At a cursory glance, especially to those who are on the other side of the glass looking in, it would certainly appear that the tenure of the Glazers has brought nothing but disrepute and calamity to Old Trafford besides bludgeoning it financially. At least that’s what it would look like to the doomsday naysayers with their hoods and pitchforks raised in rebellion.
For one, on the outflows side, the Glazers’ assuming ownership of Manchester United has cost the club £1.5 billion in interest, debt and other outgoings. Add to that the monies that the Glazers themselves have personally received, close to £200 million to date, from the club since spending £270 million in the £790 million leveraged takeover and it is not at all difficult to see why the general United loyalists are howling at the moon and baying for Glazer blood.
Yet, on the plus side, if one were to look beyond the surface and probe a little deeper, the Glazers do not seem to fit into the mold of the typical Shylock only dead intent on squeezing every available dime out of the club and wringing it dry, as they’ve been purportedly been made out to be by their detractors. It is only too easy to point an accusative finger and cast the first stone without first having prior foreknowledge and proper understanding of the Glazers’ true intentions behind wanting to own a ‘behemoth’ football club like United and, more importantly, their modus operandi.
The Glazers’ lucrative commercial strategy was a drastic change of course for United upon their arrival, prompting numerous executive departures, but the strategy has since been copied with considerable success by other clubs, notable among which are Manchester City and Liverpool.
Capitalism was the main disposition for considering every possibility that got the Glazers the club in the first place. The leveraged buyout, the scorching interest rates, not to mention the hundreds of millions of pounds of debt, may have been an instant turn-off to many, including numerous financiers, but the Glazer family, with patriarch Malcolm leading the charge at the helm, was zeroing in on a capitalist course from day one that they cast their glance at Manchester United as a business opportunity.
Pros and cons debated, the Glazers should justifiably feel their gamble has paid off. Annual dividends total approximately £84 million at the latest count, to which you can add £75 million banked from the New York Stock Exchange listing together with soft loans to some of their other companies between 2005 to 2012, as well as further share sales. All in all, it means they have collected about £200 million. Not too bad for a non-US based sports franchise, one must say.
Annual dividends are paid twice yearly with the latest tranch of £11.3 million paid to shareholders in January. As owners of 78 per cent of the club, the six Glazer siblings split £8.8 million equally. Another similar windfall in the form of a further cash dividend of $0.09 per share will be paid on June 3 despite the impact of the coronavirus crisis, perhaps giving context as to why player wage deferrals have not been on the agenda at United.
United never countenanced furloughing staff either. The Glazers have been receiving flak for having taken up the special government option to delay paying their £10 million VAT bill for a year while still finding £3.6 million to buy shares and prop up the stock price during this period of uncertainty. And as yet no plans on further dividends are being made at this stage.
The quarterly results released on Thursday revealed that United’s net debt had risen to £429 million, mainly due to cash reserves having been depleted from the acquisitions of Harry Maguire and Bruno Fernandes. The gross USD debt principal remains unchanged at around £530 million.
Another key area that has come under heavy criticism and scrutiny with Ed Woodward taking the sledgehammer blows is in transfer spending and player wages that have risen to record levels under the Glazers through the enormous rise in broadcast and commercial revenues. Compounded with the ignominy that there has been no genuine Premier League title challenge mounted since Sir Alex Ferguson retired in 2013, it is comprehensive that doubts remain linger in the minds of United’s ardent fans over the Glazers’, and Woodward’s, wherewithal to govern for success on the pitch.
Further concerns came not only from the debt placed on the club but also from the Glazers’ PIK loans (worth £220 million) which allow borrowers to pay interest with additional debt, rather than cash. The three hedge funds — Perry Capital, Och-Ziff Capital Management and Citadel — who lent the money were entitled to demand seats on the board and a share of capital in United if payments had been late.
“One of the big gripes we had was that in an NFL franchise, you can’t leverage more than around 15 per cent in a takeover,” says Sean Bones, who was a key member of Shareholders United 15 years ago. The current limit is a flat rate $350 million leverage, with the average NFL team valued at $2.86 billion, which equates to around 12 per cent. The Glazers leveraged close to 66 per cent of United.
By the time the £790 million takeover was complete, it is believed the Glazers had put in £270 million of their own money — although some City of London sources are “dubious” it was that much — borrowing the rest and using the club as collateral.
“They took a risk with the whole club’s future that shouldn’t have been allowed by the government,” Bones argues.
Richard Caborn, the sports minister at that time, counters: “We couldn’t have put blockers on it. That would have been the regulators of the Premier League and FA. Once they’d passed the fit and proper person’s test, then there is little any government can do.
“I’ve been a Sheffield United fan since I was eight. I know what a club means to a city or a town. We were interested, as a government, to make sure the ownership of Manchester United wasn’t falling into bad hands and was going to continue to play a big role in the community. And to be fair, they have basically done that.”
Ultimately, however, Walsh could not square his love for the team with what the club would become.
“Yes, the Glazers have squeezed more revenue through the commercial deals but in doing that, they’ve suffocated the soul of the club, in my view,” he says. “They are leeches.”
Well, one man’s meat is another man’s poison. And it’s also different strokes for different folks.
There’s parochialism on the one hand and big commercial success as a global sports franchise on the other. There’s no straddle positioning in this case, unfortunately. At the end of the day, if it’s supposed to be run as a business, then so be it. Leave out all the clusterf### and the namby-pamby mumblings and murmurings of the hooded hordes and just hone in on the bullseye.
Why else are the Saudis eagerly zeroing in on English Premier League clubs for?
(Look out for the concluding Part 3 of this Manchester United-Glazers saga tomorrow …)