Glazers Out – Part 2
Sup fools. Welcome back to another installation of “I really fucking despise the Glazers!” Last time, we learned about how insanely stupid it is to buy the GREATEST Football Club ever with mostly debt. In this installation, I’ll explore the financial situation with information available before the “Company” consummated their IPO. To be honest, it sucks to think of Manchester United as a company. However, that is what Malcolm Glazer decided long ago. Here is Part 2 of why getting the Glazers out of Manchester United should be a priority for every fan!
The Glazers’ Greedy Financing
After completing the takeover in 2005, the Club continued to perform under the strategic vision of the greatest manager to ever live, Sir Alex Ferguson. What did not flourish was the Glazers’ expectations for a shiny new cash-cow. This period of the Premier League was the beginning of what would be the rise of the current global game. With Malcolm Glazer’s investment only a few years old, the results of just what the Glazer family was enabling and sanctioning is preposterous.
While SAF established managerial dominance, the underlying operations showed that the foundations were starting to crack. After the massive debts were put onto the club, I wondered what can be done with that much owed? This, my friends, is where Manchester United began shifting from a football club to a corporation. Maybe you can excuse away the leveraged buyout initially, but the issues only continued.
Although specific details about the debt used to purchase the club are not readily available, let’s speculate. Debt that large was likely pooled from many investors who loaned out money for a required rate of return (i.e. interest.) Investors seeking returns likely structured the deal where principal payments were not required for at least 5 years. Essentially, Manchester United didn’t have to pay the massive $575m borrowed, but they did have to pay interest.
From Magnificent Club, to Struggling Company
Interest sucks. I have to give Glazer the benefit of the doubt and say he was a completely useless, moronic, short-sighted dumbass. You have to understand that if I give Malcolm Glazer the slightest bit of credit of being able to function like a normal human being, what he did will look like one of the worst transactions in financial history. The business model quickly went from “how do United continue to be the greatest team ever” to “how can United make these lofty interest payments?”
I don’t think there exists a world where large banks, investors, and the suitsTM aren’t the most greedy people known to man. Based on some basic info gleamed from their prospectus of United’s IPO and a little math, the original debt was likely loaned out with anywhere from a 4-6% interest rate. This theory excludes special debt circumstances such as floating rates, LIBOR+, or even increasing rate debt because that would make Glazer look worse. Remember, the $790m takeover deal was cash paid to previous owners to buy them out – essentially United the football club received none of it. Can you imagine a Football Club paying at minimum $23M a year for basically nothing?!
Now, the Glazers had to pay a ton of interest while maintaining the status quo of everything else inside the club. In 2008, things were not going well operationally for United despite selling THE GREATEST PLAYER IN THE WORLD FOR A RECORD FEE! Large payables due, such as interest, caused the first cash crunch in the Glazer era; how wonderful! At this point in the story, you might be thinking just what other tricks could Glazer use to keep his cash-cow marginally afloat? Yup you guessed it, even more debt! Operations couldn’t support the clubs large interest bills due every year, so Malcolm Glazer made United take on more debt with interest payable, to pay off the existing debt with that interest still payable! THIS. FUCKING. GUY.
Reactions to the Glazers
With SAF guaranteeing silverware every year, the Club’s global reach and valuation soared to new highs. Simply put, there was never a better time to be a Manchester United fan. After Ronaldo left, fans saw the transfer fee, and immediately expected it to be reinvested in the squad. When you lose the world’s greatest player you NEED to replace him. The exact opposite happened, and fans were furious; an argument can be made that Ronaldo wasn’t truly replaced until maybe Bruno.
You think we have it bad now? Hold my beer. At June 30, 2008, Manchester United OWED 16 DOLLARS FOR EVERY 1 DOLLAR in the bank! Holy fucking shit is right. Despite the continued lunacy, SAF continued business as usual dominating the world football stage. Looking back on the Final Years, his relationship with Glazer was a ticking time bomb. How can United have the greatest manager ever, and not run the club efficiently? I would want to retire too if a club undermines you at every chance possible.
Conclusion
Well, that just about wraps up Part 2 of the Glazer family;s history at Manchester United. I honestly didn’t think I would make it. I found myself abusing my keyboard fueled by the rage of a thousand Wayne Rooney tackles. You know it, I know it, we all know it. Manchester United cannot return to greatness until the Glazers are pushed out! Stock up on your #Glazerout merch cause I know for a fact that when fans return, there will be a sea of green and gold at the Stretford End!
GGMU,
JR
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