Talking to Manchester United fans now compared with around six or seven years ago is a very different experience. Back then the club was debt free and didn’t have a group of American owners aggressively servicing the club’s debt. Fast-forward to 2012 and it’s a whole different kettle of fish.
If you go into a Salford pub now and mention you’re a direct descendant of Malcolm Glazer don’t expect to leave without a split lip. That’s now a cast iron certainty after news that the Glazer’s are seeking to float the club they own, Manchester United, on the New York Stock Exchange to pay off more of the debt they loaded onto club.
Original plans to float in Singapore have been scrapped in favour of floatation in New York, via a Cayman Islands subsidiary, that will see the club still controlled by the Glazers. It’s hoped that it will raise the Glazers some $100 million that will help them to service a debt that still stands at £423 million – despite them paying out some £500 million of interest since buying the club.
For their outlay, investors will get a class A share that carries 10x less voting right than a normal share and means the Glazers keep control of the club through the Delaware registered company, Red Football LLC.
A statement confirmed this: “Upon completion of this offering, Red Football LLC will remain our [Manchester United’s] principal shareholder and will continue to be owned and controlled by the six lineal descendants [five sons and one daughter] of Mr Malcolm Glazer.”
No dividends will be paid on the Cayman Island shares and they’re hoping to attract bidders solely on the future potential these shares have. In order to attract the relevant amount of interest they are touting MUFC as “one of the world’s leading brands” and hoping that this will make them more attractive to investors. Being that the brand is so big it begs the question as to why they’ve trumped a New York offering over Asia.
United’s original plan in Asia would have raised 10 times what the new one is aiming for. Asia as a whole is football crazy right now and whilst it is true investors would have been smaller, there’s no way fans in Asia would have even thought twice about buying the shares. Combine this with there being less criticism of the Glazers for doing so and at the same time building up the global brand.
The current plan will save the Glazers’ bacon but what happens when the debt’s even bigger and they don’t have a pot to piss in? Don’t be surprised to see them come crawling back to Asia once again.