Manchester United: A case study on the dangers of 'public' sports teams

[Imran Siddiqui]

ManU went public (on the stockmarket) a while back and this led to amazing profits for the club, but now comes the downside. American Malcolm Glazer (owner of the Tampa Bay Bucs) is trying buy the team outright by a hostile takeover (he currently owns 28% of the club, which makes him the second largest shareholder). The problem? He can't pay for it himself and needs to borrow (right now from J.P. Morgan) around $450 million. How will he pay this back? That's right, by putting the club up for collateral and plunging ManU into debt. You get a perverse situation where the club will be finanacing Glazer's hostile takeover.

Of course this is not met with approval in all areas. ManU fans are LIVID! After all, ManU is highly profitable and debt free, but this sale will plunge them into debt, meaning they may have to sell off more players and not be able to make as many transfers are they are used to (can you say, bye, bye Christiano Ronaldo?). It would really doom ManU. Many former ManU players and now Ole Gunner Solskjaer, a highly popular ManU player, has come out against the takeover bid.

There have been pictures of Glazer hung in effigy at the stadium and death threats have found their way to Glazer.

The problem, of course, is that the Chairman of the club has to act in the shareholder's best interests, and a high buy price offer would HAVE to be recommended, usually. Though the Sports Minister has said the Chairman has to look at the present and future shareholders of the club's benefit. We'll see if the British ministry in charge of corporate fiduciaries sees it that way.

This seems to be a wake up call for those teams which are looking to go public. It may lead to great profits, but it may have some very bad consequences.

[Q Classic]

never was a fan of ManU, but... Glazer sucks.

[Imran Siddiqui]

Seriously though, I don't think Glazer realizes how rabid English soccer fans can be. This isn't going to be a "oh after a while they'll be ok" thing. They will DESPISE the man for as long as he becomes the majority owner.

[reds4ever]

The fans that have beem protesting 'Man U will never be sold' are the same ones who were gloating that their club was the biggest football PLC in the world a few years back.

The PLC chicken has well and truly come home to roost!

I hope he moves the 'franchiase' to London were most of the Man U fans are from anyway....

[chequita guevara]

Soccer sucks.

[reds4ever]

Originally posted by chegitz guevara
Soccer sucks.

very constructive

[Kontiki]

Ah, the LBO hits the sports world.

[Imran Siddiqui]

The PLC chicken has well and truly come home to roost!

Indeed! Great unintended consequences, though it had to be seen coming. For such a successful and rich club, you knew someone was going to engage in a hostile takeover sooner or later, and they'd have to borrow to do so. Even for clubs not as successful, I think you'd end up seeing the same thing.

[Last Conformist]

Originally posted by chegitz guevara
Soccer sucks.

Kind of, but compared to such disgraces as American Football or baseball, it's heaven on earth.

[Imran Siddiqui]

Now, now... let's not make this a my-penis(er... sport)- is-bigger-than-yours. I enjoy all three sports mentioned so far. Talk about the economic implications, not just for ManYoo, but for other public franchises.

[Dauphin]

Re: Manchester United: A case study on the dangers of 'public' sports teams

Originally posted by Imran Siddiqui
ManU went public (on the stockmarket) a while back and this led to amazing profits for the club, but now comes the downside. American Malcolm Glazer (owner of the Tampa Bay Bucs) is trying buy the team outright by a hostile takeover (he currently owns 28% of the club, which makes him the second largest shareholder). The problem? He can't pay for it himself and needs to borrow (right now from J.P. Morgan) around $450 million. How will he pay this back? That's right, by putting the club up for collateral and plunging ManU into debt. You get a perverse situation where the club will be finanacing Glazer's hostile takeover.

Of course this is not met with approval in all areas. ManU fans are LIVID! After all, ManU is highly profitable and debt free, but this sale will plunge them into debt, meaning they may have to sell off more players and not be able to make as many transfers are they are used to (can you say, bye, bye Christiano Ronaldo?). It would really doom ManU. Many former ManU players and now Ole Gunner Solskjaer, a highly popular ManU player, has come out against the takeover bid.

There have been pictures of Glazer hung in effigy at the stadium and death threats have found their way to Glazer.

The problem, of course, is that the Chairman of the club has to act in the shareholder's best interests, and a high buy price offer would HAVE to be recommended, usually. Though the Sports Minister has said the Chairman has to look at the present and future shareholders of the club's benefit. We'll see if the British ministry in charge of corporate fiduciaries sees it that way.

This seems to be a wake up call for those teams which are looking to go public. It may lead to great profits, but it may have some very bad consequences.

Unless Glazer is being purely vindictive against the club and has money to burn he obviously believes that the move will benefit the club. From what you say (I haven't been following this other than the protests), even if Man Utd are footing the debt by being collateral Glazer will be the majority shareholder and most damaged if ManU go under from debts that are crippling.


IMHO the issue here is the fans and the continuation of a cultual icon, not the shareholders interest. If you are a current shareholder who fears the takeover, sellout at a huge profit and let him take the club down.

[Imran Siddiqui]

Well, there are plenty of shareholders who are also fans. They may consider that the long term investment possibilities for ManU on the current path are MUCH greater than Glazer's future ManU or even Glazer's offer. The best money making may be to continue as is, and that may be an argument to resist the takeover on the part of the shareholders.

[Dauphin]

The money making potential of the club should be reflected in the share price already, and additionally the takeover will inflate the price in the short term.

Fans who are shareholders need to make sure they are not confusing love with money.

[Harry Tuttle]

I gotta ask: Why didn't the team give 51% of the shares to Manchester? Why did they leave themselves vulnerable?

[Imran Siddiqui]

You mean to the city itself? That would be strange, don't you think?

The money making potential of the club should be reflected in the share price already, and additionally the takeover will inflate the price in the short term.

What about the long term? Perhaps the shares would be more valuable in the long term if the current situation would be continued, than if Glazer increased the price in the short term.