The Glazer family already had quite an experience with multiple businesses back in the US. Their first experience with a big sports franchise came in the form of NFL side Tampa Bay Buccaneers, which they bought in 1995. Known for his thrift spending and shrewd businessmanship, under Malcolm Glazer the Buccaneers went on to become a successful investment as they eventually won the Super Bowl in January 2003. The family even managed to convince the city council to build a new stadium (Raymond James Stadium; opened 1998) for the team by getting funding from the public and little to no investment of their own.
Via one of their holding companies, Red Football, the Glazers started buying into Manchester United’s shares in March 2003, when they spent about £9 million on a 2.9% stake. Piece by piece, they started increasing their investment into the club by slowly buying shares over time. By May 2005, the family had acquired over 75% of the club’s shares, which allowed them to delist the club from the London Stock Exchange, where it had floated since 1991, hence ending its public status. By next month, their ownership of the club had reached 98%, which forced a squeeze-out of the remaining shareholders, finally making the Glazers the sole owners of Manchester United.
Manchester United’s overall takeover by the Glazers was valued at £790m, of which they themselves had put only £270m (it is disputed that there is no substantial evidence that even this amount was solely their own). They had achieved this by employing a common corporate tactic called a Leveraged Buyout (LBO), which lets you borrow huge amounts of money for a corporate acquisition by using the acquired company’s assets as collateral for the loan. In the Glazers’ case, that entity was Manchester United, meaning it was the club going in debt, and not the family. Manchester United had been a debt-free club since 1931, when it was last saved from the jaws of extinction. Nearly 75 years later, just like that, it had been placed under half a billion pounds in debt.
The reaction of United’s fanbase was just as well as you’d expect. The English football was just about coming to terms with the idea of having a foreign club owner, most notably with a certain Roman Abramovich acquiring Chelsea not too long ago. Add that to such a cunningly crafted takeover, that even though looked hostile from all angles, was perfectly legal and unchallenged by the English law and the League’s criteria, meaning any resistance was inevitably futile. Inconsolable by finding their club half a million pounds in debt overnight, United fans began protesting in different ways. A group of fans walked away and formed a ‘phoenix’ club – called the FC United of Manchester, a democratically operated club that currently plays in the Northern Premier League Premier Division, the seventh tier of English football. Multiple resignations of board executives, coupled with rallying attempts to launch a counter-bid, seemingly supported by many of then United players (including a certain Ole Gunnar Solskjær), eventually worsened into vitriolic violence in many sectors, so much so that when three of the Glazers – Joel, Bryan and Avram – visited Old Trafford for the first time on 29 June, 2005, they had to be escorted out of the stadium after the match by the Greater Manchester Police. With effigies burned and death threats chanted, United legend Sir Bobby Charlton had to issue a formal apology to the Glazer family, stating that while righteous with their dissent, the fans were going overboard with their violent tendencies. All was pointless, eventually, as the takeover went through, and the Glazer family became the sole owners of Manchester United – one of the biggest football clubs on the planet.
United’s near-£800m takeover is still the biggest takeover of any football club contrived to this day. The second biggest? Liverpool’s £300m takeover by the Fenway Sports Group back in 2010.
When the Glazers bought United, they saw a cash cow of gargantuan proportions that, if run properly, would not only bring in money, but a big-name reputation on a global scale. They were well ahead of the curve to see United’s future value skyrocket with the English football exploding with international broadcasting revenue, and looked to install a business model whose success didn’t immediately depend on the team’s performances, rather how many eyes were falling on the club. They focused on increasing the quantity of interactions around the world rather than the nature of said interactions – a common tactic to rake in revenue in the age of social media. To their credit, they managed to do exactly that. By taking the club global well before and more successfully than everyone else, increasing commercial influences in far international markets by inventing new categories of sponsorships (noodles, tires, pillows – you name them) and dominating the social media scene well before everyone else caught up (over 1.4 billion social media interactions worldwide in last year alone), the Glazers capitalised on the Manchester United name and made it a household name and a commercial giant known worldwide. In 2016, United became the first English club to earn over half a billion pounds in revenue in a single financial year. Currently, Forbes lists the club’s value as third highest on the planet (US$3.98 billion), behind only Real Madrid (US$4.23 billion) and Barcelona (US$4.21 billion).
To their credit, the Glazers never really shied away from their true intentions behind taking over Manchester United. They never claimed to have any vested interest in the sport, or the club, or its glory. They seized on a commercial opportunity, and on that note, the revenue United generated was always going to be prioritised towards the Glazers’ pockets and the interest payments for the massive loan United was indebted to, before any investment into the club could be considered.
In the beginning, the annual interest payments made towards the loan were as high as £60 million, but through refinancing, the Glazers have managed to bring that amount down over the years. Essentially, refinancing allows you to replace your loan repayment model with a new one – usually with a lower annual interest paid over a longer amount of time – as long as you can convince the moneylender(s) that your business is well capable of generating enough revenue to make those payments by the end of the year. The Glazers have refinanced their loan over four times since the takeover, bringing the annual interest payments down to £20 million approx. To generate further funds, the family even relinquished some of the shares by listing the club on the New York Stock Exchange in 2012. They currently own nearly 78% of the total shares of the club.
Since 2005, Manchester United have already paid well in excess of £790 million in cumulative interest, the original price they were bought for, and yet their principal debt sits well north of half-a-billion pound mark, with net debt risen to £474.1 million over the last year (we’ll get to that). To this date, the Glazer family has personally pocketed around £200 million from the club. Add that to the interest payments, debt and other outgoings, and the amount goes well beyond £1.5 billion. When you hear United fans talk about the Glazers and their disdain for the way they have operated, this is principally what they refer to.
Glazers’ practices were, to put it mildly, ‘tolerable’, as long as the club managed to perform well on the pitch. For the first eight years, Sir Alex Ferguson did everything in his power to maintain the club’s reputation as a football juggernaut, irrespective of what was going on off the pitch. The team went on to regularly win trophies, as they were wont to do, most notably a further five Premier League titles, along with a Champions League win in 2008, until Sir Alex retired in 2013.
Of course, when a dynasty as big as Sir Alex’s came to an end, even the Glazers knew it will take quite an investment for the club to remain a global powerhouse. Of course, to say that they have put no money into the club is bit of an oversimplification, and to a greater extent, simply not true. Since 2013, the club has spent over £1 billion in transfers, with the overall player wage bill increased by 83% (£332 million in 2019) and annual amortisation charges more than trebled in that time. That said, the idea behind player acquisitions have always leaned towards “how can this player help us with our commercial goals” rather than “how can this player fit the team”; sometimes the players have checked both boxes, but undoubtedly the club’s ability to pull players has significantly reduced, especially with young, future prospects. The Glazers have also spent over £40 million in sacking their three managers in David Moyes, Louis van Gaal, and José Mourinho post Sir Alex.
Despite the mediocrity, the past seven years have still seen some silverware arrive upon the club’s door. Two Community Shields, one UEFA Europa League and one FA Cup have helped lessening the gloom occasionally, but with the last trophy coming in 2017, United are on their worst trophy drought in over thirty years. Their best league position and highest points tally came in the 2017-18 season, when they finished second with 81 points, 19 points behind champions Manchester City. José Mourinho has since dubbed it the biggest achievement of his career. Naturally, he was mocked for the statement, but in retrospect, it doesn’t sound very funny anymore.
“Over one billion in transfers spent” is a common stick United fans are beaten with every time they’re heard criticising the Glazer ownership. While undoubtedly being no small amount, the manner of the spending shows that United haven’t really improved their squad as much as the numbers would suggest. Another most common matter of bewilderment is why the board has failed to appoint a definitive footballing body operating between the management and the owners that could make proper, long-term footballing decisions, but in reality that can be credited to the fact that the Glazers never really much cared about the football in the first place, so the idea of appointing a set of people who’d chastise them continually to invest towards the improvement of the squad with little regard towards their commercial aspirations would seem not too dissimilar to shooting themselves in the foot. Seven years might feel like a long time, but isn’t in terms of historical connotations, so as long as the club brought in occasional silverware and managed to purport an image of a club on the up, the current Glazer model would have continued to work successfully. Thing is, the challenges Manchester United are facing on the pitch currently are not too different from the ones they were facing back in 2013, giving the idea that the club has simply stagnated, with big, sweeping changes required to bring about any long-term improvement. At the end of the day, the brands only ever want to associate themselves with ‘winners’, so there was only a matter of time before United’s mediocrity caught up with their commercial might. The club had already started suffering a lack in profit with an ever-diminishing reputation in recent years, but it would have still taken quite a few years for United’s revenues to dry way too much for the Glazers to take any drastic action.
That was the case, until COVID happened.
Even before the Pandemic, the club had projected a significant loss in revenue for the financial year of 2019-20, helped by the lack of Champions League football. This was only accentuated after lockdown, when even the otherwise perfunctory revenue streams dried up.
Manchester United’s overall revenue clocked in at £509 million, less than the projected £560 million-£580 million, and massively short of previous year’s amount of £627.1 million. While the commercial revenue went up by £3.9 million to £279 million, United’s net debt rose to a whopping £474.1 million from last year’s figure of £203.6 million. Along other factors, the major reason for such a spike in debt was credited to the complete absence of matchday revenue post March and loss on season ticket advances after it was confirmed that the fans won’t be returning to stadia across the UK anytime soon. Furthermore, United’s major sponsors are also set to make delayed payments; most notably their principal sponsor Chevrolet, whose contract with the club was up at the end of this season. The two parties managed to extend their deal by six months for the American automaker to pay the remainder of the £425 million amount, with United pocketing further £11 million. The lack of cash influx meant United’s operating profit dropped from £50 million to £5.2 million. Despite the clear drop in revenue, United paid £23.2 million in dividends to their shareholders, only £100,000 less than the amount paid the year before. Naturally, 78% of this directly went to the Glazers.
While the impact of the Pandemic on United would seem comparatively less severe than what the other clubs have had to go through (and are yet to go through), it is clear that the club has taken quite a hit, which was evident in their sheer reluctance to make any big-money signings in the summer. Not only these numbers paint a clearer picture as to why United didn’t want to pay huge amounts of money up front for the likes of Jadon Sancho, they also warn us to not expect any big, jaw-dropping, statement arrivals in the immediate future as well, not unless the club manages to offload a huge array of players long earmarked for departure, extrapolate the long-term repercussions of the COVID crisis, regulate the dividends and interest payments, and/or manage to strike up carefully crafted deals, like partial payments – a personal favourite of the club’s executive vice-chairman, Ed Woodward.
At the end of the day, it’s all about perspective, really. If you look at the Glazers’ ownership of Manchester United objectively from a business point of view, the family has run the club very effectively so far, as far as businesses go. The debt, although there, is regulated. The ticket prices at Old Trafford have stayed the same since 2012. Despite no longer being one of the best performing teams, Manchester United is one of the most valued clubs on the planet and remains a reputable, global household name. Even if you don’t know or care much about football, there’s a good chance you’ve heard of Manchester United. Although dwindling ever so slightly, the name still carries a lot of weight. Even in an unprecedented global pandemic, United have so far managed to sail through without making any redundancies or wage deferrals – things other big clubs around them have done, if not at least tried, in order to survive.
If you are a football fan, though, this story would either anger you or make you feel sad, depending on who you support. There’s hardly ever a place for morals and feelings in business, and to demonstrate that there are few examples better than the Glazers’ ownership of Manchester United. The club and the community have only ever been means to one end and one end only – money. After watching my beloved club put into debt and billions taken out of it with no regard towards the ethos and what the club represents by machinations of apathetic businessmen who by all accounts are not going away anytime soon, it’s always a sad moment for me as a football fan to feel that maybe my club needs to fail immensely for something drastic to happen that would eventually help us in the long run, as hope is a currency we can seldom afford.
Yes, there’s very little chance of the Glazers walking away from the club anytime soon, not least before they can assure a substantial personal profit over their initial investment of £270 million. Estimates suggest one would need at least £3.5-4 billion in the form of a takeover bid for any conversations to even begin. Even then, money would be needed to put in regularly, year after year, to make sure the club can maintain its standard both on and off the pitch. Unsurprisingly, not very many people or groups have that kind of money, and even then, running any football club is always an expensive and risky business, let alone one of United’s stature.
Another argument is that maybe the effects of the Pandemic accelerate the Glazers into making some sensible, football-oriented decisions, if only to safeguard their own revenue. A business, after all, is only as successful as your product, and United’s produce is their football. There’s only so much the Glazers and Ed Woodward could ignore, and even that margin has been scythed by the coronavirus.
As is customary of a football fan, I shall stay here and hope to see my beloved United reach former glories sooner rather than later. Maybe one day, I can look back at this time and hopefully not miss it. Then again, if there’s anything this year has taught us, is that there are more important things in life than football.
Given the events of the past few weeks, I thought I’d add a few words to bring this piece a bit more up to speed.
The Super League, Woodward’s resignation, fans breaking into Old Trafford, Joel Glazer (JOEL GLAZER!) sending letters in his name – quite a trip, eh?
So, to recap, in the aftermath of the recent fan protests, the Manchester United Supporters Trust (MUST) wrote a calculated letter to Joel Glazer, saliently pointing out how they saw the path ahead. Direct conversations between owners and fan representatives regarding the welfare of the club and community, support of fan-led government review of football, and encouragement to fans wanting to own shares in the club were the key features of the address. In response, Joel Glazer released a statement in which he acknowledged the aforementioned points, and vowed to build a healthier relationship with the fans.
Now, when I read Joel’s letter, the first thing that came to my mind is, “There’s no chance he has actually written any of this.” We all know how it works by now. It’s hard to believe a man who has not bothered to put his name to any statement in 16 years would suddenly come out sympathising with the fans. Yet, since he has put his name to the letter, we have to legally assume him responsible for its contents as well, and deal with it as such.
The letter does, as a bare minimum, contain the right words. But that’s all they are – words. There have been words of all sorts before, with their insignificance reverberating within their own hollowness. It’s a seemingly irrevocable marriage that was fractured from the knot, so it’s not going to get better anytime soon.
All we can do right now, though, is wait and see if these words get backed by actions, whether any of the Glazers actually show up for a direct dialogue with fans instead of hiding behind lawyered prose. There’s 16 years’ worth of experience telling us it won’t happen but, well, what else remains to hold on to if not hope, however bleak? As the protests continue, we shall see in due time how much appetite our dear overlords have towards building trust with this fanbase they have gleefully ignored for a decade and a half.
Written By
Anshuman Joshi
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