News of the Glazers’ interest in a sale was met with euphoria by United fans, but with a nation-state, hedge fund or tech giant likely to replace them, there’s little cause for celebration
The calculation now being made by nation-states looking for projection, hedge funds looking for profit or tech giants looking to monetize their involvement is the same one that lured the Glazers into buying Manchester United.
The 2005 purchase of the Premier League’s jewel was a classic leveraged buyout executed like so many city acquisitions, a debt-driven venture with enormous growth capacity involving a blue-chip organization.
Like the Bank of England and UK plc, Manchester United is the guarantor of stability itself, such an established and trusted profiteer that it will never go out of business as long as 11 guys are chasing a ball across the turf to please us.
The Glazers bought the club for $790m (£661m), more than double what Boston moneyballers FSG paid for Liverpool five years later. More than half of this was financed by loans.
For their part, the Glazers invested $270m (£226m). Interest payments would be paid by the club, meaning all they had to do was ensure a basic level of competence in the boardroom and on the pitch, sit back and watch the big bucks roll in. Oh, and don’t forget, they pay a hefty dividend on profits along the way.
The club have paid out an estimated US$133million (£11million) in dividends on top of Glazer-owned debt payments, most of which goes straight to the family, effectively recovering half of their original investment. For the Glazers, United was just a fattening calf for sale. Their ownership was purely transactional. Seventeen years into his jackpot time, they’re trying to turn that $270 million into at least a $5 billion (£4.2 billion) win.
Brilliant, especially when you consider that this sum is almost double the total British working population for the same period. And since this calculation assumes that 44 million economically active people earn an average of £36,000 from full-time work, the figure for 2021 rather than 2005, the difference is likely to be even larger.
The family was already familiar with sports as a commodity through their ownership of the Tampa Bay Buccaneers in the NFL. They saw an opportunity to expand commercial operations and milk the potential of a global fan base estimated at over a billion. Raine Group, which has been tasked with overseeing the sale of the club, is promoting United to investors on the same basis, except now, following the development of social media platforms and technical integration, there is even greater economic potential in the monumental United’s presence lies.
Glazers United’s estimated $1.7bn (£1.4bn) transfer spend is broadly consistent with Manchester City’s transfer spend during the Abu Dhabi ownership period, $1.8bn (£1.5bn) .GBP). The difference to United’s expenses came from the club’s profit, not the owner’s pocket. Add that to around $500m (£419m) in debt payments plus dividends and it’s a huge drain on United’s ability to keep up with the Joneses.
While City have poured money into stadium development, upgrading training grounds and infrastructure projects around the Etihad, as well as player recruitment, United have repaired Old Trafford and Carrington. Both require significant investment to maintain the club’s gold standard status.
The emergence of corporate and state ownership is a consequence of the transformation the game has undergone since the rise of the Premier League 30 years ago. This is about the growth of sport, especially football, as entertainment. Audience demographics have changed dramatically over time, creating a market unimaginable in the days when clubs were essentially inward-looking, community-based gigs for working-class guys. The business began and ended with matchday, a no-frills endeavor that smelled of cake and Bovril.
In the Premier League era, none thrived like United until first Chelsea and then City changed the competitive landscape. Tolerated in the days of plenty under Fergie, the Glazers turned venomous on the post-2013 hellscape when they were seen for what they are, rapacious collectors who put their interests ahead of the club’s.
Warning, the next lot could be even worse.