The Glazer Takeover: The financial downfall of Manchester United

Manchester United's president was Louis Edwards, a Salford-born entrepreneur who made much of his fortune through his meat trading company, from 1965 until his death in 1980. He started investing in the club in the 1950s and became its majority shareholder in the 1970s. His son, Martin Edwards, who was president until 2002, succeeded him. 

Mihir Bose, British sports journalist/author investigates in his book- Manchester Disunited, how Edwards had constantly attempted to sell to multiple investors, some of his shareholdings in the club since 1984. In 1989, he agreed to sell his 50.6% at the club to Michael Knighton for £10m, but the agreement came to an end when it turned out that Knighton was unable to raise that much capital. In June 1991, Edwards followedTottenham Hotspur's precedent of placing the club in the stock market in 1983, valuing the club at £42m, or £3.85 a share.

The change of ownership structure from a limited company to a public limited company made it easier to trade shares. 

In 1998, Rupert Murdoch tried to buy shares in the club but was thwarted by the Mergers and Monopolies Commission (now closed) following fan protests. Adam Brown and Andy Walsh in their famous book- Not for Sale!: Manchester United, Murdoch and the Defeat of BskyB, noted that most supporters often hated the club trading on the stock market, claiming it was diving into commercialization and creating a wedge between them and the club. 

The club was eventually owned by John Magnier and J.P. McManus, who owned Ireland's Coolmore horse-stud estate. They sold their 28.89 percent stake in Manchester United to Malcolm Glazer in May 2005 after a lengthy dispute with Sir Alex Ferguson over the breeding rights of racehorse, Rock of Gibraltar, which prompted him to make a formal takeover bid on the club.

Malcolm Glazer and his family won the club's controlling bid of £790m on May 12, 2005. The BBC in 2005 reported that initially, the Glazers had acquired a 2.9% stake in the club in March 2003 and by 28 June 2005, the family owned 98% of the club's shareholdings and deducted them from the stock exchange. 

In 1995, Glazer acquired a National Football League (NFL) franchise, the Tampa Bay Buccaneers and then entertained requests for relocation from other cities. Forbes in 2007 argued that the favorable terms of the Tampa Bay residence contract resulted in the franchise being priced at $963 m. The era in which Glazer owned Tampa Bay Buccaneers saw a dramatic improvement in the on-the-field performance levels of the franchise to the point that it won its first Super Bowl title in 2002. The on-the-field performance of Manchester United was also noteworthy under Glazer's ownership: it won the EPL title in three of the first five full seasons and the Champions League once. According to Forbes, by 2009, Manchester United had become the most valuable football club in the world, surpassing Real Madrid. 

Nonetheless all of Bose, Brown and Walsh’s accounts clearly show that supporters’ worries regarding the Glazers’ buyout were not primarily related to team performance fears. Alternatively, a major concern was the amount of debt he put on the club in May 2005, Glazer quickly leveraged the £559m they borrowed to purchase Manchester United back to the club (with annual interest repayments of around £60m) and then refinanced the debt in January 2010, as the club tried to draw £500m in new bond loans.Ticket prices, meanwhile, had increased by an average of 48 percent. By the start of the 2009/10 season in some parts of the club's Old Trafford Stadium it had increased by 69%.

Brown even claimed that Manchester United's purchase by the Glazers divided the club's supporter base as some supporters responded by setting up F.C. United in the 2005 season. F.C. United is led by a fan group that included the likes of Adam Brown and Andy Walsh and many other active members of the Independent Manchester United Supporters Association (I.M.U.S.A.) who protested against the attempted purchase of the club by Rupert Murdoch in 1998. 

F.C. United operates as a semi-professional football club and, although it was based at the stadium of Bury F.C, it moved to Newton Heath in 2013 on its own ground. In its first three seasons, it has been promoted and is currently playing in the seventh tier of English football, three divisions below Division Two of the Football League. 

The Red Knights was formed after news that the Glazer family tried to restructure the debt of the club in 2010. This group was led by Jim O'Neill, Goldman Sachs' head of global economic research, with the goal of buying the club from the Glazers. The group is liaising with Chief Executive Duncan Drasdo of the Manchester United Supporter's Trust (M.U.S.T.) asking fans to pledge support by supporting the trust. 

An alternative fan response was to demonstrate additional support by wearing ‘Green and Gold’ scarves to games, which reflected fans' disharmony visually. The movement gained international recognition, to a point where former Manchester United player/international celebrity- David Beckham who’s been a long-time supporter of the club too, dawned a Green and Gold scarf (see picture below) in support of the movement back in 2010.

In June 2010, the BBC reported that the Red Knights postponed their plans to make a formal offer to buy the club from the Glazers, fearing that the cost would be too high. 

In summary- Once Malcolm Glazer and his family took over Manchester United's financial control in 2005, they surmised it from the London Stock Exchange and shifted the ownership structure back into a limited company from a public limited company. One of the first major impacts of the global credit crunch impacted the London Stock Exchange, where Manchester United shares were exchanged between 1991 and 2005. Although companies trading on stock markets were affected–and recovered–differently from the crash, the events culminated in significant increases in the number of insolvent, bankrupt and liquidated firms over the years that followed. 

If Manchester United had managed to trade through the credit crunch as a public limited company, the share price may have declined dramatically. This may have made it attractive for organizations such as The Red Knights as well as other small investment groups. In view of the credit crunch, these buyers may not have been able to leverage the sale price from banks and commercial creditors and, even if the club were not selling, investment in playing staff and the club more broadly would almost certainly have declined. 

With that in mind, there may also have been some of the impacts of Manchester United's post-2005 leveraged debt if the club hadn't changed its operational structure and continued to operate as a public limited company. It is highly unlikely that Manchester United would have faced bankruptcy, but the operating budget may have been limited. Fans started mobilizing over two years before the credit crunch emerged. Most of it was done through F.C United's establishment that was largely due to BSkyB's attempted buyout of the club which was opposed by the leaders of the IMUSA many years earlier. 

Today, as the club faces some of its darkest times in the history of its existence, fans are quick to blame the Glazers for sinking the club in debt and their lack of interest and financial support in the game, and rightly so. As the Green and Gold movement continues, a new generation of fans have taken the fight online with the #GlazersOut movement. 

The motives for this mobilization are primarily related to the Glazer family but are numerous in their underlying nature, as the new club has adopted a motto of ‘broad church.’ Issues of culture and cultural ownership have been important to some of its followers, ranging from advocates in the fight to change football's social politics, to just those fans who want to watch a match at a cheaper price than what the EPL offers. For those who are directly involved in the politics of the club, collective action is held–in effect–to watch games in Manchester and the regionalised non-league grounds of English football, even if fans from abroad are not deliberately excluded.

Sources

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