Will the Glazers ever sell Man United?

Tim Williams (0:01)

The Athletic FC.

Kate Mason (0:07)

Since taking full control of Manchester United in 2005, the Glazers have pocketed over 1.3 billion pounds, all while racking up over 700 million in debt at the club. So, with Manchester United in crisis again, why are the Glazers nowhere to be seen?

We are The Athletic FC Podcast. I'm Kate Mason, joined in studio by our regular Thursday panel. First up, it's former England international, Rob Green. Hello. Hello. The Athletic senior news reporter, Matt Slater. Hello, Matt.

Adam Crafton (0:40)

You're all right?

Kate Mason (0:41)

Yeah, I'm feeling the vibes, as is Adam down the line in New York. Hello, Adam Crafton, reigning sports journalist of the year.

Adam Crafton (0:49)

Hi. I look like I'm in a school classroom. Yes.

Kate Mason (0:52)

Have you been held back for detention?

Adam Crafton (0:55)

Yes, very much so. So please free me at the end of this episode.

Kate Mason (0:59)

Okay. Well, we are going to start with a bit of a history lesson. So perfect. This is on the numbers behind the debt at Manchester United and how exactly it came about. Matt.

Adam Crafton (1:09)

Oh.

Kate Mason (1:10)

Are you ready to tell us about leveraged buyouts?

Tim Williams (1:13)

All right. Yeah.

Kate Mason (1:14)

What does that term mean and why is it important here?

Adam Crafton (1:18)

All right.

Matt Slater (1:18)

Leveraged buyouts. So this is where you buy a company, take over, and typically you borrow about two-thirds of the money. It could be as much as 80 percent of the money, but let's call it two-thirds and then you use about a third of your own money and you buy the thing. So that sounds a bit like buying a house, right?

Adam Crafton (1:37)

But.

Kate Mason (1:38)

It's a mortgage.

Adam Crafton (1:40)

Kind of.

Matt Slater (1:40)

You then, however, secure your debt, the amount you're borrowing, against the company's assets, your target company's assets and or cash flow. So the debt sits on the thing you've bought. Again, you're thinking a bit like a house.

Think more maybe like a buy-to-let because the whole point is the thing you've bought services the debt for you.

Adam Crafton (2:02)

All right.

Matt Slater (2:02)

So that's the key thing, right? You have borrowed a load of money to buy this business.

And then the debt sits on the business and the business basically pays the debt. Now, the idea really took off in the 80s. It was sort of how you bought companies in, particularly in the States, very controversial in sort of football terms.

Because, there are lots of reasons really, but you are basically using their kind of money to buy the thing. And look, Manchester United went from a club, a company that never had any debt, in fact, they had some cash in the bank, to suddenly being about 600 million in debt. And when Malcolm Glazer did this, so this is the key thing, so Malcolm Glazer was the guy that bought United in 2005, he'd started buying shares in 2003 So it took him a while to get there. I think we've done this before. By the time he'd bought the club for just under 800 million, so it was about 790 million, he put the best part of 600 million, certainly more than 500 million on the club at very, very high rates. He'd borrowed a load and some of it was these things called pick notes. Payment in kind notes is a very, very like payday, loany type of debt, and the interest rates on those bits of the debt were between 14 and 16 percent.

Adam Crafton (3:14)

So who pays that?

Matt Slater (3:15)

The club did, the United did, the fans did.

In the first five years of Glazer ownership at United, so 2005 to 2010ish, they paid over 500 million pounds in interest. For the privilege of Glazer ownership, Man United went from having no debt to 500 million pounds worth of debt plus, and that's how much interest they paid.

Rob Green (3:38)

So they borrowed 500 million?

Matt Slater (3:41)

They borrowed a bit more.

Rob Green (3:42)

And in five years paid back 500 million just on the interest.

Kate Mason (3:48)

They didn't know, it sounds like.

Tim Williams (3:49)

No, no, no, no. But there was.

Rob Green (3:51)

Those terms are incredible.

Matt Slater (3:54)

They're insane. And there was conversation around it at the time. The government kind of had a look at it, but no one really had any powers to stop it, because Manchester United was traded on the stock market. Like I've said before, if it's OK under British company law, then it's probably OK under football law. We didn't have an independent football regulator. I think as a sort of nation, as a sort of football supporters, we're a bit kind of like, whoa, what is this? But to be fair, Manchester United fans spotted it, because Manchester United fans had already seen off the Murdochs. They were a big, obviously a huge fan base, but they're also kind of a kind of a switched on fan base. They couldn't do anything to stop this, unfortunately. You know, some of them left, literally left and formed FC United. You know, some of them right from the get-go were very, very unhappy, and they applied pressure on people like Alex Ferguson and David Gill, the CEO, don't do this.