Glazers' plans to float Manchester United make the heart sink
The US owners hope to entice investors willing to buy Manchester United shares with reduced voting rights and no dividend, then register the company in the Cayman Islands
After so many months of testing the flotation waters in Singapore, then New York, we can now see the scheme that Manchester United's owners, the US-based Glazer family, have been paying an army of bankers to orchestrate. United's debt, loaded on in 2005 for nothing more constructive than the Glazers' takeover itself, remains a sorry £423m burden, even after the club has paid out more than £500m interest, bankers' fees and charges, to service it. Now the Glazers have hit on their preferred solution: find other people prepared to pay some of it off, while the family remains in complete control.
The 231-page registration document filed with the New York Stock Exchange in preparation for a float of the famous Manchester United is the latest Glazer candidate for the most depressing document ever produced containing the word football. It features an introductory "reorganisation" map, so potential investors can navigate themselves through the tax havens within which Manchester United is to be harboured.
The Glazer family will retain control, via their company, Red Football LLC, registered in the low-tax US State of Delaware: "Upon completion of this offering, Red Football LLC will remain our [Manchester United's] principal shareholder and will continue to be owned and controlled by the six lineal descendants [five sons and one daughter] of Mr Malcolm Glazer."
The Manchester United company to be floated has been registered in the Cayman Islands. Investors will be invited to buy class A shares in that company, which will carry 10 times less the voting rights of the B shares the Glazers will issue to themselves. Nor is there a plan to pay dividends to the investors. They are asked to buy shares in the expectation their value will increase as Manchester United, described in the document as "one of the world's leading brands", further exploits its commercial potential.
Below Red Football LLC, the Glazers' vehicle in Delaware, and the public investors in the Cayman Islands-registered Manchester United Ltd, are five further holding companies, in a graphic which looks like a robot with a wonky hip. At the bottom of the chart are "various operating subsidiaries", not itemised in any further detail. Somewhere within that assortment, at the bottom of the corporate structure leading via the Cayman Islands ultimately to Delaware, is Manchester United, the football club of Sirs Matt Busby, Bobby Charlton and Alex Ferguson, still with its 0161 telephone code somewhat quaintly noted on the New York Stock Exchange document.
Some eyewatering detail is provided in the necessary information for investors, besides the already famous admission that United's debts risk "adversely affecting" the club. Indeed a legendary club, and with 20 years success in the Premier League era, United make huge money, from 76,000 supporters at Old Trafford, TV sales and all the sponsorships and commercial income the Glazers' executives wring from the "brand". Yet over the years, £500m has gone out to service the debts, and some of that is broken down.
In the nine months to 31 March this year, finance costs were £35m; in the year ended 30 June, 2011, United paid out £51.3m interest. That followed the hideous £108.6m paid out, in the year to 30 June 2010, when the Glazers last refinanced. That included £16.4m and £19.3m lost on dollar-to-pound exchange rates, and "a £11.9m one-time charge related to terminated interest rate swap agreements". Supporters asking why Ferguson has not signed top European players to complement his still admirable faith in youth, can peer at that to see where some of their club's money has gone. This stock market move is intended to reduce the debt and put United in a healthier position, but supporters see the financial interests of the Glazers at the heart of it.
One wider point should be considered, among many. This is the most momentous event at an English club since the England team tumbled out of the European Championship. Roy Hodgson's team of triers was accompanied by the age-old call for a revolution in how we think about football, for Premier League clubs, the Football Association and the whole game to the grass roots, to pull together for the common good. Days later, English football's greatest name is being re-routed to the New York Stock Exchange via the Cayman Islands, to pay debts a US family was allowed to load on, to buy one of our great clubs in the first place. That hocking of clubs in the global marketplace has always seemed at odds with a coherent approach to building a great sport, a waste of the great opportunities the modern era is providing.