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Stand up if you’re not for sale

Submitted by on March 2, 2010 – 9:37 amNo Comment

Good breeding

From The Guardian:

The Glazer family, under pressure from fans protesting at their ownership, said tonight that Manchester United were “not for sale” after it emerged that a group of influential City figures known as the Red Knights had met to consider a bid for the club.
Sources close to the talks said that the discussions, although in their early stages, were serious in their intent. Jim O’Neill, chief economist at the bank Goldman Sachs and a lifelong United fan, is a key figure in the group, which is made up largely of United fans, and is confident of being able to raise the £1bn-plus required.
O’Neill today met other powerful City figures interested in exploring the possibility of bidding for the club, which is carrying debts of £716m if the high interest hedge fund loans secured by the Glazers on their stake in United are added to the £504m bond raised in January.
O’Neill was an outspoken critic of the bond issue despite his investment bank being one of seven underwriting the issue and sharing in £15m in fees. “There’s too much leverage going on with Manchester United,” he said in January. “It’s not a good thing. I’m not a buyer of the bond.”
Others believed to be at today’s meeting in London included Mike Rawlinson, a partner at the City law firm Freshfields, who advised United on their takeover by the Glazers in 2005.
Further City figures, including Paul Marshall, a partner at the hedge fund Marshall Wace, and Keith Harris, a stockbroker who has been involved in several football takeovers, are supporting the Red Knights. Richard Hytner, the deputy chairman of the global advertising agency Saatchi & Saatchi, is also involved along with other influential figures from other business sectors.
Harris, a United supporter, last week called on supporters backing the anti-Glazer green and gold protests – the colours first worn by United – to begin boycotting the club and said that any takeover would hand fans a “golden share” giving them a decisive say in its future.
The talks grew out of earlier attempts by United fans to engage wealthy fans in the possibility of a buy-out scheme that would slowly morph into a collective ownership model. But the discussions have become more serious after the full extent of the Glazers’ borrowings, and the amount they intend to take out of the club over the next seven years to pay down their own high interest loans, has become clear.
The 322-page prospectus that was issued to encourage take-up of the bond issue revealed that the Glazers could potentially take out almost £130m in cash from the club next year alone. That is in addition to the straightforward payment of interest (yield) on the £504m bond of around £45m. That will bring the total taken out of United to service the Glazers’ borrowings, which were loaded on to the club after the family bought it, to £172m next year alone.
Although the successful bond issue laid bare their business model and the money that would flow out of the club rather than being invested in players and facilities, it has in many ways strengthened the Glazers’ hand. Their spokesman was tonight unequivocal: “Manchester United is not for a sale. It’s business as usual.”
The bond was twice over-subscribed but the risk attached to the bonds by the market has increased since they were issued. Andy Green, an investment professional and United supporter who wrote a challenging open letter to United’s chief executive, David Gill, under his blogging name Andersred, told the Guardian last week: “There is a very serious process going on in the City, with investors looking at a structure in which fans can develop as significant a stake as possible. Key will be persuading the Glazers to sell.”
United sources believe the news may have been leaked for maximum impact. Figures released tomorrow by Deloitte will show that United have been overtaken by Barcelona in the list of the world’s biggest revenue generators, slipping to third.
Gill will on Wednesday give his first public defence of the refinancing at the Soccerex conference in Manchester. In his only interview since the bond was issued, he has backed the Glazers to the hilt.

David Conn’s take on procedings:

During all the Manchester United fans’ long campaigning against what they have seen as serial financial exploitation of them and their cherished club, beginning with the Stock Market plc and ending with the Glazer family, they have nurtured the hope that United could ultimately become owned by supporters, not speculators. The outburst of green and gold in the stands expresses a yearning for United to embody the earthier, working-class roots of their Newton Heath railway worker founders, from long before a family from Florida loaded the club with £716m debt solely to finance its own takeover.
Whether that yearning can evolve into a solid transformation and exit by the Glazers depends on the hard-headed detail beginning to be knocked together in the City of London. Sentiment alone will not buy the club but, if the Red Knights really are United supporters who can raise a great deal of money and work with the Manchester United Supporters Trust to widen ownership, profound change could at least be possible.
The reported presence in yesterday’s “Red Knights” meeting of Paul Marshall, the hedge fund founder who has called for the club to be supporter-owned like Barcelona, gives hope for the genuineness of the idea. It shows, too, how widespread the revulsion has been to the revelations about United’s debts contained in January’s prospectus by which United were seeking to borrow £500m in bonds, at 8.75% interest “yield” – £43.75m a year.
The prospectus set out the detail, that in yet another Premier League winning season, 2008-09, United made a profit only because they sold Cristiano Ronaldo for £81m. It itemised the £22.9m the Glazers themselves have been paid in fees and personal loans and how much more they can take out.
The attitude no longer washes that somehow the fans do not understand finance and that this is all fine for United. Fans from working-class Mancunians to the men in the City yesterday have united in seeing through the blandishments to the core fact: a great football club has been lumped with punishing debt for no purpose other than a profit the Glazers ultimately seek for themselves.
Even the success United have had under the Glazers, and the formidable run into which Sir Alex Ferguson has whipped his team since they lost 1-0 at home to Leeds United in the FA Cup, has not appeased fans who see simply how much better the club would be without pouring fortunes out to a debt mountain.
Yet before any takeover becomes real there are, of course, major challenges. Put bluntly, they are: can this group of 40 or so people raise anything like the money required to make a realistic offer and, even if they do, would the Glazers sell?
To the first question, assumptions and figures are tossed around. The assumption is that the Glazers, who seem so resolutely thick-skinned in the face of their always stormy welcome in Manchester, would certainly not go without a profit. Of the original £810m purchase price in 2005, they paid £272m, with the rest borrowed from banks and, very expensively, from hedge funds. The presumption is that they would want a significant increase on that £272m before they even entertain a sale. The Red Knights would have to find that, and also take on or pay off the £716m debt. That takes the amount a group of wealthy Manchester United fans need to raise up to around £1bn, a massive mound.
Even if they do, the family has said it is not for selling. The sole point of the bond issue was to enable the Glazers to take money out of the club, £95m initially, to part pay-off the hedge funds whose £202m loans are accruing interest at a heartbreaking 14.25%, rising to 16.25% this August. With that device achieved, and a Wayne Rooney-inspired United still successful enough, the Glazers may dig in for what they claim they want – to remain owners for the long term.
That is where the combination of wealthy, sympathetic buyers and the green and gold mass of fans becomes intriguing. If the Red Knights can raise the money, and supporters, including corporate subscribers, are motivated to vote by wielding their right not to pour their hard-earned into the Glazers’ business plans, the family could come under sustained pressure. Delivering so huge a club to wealthy supporters in combination with a supporters’ trust looks a red devil of a project but it could just have legs.

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