Old Trafford in turmoil as Glazers restructure crippling debts
THEY boast of having 469 million followers around the world but then warn that they may have to sell their own stadium.
They are the most valuable club in the world – worth £1.2 billion (R14.5bn) according to Forbes – but have no money of their own to buy players. This is Manchester United 2010; Manchester United the Glazer way.
Fears of financial meltdown have stalked the dreams of supporters since the Glazer family took their club into private ownership in 2005. Now – as they tour the world trying to raise £500 million to ease the burden of debts worth £699m – United’s owners have put down in black and white just what their four-andhalf turbulent years have done to United.
Here are five warning signs from the “Preliminary Offering Memorandum” distributed to potential investors this week. 1. SELLING OLD TRAFFORD AND THE CARRINGTON TRAINING GROUND
United need to raise money and quickly. One way they can do this is to sell their assets and then lease them back. Previously, they have denied they would do this but in the document the club admit that: “The indenture governing the notes (bonds) will limit our ability to sell or transfer, but not prohibit us from selling or transferring, our training ground facilities and our stadium. In the sale or transfer of any of these properties, the transferee will be required to enter into a long-term lease with us to enable us to continue to have substantially the same access to such property as we currently do, if we sell or transfer either or both of these properties, we will no longer control them.” 2. PLAYER SPENDING IS ZERO
The club made a £7m profit on player spending over the last three financial years ending June 20, 2009. In other words, they have spent nothing. Now they are admitting they will have to use their recently arranged £75m credit facility to buy players this summer and the prospectus says: “Although we have not historically drawn on our revolving credit facilities in the summer window, if we seek to acquire players with values substantially in excess of the values of players we seek to sell, we may be required to draw from our revolving credit facilities.” 3. THE DEBT COULD GET WORSE
The document warns the Glazers may need to refinance their debts again in the future. It says: “We believe the proceeds of this offering ... will be sufficient ... to meet our capital requirements and pay our interest. However, if cash flows are less than projected, we will require additional debt or financing in amounts that could be substantial.” 4. THIS COULD REQUIRE UNITED TO SELL PLAYERS
Despite their massive turnover and unrivalled income streams, United broke even last year only because of the £80m sale of Cristiano Ronaldo to Real Madrid. The prospectus warns that player sales could be necessary again and adds that the club’s debts could: “Require us to dedicate a substantial portion of our cash flow to pay the debt, thereby reducing the availability of our cash to fund the hiring and retention of talented players.” 5. SPENDING MONEY THEY HAVEN’T GOT
This summer United will officially begin a lucrative four-year shirt sponsorship deal with financial giant Aon. The contract is worth £80m but the prospectus reveals that United have already had an advance of £36m. We are told that: “Our net cash inflow for the year ended June 30, 2009 was £111.2m – a significant increase that reflects an advance payment of £35.9m as part of our new shirt sponsorship agreement.” – Daily Mail
SIGN OF THE TIMES: In October 2004 Man United supporters demonstrated outside Old Trafford against a possible takeover of the club by American businessman Malcolm Glazer. Seven months later the takeover was completed.