Manchester United: The Glazer Takeover
On June 14, 2005, US businessman Malcolm Glazer announced he had acquired over 90% of the shares of Manchester United plc. This would allow him to delist Manchester United’s shares from the London Stock Exchange and turn it into a private company. Glazer’s offer of £3 per share was over 40 times the previous year’s net income and was almost double the average market price of Man United’s shares during the preceding three years. All told, the buyout cost was £812 million – mainly financed by borrowings of £540 million. For the first time in its history, the club would go into debt. The takeover generated outrage among Man United’s most loyal fans. The Financial Times reported: The level of anger among Manchester United fans was palpable as they gathered last night outside the Theatre of Dreams, the name the club gives to its Old Trafford ground. A big “Not For Sale” sign was quickly erected on the club’s gates. Rob Adams, a lifelong fan, said: “It is the worst thing that could have happened . . . He [Mr. Glazer] is a businessman and all he wants to do is scoop as much money out of the club as possible.” Another said: “He’s just not interested in the game of football.” Margaret Orhan, company secretary of Shareholders United, which has been leading the fight against the Glazer bid, said: “We are opposed to any single person owning the club. It is 126 years old and belongs to the community it serves. We are opposed to anyone who is going to take away the fans’ voices. You are talking £800m – none of which is his money. Who is going to have to pay it back? The profit that this club produces is not going to even pay the interest on what he is going to borrow. It is our money; we are the ones that put bums on seats; we buy the shirts and all the rest.”
This case was written by Robert M. Grant and Simon I. Peck, assisted by Aude Le Minor and Drew Hoffman
Copyright © 2008 Robert M. Grant and Simon I. Peck
The takeover had come at a critical juncture in Man United’s development. It was the most financially successful professional sports team in the world -certainly the biggest earning soccer club, generating £172 million in revenue and £58.3 million in operating profit. However, its performance on the field seemed to be waning. Under the leadership of veteran team manager Alex Ferguson, the club had dominated English football for most of the 1990s.1 Since 2001, however, Man United had been eclipsed first by Arsenal and then by Chelsea. The question in the minds of many observers was whether Glazer could do anything to enhance Man United’s performance, either financially or on the field. Unlike Chelsea’s acquisition by Russian billionaire Roman Abramovich, Glazer’s takeover would almost certainly leave Man United less able to lavish money on new players and facilities (it had been rumored that Glazer wished to limit expenditure on new players to £25 million a year). The consensus among financial experts was that Glazer had made a bad investment. He had paid a massive premium for a company that, in financial terms, was performing at the top of its game. Underlying both these doubts was concern that Glazer brought little relevant expertise to the club. Not only did Glazer know little about the game of soccer, it was unclear as to whether his experience as owner of the US National Football League team Tampa Bay Buccaneers was in any way relevant to Man United – arguably one of the most effectively managed professional sports teams in the world, with a global fan base and licensing revenues to match. Glazer’s suggestions for expanding Man United’s franchise and seeking an independent deal over television rights failed to impress most observers. The London Sunday Times noted that Man United fans were already deluged by commercial offers from their club – and not just with “£45 replica shirts . . . but their own MUTV subscription television channel,...