversion than to buy a British football club, especially when you can sell it for a vast profit.

    It is far better that these kind of people invest in British football - otherwise the whole sport would be overrun with money launderers. That is where the value lies. I thought it would have been obvious.

  • Comment number 13.

    Just confirms the truth I have known for a few years now - football isn't a 'game' or a 'sport', it is purely a business.

  • Comment number 14.

    After ten years of the bankers taking everyone on a ride we find that many things are over-valued. The question is about how are adjustments made to reflect the current, true value. The investors do not want the over-blown values to drop, as that would be viewed as a loss for them. These canundrums created by the bankers will be playing out for sometime to come. Basically, because of the bankers, everyone is sitting on a bad set of books. Of course, the bankers will lend money to a potential buyer, but the interest rate will be high because the economy is not doing understand.

  • Comment number 15.

    'At, say, a £15m contribution per deep-pocketed fan, it required 40-odd Knights to dig into their respective treasure chests.'

    or 400 new Knights at £1.5m each
    or 4000 new Knights at £150g each
    or 40,000 new Knights at a paltry £1,500 each.

    A season ticket for Old Trafford costs anything up to £1000 (with parking permit) and capacity is just shy of 76,000.

    Why don't they issue 400,000 shares at £150 each and sell them to Man U fans across the world.

    Football (soccer for Americans) is not a business, it is a hobby and a passion and as such will never really be profitable in the proper business sense, investors in football are buying into the dream of sporting success, if they wish to invest in financial success then they should be investing elsewhere.

  • Comment number 16.

    If my company makes an operating profit of 20 million but its management is contracted to my holding company that charges them 21 million for "running" it then my company has made a 1 million loss.

    The Glaziers and Mike Ashley run this scam with their respective clubs, and many other institutions do the same, on a small scale a friend of mine who runs a highly successful S.London pub and restaurant business complains that it never makes a profit ; but clams up when I point out that he has varied his wages at times in order to get a mortgage that enabled him to buy a house he could not afford that has since trebled in value giving him 300,000 in capital gain and that he lives a glittering lifestyle due to cash and wages removed by his partner and himself and that without those the place would be showing a very positive return on capital.

    Looking at the worth of any trading entity without looking at all the draw downs makes most P and L completely subjective.

  • Comment number 17.

    Why don't MU just start playing crap so that they get relegated.

    Then see if the Glazer's are willing to sell after that!

  • Comment number 18.

    12. At 1:07pm on 25 May 2010, armagediontimes

    This may indeed be true - but I am certain the premiership also provides some excitement and not just a 'funny money laundry service'

    However - the recent revelation that Mr Abramovich is not as generous as we were led to believe. In contrary to the reports in the media the 'generous amount' given to Chelsea is still owed to him (and not written off as claimed).

    These socialists - a clever bunch you know, they get half the worlds energy supply by simply offering 'bread for shares' to a starving population and then they pretend to be generous whilst actually being the opposite.

    At least all of them conform to the FA's strict guidelines of being 'fit and proper' to run a club.

    Mind you after seeing the last few FA appointments, is it any wonder they are confused by the phrase 'fit and proper'?

  • Comment number 19.

    Jacques Cartier wrote:
    I think all these plots are signs of antisemitism in our midst. The Glazers can do as they please, and that's that. If you don't like it, support City, which is owned by Arabs.

    Is there anything that can't be blamed on anti-Semitism these days ?

    I think you'll find most people don't know (or care) what religion these people are, what they do care about is that they have got the club into hundreds of millions of pounds worth of debt that is currently restricting the amount of money that can be spent on new players and improving the facilities at the club.

    Most people don't really care who owns their club as long as they run it in a way that protects the future of it and provides the manager with the resources he needs to make it (relatively) successful.

  • Comment number 20.

    Who really cares? Over paid people buying other over paid people. Let us hope the overpaid footballers continue to perform.

    My experience suggests all good things come to an end!! How many of these footballers have tried every scam they can to avoid their tax liabilities?

    Here is a nice little earner for someone lets tax footballers as well as the bankers on bonuses.

  • Comment number 21.

    Bob Rocket (Comment 15) your maths is off. To raise £600m you would need 400,000 new Knights at a (paltry as you call it) £1,500 each or 4 million at £150 each. I'm sure Man U has more than that number of fans across the world but I don't think you'd get them all to spend that much.

  • Comment number 22.

    Whatever the cause of the increase in the Libor rates, it is a clear indication that there is still a serious shortage of money, in spite of the extra that the central banks have made available since the crunch. After the trauma of near collapse in 2008, even without stricter regulation, banks will continue to be much more cautious than they were previously, and will not allow their reserve ratios to get too low.

    To bring the amount of money and credit up to the level required to return world economic activity up to anything approaching the pre-crunch level, central banks will need to create a lot more money.

    Unfortunately, the mood of governments has changed, and there is a determination to reduce public deficits, reflected in the replacement of Darling by Osbourne in the UK and the imposition of cuts on the weaker members of the Eurozone.

    Bigger deficits are needed, largely unfunded by using QE so that extra new money is created. The alternative may be a 1930s style depression.

  • Comment number 23.

    You can equate football supporters with taxpayers when it comes to the fundamental problem of a much needed marxist revolution.

    A pre-requisite of such a revolution is that the people or fans or taxpayers unite to demand liberty, equality and fraternity and that dont happen very often.

    MU supporters wear their green and yellow but are still willing to buy their season tickets and their silly shirts. Bless !

    Taxpayers, slaves, serfs always hang on the notion that things could be alot worse and therefore wont cause trouble and continue to pay their masters.

    I'm sure WOTW will shoot me down in flames but I'm afraid he has to face it. The British would much rather just enjoy a good moan about things and take what they are given.

  • Comment number 24.

    You know what they say....

    Red sky at Knight - the barn is alight.
    Red sky in the morning - Stock market Warning

    It was another 'red' day today - I wonder how many more before they call time on this whole sheebang.
    Maybe we're into 'Alex Ferguson extra time' - in more ways than one...

  • Comment number 25.

    @ 19. At 2:40pm on 25 May 2010, General_Jack_Ripper wrote:

    > Most people don't really care who owns their club as long as they run it
    > in a way that protects the future of it and provides the manager with
    > the resources he needs to make it (relatively) successful.

    Why not support a club that does the things you do value – e.g. one that provides the manager with resources he needs?

  • Comment number 26.

    I'm afraid I don't care what happens to the club. I'd like to see them go the next 3 seasons without winning anything, which includes not qualifying for European competitions, and seeing the concommitant decline in revenues.

    Then we'll see how determined the Glazers are to hang on. The club has already announced no new players to be added, which suggest the money has been earmarked for something else. I just want to see them lose, the club, the Glazers, and the bankers who provided the finance.

  • Comment number 27.

    I hope there is no takeover anytime soon.
    The Red Knights will have to up their ante considerably if they want Manchester United. The question I ask myself is this: What makes the Red Knights tick?
    The supporters recruited through MUST (Manchester United Supporters Trust) usefully keep up discontent against the Glazers. They buy gold and green scarves. They rally.
    But among the Red Knight-MUST phenomena has no one noticed, does no one care about the FACT that many in the Red Knights work in the same financial sphere as Goldman Sachs? Has it caused no one to pause?
    GS faces a plethora of investigations for securities fraud. Selling and profiting from CDOs consisting of mortgage securities in a market that GS knew was risky. They bought insurance against their own products. When the housing market collapsed in a mountain of debt, they enriched themselves with billions from AIG insurance payments.
    Many in the Red Knights work for similar banking enterprises and hedge funds who deal in the unregulated derivatives market that is worth an estimated $600T.
    If GS owned a football club and if derivatives included football securities and they knew that the football market was swimming in debt, do you think they would not bet against the club and make a super payoff.
    Legal? Transparent? Ethical?
    Who cares!

  • Comment number 28.

    KenFayers ( #15 )
    and even if they did manage to find 4 million fans at £150 a share, they still wouldn’t own the club. There is the small matter of the £500m bond to pay off or service. How much are the assets of MU really worth?

    Real life Fantasy Football!

  • Comment number 29.

    As I understand the UK Govt debt as a result of the global financial woes is around £156Bn. Can someone please tell me what the money has been spent on and who's got it?

  • Comment number 30.

    It looks like a business, it's run like a business and it smells like a business.......

    Don't get any football club in the Premiership mixed up with Sport

  • Comment number 31.

    The portmouth of 2011, no wonder fergie is bailing out.
    The markets are on fire again and we are talking football?, its only a game after all.

  • Comment number 32.

    #21 KenFayers wrote:

    'Bob Rocket (Comment 15) your maths is off.'

    Yes, got me bang to rights there, missed a nought off.

    How about 76,000 shares at 8 grand a piece, agm to be held at old trafford after a big match (where only the shareholders are admitted) the board to have a table in the middle of the pitch.

  • Comment number 33.

    Outrageous from Glazer, it is equivalent to wiring your electricity meter up to your next door neighbour.

  • Comment number 34.

    Anyone want tickets for Elton Johns Concert at Watford FC this Saturday, Vicarage Road. With the money raised we hope to buy Portsmouth FC in their fire sail! Now that's the way to raise money for players. Perhaps the Glazers could hold a barn dance at Old Trafford. Or maybe not.

  • Comment number 35.

    29. At 7:44pm on 25 May 2010, ericb1970 wrote:
    As I understand the UK Govt debt as a result of the global financial woes is around £156Bn. Can someone please tell me what the money has been spent on and who's got it?


    sorry - your info is way off.

    government deficit (ie it spends more than it earns) = £156bn
    Current government debt approx £900bn ish.
    Not all the current deficit is due to the banking crisis - a big wodge of approx £40bn ish went to prop up banks but a lot is structural - probably at least half of current deficit needs to be trimmed/financed.

  • Comment number 36.

    To be successful in top flight football these days you need two things - loads of money and a good manager.

    Chelsea and Manchester United have these two qualities and they will be challenging for the major trophies again next season. The other teams are also rans and are just there to make up the numbers.

    Sorry but it's true.

  • Comment number 37.

    "Investing" in a football club probably has as much chance of working out as investing in Greek debt.

  • Comment number 38.

    So football and business really do not mix do they?

    I mean why not play this as a board game instead of involving a ground, supporters and some footballers? At least there would be no damage to a game that started life as a sport with all the inherent ups and downs that entails. Now we have a farce, a non-competition competition, where a few teams battle with each other to defeat fourteen lesser teams as efficiently and as effectively as they can.

    And, of course, where would we be without the accompanying marketing hype? Serious money leads to serious problems and that is all that needs to be said.


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