Well, folks, it's all over but the shouting -- or should I say, "fee collecting" on the part of Glazer's advisers. The fans are screaming, but there is nothing they can do now. He says he's a long-term investor, but this has all the hallmarks of a classic flip in the LBO world: take the cash it thows off, pay down the debt as fast as possible, probably within 5 years, and then own an appreciated asset (probably valued in 5 years at 1.5 to 2 billion pounds) after only putting in around 300 million pounds. http://www.reuters.com/newsArticle.jhtml?type=sportsNews&storyID=8488779 Here's how he's financing this: http://today.reuters.co.uk/news/new...513:MTFH42339_2005-05-13_17-50-39_L13273673:1 The "new club" they are talking about is presumably the acquistion entity called "Red Football" that Glazer has set up to own these shares, and then to de-list them. A hansdome payday for the advisers...nice work if you can get it.
More interesting info on Man U's income and what will be needed to service the debt... http://www.itv.com/news/index_348230.html
This is a great business deal on paper. It could make the $180 million in profit John Magnier and J.P. McManus made by investing in ManU 4 years ago look like paperweight. Economic 101: It's better for a company to have debts than without it (something tax benefits if I remember correctly). However, there is a certain thresthold that the debts can't go over, otherwise, it will negatively effect the company. That's why company like Microsoft which has around $40 billion in cash lying around has debts (because the tax effect).
I sure hope the Man U fans who are fighting this have a plan B because I agree with the OP, this thing is a done deal. Glazer owns the club now and there's not a damn thing they can do about it.
I'm no expert on tax laws, but I don't see how having a £550 million debt can be a good thing. As the report above stated, the club will have to somehow find an extra £50 million a year to just keep the club where it is now. To put that in perspective, that'd require a 30% jump in turnover. Even raising ticket prices would barely make a dent, not unless the raises were stunning. e.g., say Man Utd play 25 homes games a season, allowing for cup games too, they'd have to raise £2 million per game extra. Divide that by 67,500 fans and it works out at an extra £30 per ticket. Most of the fans at Old Trafford are season ticket holders, paying around £425 a year (£25 x 17, two games free). That would rise to £935, a 120% price hike, for no benefit to the fans at all. In effect he'd be forcing the fans to pay off his debts for him. Now every time prices rise people grumble, then generally end up paying them anyway, but a £500 jump is just too much, especially in a year where there's there first signs of worry that the premier league clubs may have killed the goose that laid the golden egg by raising prices too high already. Yes, in theory he could take legal action to allow Man Utd to negotiate their own TV rights, but that'd not only be costly, he'd run the risk of upsetting the rest of the clubs - not a good idea when they could quite legally kick Man Utd out of the premiership with a simple vote. When Rangers & Celtic in Scotland tried a similar thing the rest of the SPL threatened to resign from the SPL, effectively leaving Rangers & Celtic with nobody to play against.
I think naming rights for Old Trafford could amount to £5 million annually, given the worldwide visbility of the club. Think "Virgin Atlantic Old Trafford" stadium. (Virgin...Old...now THERE's a juxtaposition. For the value of naming rights in the USA, see this link. http://sports.espn.go.com/espn/sportsbusiness/news/story?page=stadiumnames Fees all over the map, but if Denver can get Invesco to pony up $7 million, and Atlanta $9 million from Philips for an INDOOR arena...well, think about ManU.
They should be able to sell the rights to, not only the stadium, but the field, and each individual stand and consourse. Obviously the big money is on the field and stadium.
pc4th, IIRC the other reason to have corporate debt is to make your company less attractive to raiders. Companies that are debt-free are usually acquisition targets - like Man U.
amazing that manu fans have ever had the idea that the manu entity somehow gives a ******** about them and their idiotic loyalty...sorry, but only as far as the bottom of your pocket. it's business, ********ed up or not, whether the owner is a fat tasteless yank or a fat limey wanker, it doesn't matter. But I'm glad to see there are so many 'fans' who have the leisure and energy to fight for the fat limey wanker over the fat tasteless yank.
This is an interesting point of view, but naive. Let's understand the responsiblities here: What ManU owes its investors is return on investment. What ManU's management owes the supporters is a quality, entertaining product on the field. There's no reason to believe those ends are mutually exclusive. Beyond that, you can spout all the unkind invective about this fat yank or that fat limey, but it won't change these goals. And, unless the quality of play goes downhill, it won't stop people from paying to come to the park, either, in spite of what a few disgruntled supporters claim. But cheer up: Glazer hasn't said anything about buying CD Guadalajara... yet!
Of course it won't make a difference if ManU is private - just commenting on the naivete of putting ManU public in the first place without some kind of debt on the books.
I like all the outrage at "naming rights" for Old Trafford being sold. I guess the having this seat colored pattern in the famed hardcore Stretford End somehow escaped notice:
I've seen Yank after Yank assert this, that the club is going to massively increase in value and make Glazer rich(er). But that begs the question, why were the shares so cheap, then? Everybody is an idiot except Glazer? LBO's often work because the buyer restructures the company. I don't think Glazer is going to sell the unprofitable "reserves" branch, so that's out. The other possibility is that Glazer sees a way to cut costs that nobody else saw. While I think we may not see as many David Bellion-type signings, there's not alot of there there, since ManU's value as a global brand plummets if they can't compete for the EPL title, and if he slashes the payroll, they can't compete for the EPL title. That leaves revenues. Again, Glazer is not a genius among the retards. He has ideas on how to increase revenue, but they're risky. OK, he's going to raise ticket prices, that's a given, but it won't be enough. And they're going to sell the name of the stadium. Is that enough? Not just to service the debt, but also to increase profits so that the club's value increases? If not, he has to find another revenue stream. I'll keep saying it...when this cropped up a few months back, the story was that Glazer's lawyers thought EU law would allow ManU to sell their global TV rights independently of the rest of the EPL. And that right there would make the deal work. But a) his lawyers have to be right and b) the other teams in the EPL have to not expel ManU. The other possibility is that Glazer will crack the US market. Good luck with that. Side story...about 5-6 years ago or so, two rival sets of gangs in, I think Chicago, starting wearing Duke and UNC paraphenalia. I can't remember what UNC stood for, but Duke was Disciplies Utilizing Knowledge Everywhere. For ManU gear to become hip, it's got to be urban. I hope Glazer's marketing strategy isn't going to be selling ManU shirts to Bloods. There's alot of underpants gnome thinking going on. Step 1, buy the club. Step 3, sell at a huge profit. What's step 2, Karl? Anyone? To make the club DOUBLE in value in 5 years of low inflation?
Pointless anecdote: my former roommate at Carolina got pulled over in Colorado for no apparent reason. When asked why, the cop said he noticed the interlocking "NC" baseball hat, which the Northside Crips where. The funny thing is, the former roommate is about the whitest white kid to ever come out of Upstate New York. But you do raise a point - how does Manchester United increase its value from here on? It's not like the club hasn't been aggressive marketing itself in East and Southeast Asia, and it's done quite a bit of legwork with the ChampionsWorld tours the past two summers. How much more marketable could they get? And I know it's easy for us rival fans to make fun of the PLC structure, but that's what helped the club stay successful in recent years, as you don't see relatively few blockbuster transfers (Veron and Ferdinand notwithstanding) and the board shies away from giving huge pay raises. We'll see if Glazer can be as wise in his spending.
First, to make this deal work you have not just service the debt but pay it down. It would be quite interesting to see how the preferrred shares are structured, if they have specific convenants or conversion rights. If 10% of the debt gets amortized in the first couple years of operation, then this deal will be a winner. Second, you really do have to wonder about an asset worth pre-Glazer at around, what was it?? £400 million thowing off just £12 million of profit. That's serious underperformance. Something isn't right. Third, there is no doubt that Glazer is very litigious, and will exhause all legal remedies to see if he can't, a la the New York Yankees (I bet his "model" for the business side of the deal), strike his own separate media deal. If he does, that alone might earn ManU upwards of £100 million annually. The lawyers are going to be kept very busy. So, assuming he sells the naming rights for £10 million annually, and squeezes another £10 million of costs/revenues out, he's a third of the way to where he needs to be even before he steps to the plate to try and hit his media home run (sorry to mix sports metaphors!!!).
Do you think he knows there's a rule here that if you take your own FA to court you are barred from european competition? The premier league is run by the FA. There is also the little matter that Manchester United is not a franchise and has no legal right to play in the premiership. It'd be a drastic step, but if 14 or the other 19 voted them out, then they are out. And it wouldn't even be out down to CCC level either, it'd be out right down to Unibond League level, if they'd take them. When Rangers & Celtic tried a similar stunt in the SPL (where an 11-1 majority is required) all the other 10 threatened to resign from the league, which would have left the old firm with a potential TV deal, but nobody to play against.
Whoa!! Didn't know about that. That makes the plan even more far-fetched. Wow, that's draconion. Is it? I thought the whole point of the Premiership was to be separate from the FA? Let's see...how many clubs would benefit from following ManU's path? I expect it would be less than 5, right?
Just because they wouldn't benefit from the path doesn't mean they would vote Man U out of the Prem. Many teams would probably reason that its better to have Man U in the league then out. Remember, they would only have individual TV rights for matches at the Budweiser Old Trafford Stadium presented by Vodafone. The other clubs would still stand to make money off of Man U games at their house. Albiet less then they would with a universal Premiership TV package. A question of......am I better off with $35 million a year or $20 million a year....even if I used to get $45 million a year.
He pays his lawyers a lot of money to cover these bases, so I am sure he is not going to be surprised by anything. My understanding is that if you are club in good standing with the FA, then you play in the league you qualify for over the course of many seasons of play. It's not an issue of some exclusive society membership where the other guys can vote you out if they want, arbitrarily. (Heck, if that were the case, Chelseas might be banished tomorrow, given what other clubs think of them and Roman!!!) So in three years, a Division III club can make it to the EPL, and the only way they leave is by being relegated, or, presumably, for some some sort of dastardly malfeasance. Now this is different than having a league rule about sharing TV rights in a socialist (re: NFL) fashion. That is, of course, the issue he will likely litigate. He may not force the hand of the EPL, as Rangers and Celtic did with the SPL, but rather work his way through the courts as he plays by the rules for the time being. And Glazer knows how to work his way through the courts. If the courts say "Well, there's no binding requirement on Man U to stick with the EPL deal, and the EPL has no standing to evict ManU from the EPL" then Glazer wins. If it looks like he's going to win, he also has leverage, and then Chelsea, Arsenal and Liverpool, who have been "sharing" their pie with the likes of West Brom, now see pound signs too. Allies with Glazer? I certainly don't know all the legal ramifications, and could be wrong here. But I think that is the logic.
true, except your figures are screwed. There's no way at all they get £15 million for one match with Man Utd. They'd lose far more than they gain with no reason at all to go for anything other than the collective TV rights. It'd be interesting to see what the ordinary clubs in Serie A get now they've gone towards such regulation, but it seems like clubs would probably lose, at a guess, at least 75% on their TV money, with maybe a few hundred thousand pounds at best for their home match with Man Utd.
Those figures were just to make an argument.....I have no idea what the real numbers are....and neither do you, I'm guessing. Point is...the majority of premiership clubs are worse off with Man U out of the league and collective TV rights then they are with Man U and individual rights. Look, its done in La Liga and no one is threatening to throw Real Madrid out of the league, are they?
it would certainly be an extraordinary measure, but I do believe it could happen. It is an exclusive society, totally democratic, with one member, one vote - with the FA acting as a casting vote if required. I'm sure there must be rules in place covering such exceptional circumstances, and taking actions contrary to the interests of the other members isn't something that'd exactly be encouraged. Just because relegation is the only way people normally leave doesn't mean it's the only possible way clubs can leave. In Germany for example, there are rules to prevent debt, and clubs getting into too much debt have their professional licence revoked and are kicked out of the Bundesliga. Two big "ifs" though. IF there are rules in place for expelling a member club then it'd be hard for any court to rule that a member can ignore the rules. allies with him in what though? I can't see them breaking away to form a 6 team league or something like that. And as it's incredibly unlikely that there'd be 13 other clubs who benefit from such a deal, there'd never be a democratic vote away from the the deal. Nor do I. The rules of the premier league must exist somewhere, but I don't know where - the premier league's own site certainly doesn't go into that detail. I'm not sure that even if they did break away they'd be able to get that much more anyway. Overseas rights, maybe, but domestic rights are more difficult. The SKY TV contract, for example, isn't based on ratings. Ratings are actually very poor by national TV standards. What drives SKY's deal is that the premiership package is the cornerstone of getting their subscription service into homes. PPV games really haven't been much of a success over here, so even if MUTV was to show games they'd be unlikely to be able to charge the huge sums some are quoting. There's also the problem of broadcasting their channel. SKY TV, for example, would probably terminate their deal to show MUTV as part of their package. The national cable providers don't have a particularly large share of the market, so it'd be hard to generate huge revenue that way either.
It's definitely about overseas TV rights. I think I read that the current EPL overseas TV rights (mostly to NewsCorp-controlled broadcasters) are worth about 380 million pounds or so. Premier League telecasts in Southeast Asia and China reportedly draw audiences in the hundreds of millions (vast majority of the 500 million-plus audience that Richard Scudamore regularly talks about). Some speculate that Man U has at least 50 million fans in that region, and Man U/Nike have supposedly been generating rapidly increasing revenue from shirt sales over the past couple of seasons. If Man U's popularity in China and Southeast Asia is as claimed, then the pundits who claim that Man U could get over 100 million pounds a year in overseas TV money on their own may not be far off. They're probably NOT going to get anything in the US unless they pay for TV time and get their sponsors to buy commercials on the broadcasts. The US television ratings are far too low, plus Rupert Murdoch would probably stop at nothing to prevent it.