04/20/24
January 12, 2010
"How the Glazer family have milked debt-ridden United for millions": In an attempt to make their countrymen feel better about sleazy sports team accounting in the US, the Glazer family (owners of the Tampa Bay Bucs) financed their purchase of Manchester United with a mountain of debt at a rate you'd refuse from your credit card provider. And then they started paying (and loaning) money out to themselves.
I guess I am confused why the internal financial operation is such a big issue. Are they concerned that a some point the Manchester United are not going to be competitive because of the debt? Is there evidence that this debt load is preventing them doing something?
The Glazers suck. After buying the Manchester United, the Glazers have failed to put money into the Bucs. They were the team farthest below the salary cap this year, and the results were predictably abysmal. They hired the cheapest (and most inexperienced) coach and GM tandem they could find. They don't have a plan for the team. They are saving money.
posted by bperk at 05:13 PM on January 12, 2010
I guess I am confused why the internal financial operation is such a big issue. Are they concerned that a some point the Manchester United are not going to be competitive because of the debt? Is there evidence that this debt load is preventing them doing something?
I believe the feeling is that the debt load (and internal family kickbacks/payouts) are precluding the club from investing in the team. Not sure whether that is actually the case; United do not spend like, say, Chelsea (at least the Chelsea of a few years ago) or current generation Manchester City, but they have made some significant purchases in the Glazer era.
I think there is also a broader undercurrent here (as well as in the Liverpool context) of (a) reflexive anti-carpetbagging-American-owners sentiment (although it should be said that Aston Villa fans appears to love Randy Lerner), and (b) a general distrust of leveraged buyouts/debt financing. From my distance across the Atlantic, some of that appears to be rooted in past bad experiences and/or justified based on actual facts and some appears to be irrational and/or in the realm of superstition/knee-jerk reaction.
posted by holden at 06:13 PM on January 12, 2010
If I was the MLS boss, I'd approach this creep to demonstrate his love for the sport of football by buying a franchise in Tampa. Fat chance, he could have supported the Mutiny and didn't. He is as interested in the sport like I am in basketweaving. ManU better watch out, this money hungry fecal matter will milk them to the max.
posted by trueblueroo at 09:13 PM on January 12, 2010
although it should be said that Aston Villa fans appears to love Randy Lerner
Perhaps because they've had a couple of good seasons. But when Martin O'Neill leaves for United to replace Imperial Lord Ferg...
posted by owlhouse at 09:24 PM on January 12, 2010
money hungry fecal matter
My fecal matter is money to begin with.
posted by Hugh Janus at 12:28 AM on January 13, 2010
I guess I am confused why the internal financial operation is such a big issue.
One of Platini's proposals as boss of UEFA concerns the use of debt financing, particularly in buying players, and its inflationary and potentially destablising effects on the top leagues.
It was clear from the outset that the Glazers regarded Man Utd as a nice big security for their financial dealings, and that the debt-servicing at the heart of the acquisition would eventually eat away at the club's finances, with or without the tapping of payments to Glazer subsidiaries. Private Eye's business pages have been good at detailing the baroque arrangements behind many top English clubs that generally involve holding companies, offshore trusts, payments from the left hand to the right, and very limited tax exposure.
From my distance across the Atlantic, some of that appears to be rooted in past bad experiences and/or justified based on actual facts and some appears to be irrational and/or in the realm of superstition/knee-jerk reaction.
There's a paradoxical quality to it. Fans love the idea of a white knight who'll pour money into a club, but they don't like to see them treated like businesses. There's a romantic attachment to shambolically-run operations and bullshit artist chairmen until the party's over and the hangover begins. But the in-over-the-head bullshit artist -- a George Reynolds or Michael Knighton -- or the ostentatious plutocrat -- Abramovich or Sheikh Mansour -- aren't treated with the same suspicion as people like the Glazers or Hicks & Gillette who treat clubs as financial instruments.
posted by etagloh at 02:27 AM on January 13, 2010
I guess I am confused why the internal financial operation is such a big issue. Are they concerned that a some point the Manchester United are not going to be competitive because of the debt? Is there evidence that this debt load is preventing them doing something?
You could try, you know, reading the articles, wherein the answers are all spelled out.
posted by rodgerd at 03:51 AM on January 13, 2010
Hugh: If that's true, please poop in my wallet.
posted by Drood at 05:04 AM on January 13, 2010
You could try, you know, reading the articles, wherein the answers are all spelled out.
Yeah, thanks for nothing. I did that. I didn't see anything about how ManU was suffering as a result of the debt, unless you really believe that it caused ticket prices to go up.
posted by bperk at 07:26 AM on January 13, 2010
I guess it's sort of implicit in the articles; suspicions have been growing since the team sold Ronaldo for a ton of money, then said the money was available for new player acquisitions that were never made. Conveniently, that unspent money took the team from a net loss to a net profit on the year right before they want to issue a bond to refinance their debt.
posted by yerfatma at 09:16 AM on January 13, 2010
Suspicions are easy, Fatty, and show me a corporation that doesn't try to pretty up the books before a big securities deal. Given how outspoken Sir Alex is I don't think he'd sit on his hands if he thought the right players weren't being bought due to Glazer interference.
Meanwhile ManUre are sitting pretty good just behind Chelsea and primed for the standard second half run at another title.
posted by billsaysthis at 11:45 AM on January 13, 2010
Meanwhile ManUre are sitting pretty good just behind Chelsea and primed for the standard second half run at another title.
That's the crux of things: they look like the typical ManU club, sitting in a top spot halfway through the season, but are they primed for a run at the title and in Europe? They're beset by injuries, lack finishers and have questionable depth. If they don't bring in a few decent players, I think this is more than smoke.
posted by yerfatma at 12:23 PM on January 13, 2010
That's the crux of things: they look like the typical ManU club, sitting in a top spot halfway through the season, but are they primed for a run at the title and in Europe? They're beset by injuries, lack finishers and have questionable depth. If they don't bring in a few decent players, I think this is more than smoke.
But really, with the exception of Ronaldo (and that is a big exception), how is this squad (other than being beset by injuries) any different than the one that won the past few titles? Yes, Giggs and Scholes are older and can't be relied on as much as in years past, but the real problems this year are twofold: (a) lacking a true world class caliber attacking player as in Ronaldo (although a strike force of Rooney, Berbatov and even a past-his-prime Owen puts most other clubs to shame), who is literally irreplaceable; and (b) injuries, which you can't really plan for, other than to bulk up squad depth overall. In addition to the fact that two of United's world class players (Rio and Vidic) have been hurt much of the season, a big part of the problem with United this year is that the injury bug has been so great that, at certain positions, the top few players on the depth chart are injured and United have been forced to play others out of position or truly scrape the bottom of the barrel. If you can look past the fact that Chelsea have more formerly famous (but past their prime) people (e.g., Deco, Ballack) filling up their depth chart, can you really say that Chelsea have a deeper or better squad than United? Perhaps with Chelsea you can, but United are still unquestionably in the top three (if not top two) of overall depth and talent in England.
posted by holden at 01:47 PM on January 13, 2010
I'm well out of my depth on the subject, but it's interesting to me. Everything you said is perfectly true and maybe they'll be fine, but given the injuries and the sudden discontent (Vidic), it's weird they haven't brought people on to replace the aging parts if not the injured ones. Last Football Weekly podcast had an interesting bit on how Scholes is being used out-of-position because he's too slow to keep his old spot but they don't have a better defensive option right now.
posted by yerfatma at 02:01 PM on January 13, 2010
United are still unquestionably in the top three (if not top two) of overall depth and talent in England.
Sad but true.
It's not a newsflash for anyone, but the loss of Ronaldo has had a really huge impact on the team. The 4-5-1 or 4-4-1-1 counter-attacking formation United have employed since Carlos Queiroz started whispering in SAF's ear became almost solely reliant on Ronaldo and while I'd be happy to see the boy get jam in his hair and then be attacked by bees, I can't argue that he was really mind-bendingly good in the system.
With Ronaldo gone a lot of the cracks he was papering over have been revealed - firstly the system remains and so Rooney has had to move from modern-day-version of the Trequartista into the Schwerpunkt role - a role I'm sure he has the quality to play, but the supporting cast isn't there.
Berbatov is the very embodiment of a contract-year player. He played out of his skin at Spurs to earn the move to old Trafford, but now he's there his form has dropped away. Owen is another option, but his style of play is totally wrong for the second-forward role and besides, hattrick in Europe aside, he's just not very good anymore.
Behind them there's a collection of kids - Obertan... Macheda...
Secondly, the lack of creativity out wide is now very apparent without Ronaldo drifting from wing to wing - down the left you either see a workmanlike Park or the creaking Giggs and on the right Valencia has been decent, with flashes better than that, but he's mostly about his speed. Behind them, Anderson and Nani aren't convincing anyone.
Perhaps United's most powerful asset out wide would be Patrice Evra, but he's had to be reined back in because of the severe rash of injuries inside.
Having said all this, the distressing thing is that, as Holden says, this misfiring collection are still comfortably top-three material in England, especially in a season that no one seems to want to win - Arsenal's form is all over the place and they suffered injuries to parts of the team they just can't replace (van Persie, Fabregas, Song). Chelsea should be cantering clear, but have suffered inexplicable hiccups and now see a chunk of the squad head off the ACN. Liverpool are a train wreck, Manchester City aren't the finished article yet, (although the have the best scarf wearing manager), and the likes of Spurs, Villa and even Birmingham are always going to be fighting for scraps.
So I wouldn't be surprised if SAF looked at his team, factored in the financial realities this year and decided to essentially stand pat - it certainly seems that if you have to pick a season to sit on your hands, this is one of the better ones to do so.
posted by Mr Bismarck at 03:02 PM on January 13, 2010
Having just listened to the most recent Football Weekly podcast (discussion starts about 20 minutes in), I'd like to repudiate my earlier position and apologize to holden and bill for not paying better attention. The podcast discusses how the sky is falling and ManU is finished without ever explaining why. The mere existence of debt is taken to be proof the Glazers have no idea what they're doing. They talk about how there's all this debt to be financed and how it means the team can't buy players anymore, but no proof is offered. It's just accepted it must be true because there's finance involved.
a general distrust of leveraged buyouts/debt financing . . . some appears to be irrational and/or in the realm of superstition/knee-jerk reaction.
Completely. I don't know how major sports teams are purchased in Europe, but not everybody is sitting on a pile of oil cash that needs to be spent. From what I heard, I think it's more than a distrust of leveraged buying. The discussion was amazingly Victorian, as though taking on debt was distasteful, something that "just isn't done" (apparently a 300 page prospectus is too much, a clear indication of shenanigans). Worse still, the panel was universally down on people who sold to the Glazers in order to turn a profit. I must not understand how public corporations are run in Europe or it's 1919 again and my calendar's messed up.
The only upside to the whole discussion is that the Irish weren't blamed-- the Irish shareholders apparently sold out to the Glazers because Sir Alex was less than grateful for the gift of a horse. The Irish, of course, being a prickly and easy-to-upset race.
posted by yerfatma at 03:08 PM on January 15, 2010
yerfatma: I think other than teams that are owned in a public trust, as a public company, or by a wealthy Brit, the rest are basically damned by the British media, either as (a) being owned by a distrustful wealthy foreigner (swarthy Arab, crass American, or shady Russian oligarch), or (b) being funded by some measure of debt. That United has so much debt is, paradoxically, a sign of its success and overall financial well-being (in terms of ability to generate revenues), because of the high purchase price of the team (reflecting perceived, if not actual, value) plus the confidence the debt-holders have that the enterprise will make good on its interest payouts and ultimate redemption. Does it increase the risk to a certain extent? Sure. United potentially could be just a season or two out of the Champions League (in terms of missed revenues) away from being unable to meet its interest payments and defaulting on its loans/debt payments. So the margins of error are likely thinner. But the level of reflexive anti-debt financing vitriol and the unwavering conclusion that bad things are happening, will continue to happen, and realistically are the only possible outcome of this type of arrangement do not seem to be based on anything other than personal/traditional preferences about how corporate economics should be ordered.
posted by holden at 04:13 PM on January 15, 2010
Yeah, I was completely swayed by the level of hand-wringing. Guess it's the British accent that prevented me from suspecting a sports journalist might not be a penetrating economic mind.
posted by yerfatma at 04:30 PM on January 15, 2010
I just read Niall Ferguson's (no relation to Alex) The Ascent of Money. He has now convinced me that debt is actually an asset.
Or something. What holden said, anyway.
posted by owlhouse at 07:39 PM on January 15, 2010
Was that any good? I've got it on my reading list, but I'd swear I picked up and promptly dropped (which is a risk, given the tome-like nature) one of his other books.
posted by yerfatma at 09:52 AM on January 16, 2010
The PBS/BBC version of Ferguson's book was mostly a waste of time, far too superficial and historical despite the frequent claims to show where things went blooey in 2008/9; haven't read the book yet.
posted by billsaysthis at 03:19 PM on January 16, 2010
So glad that we Americans can export two things well: corporate greed and nepotism.