“Compared with this IPO, Malcolm Glazer’s facial hair seems attractive”

The Economist today published a brief analysis of the Manchester United IPO on the New York Stock Exchange. The gist is in the headline above.

Who are you kidding, Malcolm?

“Manchester United is not for sale and the owners will not entertain any offers.”

This statement accompanied today’s release of the second-quarter financial results. All very official. But not true.

So far there hasn’t been even the slightest hint of an emotional connection between the Glazers and Manchester United. This means that an old business truth is still valid in this case; all assets are for sale at a price. It also means that today’s statement is nonsense.

The Entertainer?

For a take-over to happen will need an investor with deep pockets and an even more optimistic outlook than the Glazers on United’s future revenues. Which looks unlikely at this moment. But of course our esteemed owners are willing to do business at some level. The club might not be for sale at £1.5 billion. But if they received an offer of, say, £2.0 billion I can assure you that the owners would have a look at it. They might even entertain it.

I will not praise that purpose not to sell

The potentially most interesting news of recent weeks is of course the rumour that Qatar Holdings plan a massive takeover bid of United. The Glazers keep insisting that the club is not for sale,but of course it would be if someone was prepared to pay over the odds. And the Qatar group is exactly the kind of buyer our esteemed owners are likely to be looking for.

Even so I don’t get too excited by a rumour that has all the hallmarks of having been invented at a Fleet Street desk (or the Middle East equivalent). It’s not too difficult to imagine that someone has tried to put two and two together. A: You need an awful lot of money to convince the Glazers to sell. B: Some guys from Abu Dhabi are pouring an awful lot of money into City. C: Their wealthy neighbors from Qatar show a lot of interest in football, e.g. Barcelona and the World Cup. D: A bid for United is imminent. Even a humble blogger could have come up with something like that. And the stories circulating don’t contain any quotes or other facts to make them more credible.

But there is one little piece in this jigsaw that keeps nagging me. Why has Sir Alex offered such a lot of support for Qatar’s World Cup bid? When he did so in January 2010 it could be interpreted as nothing more than normal courtesy when visiting the country, but he praised the bid again in November and I don’t see a lot of (if any) footballing reasons for doing so. Might there just possibly be a hidden agenda?

The Last Days of the Banks

"Aux armes, citoyens!"

United legend Eric Cantona has today been named Honorary Chief Economist of Between the Lines. Not perhaps because of his brilliant insight into Economics, but simply because he is, as far as we know, the first United player to have forced  the Eurogroup of finance ministers as well as the European Union economic affairs commissioner to issue statements about his comments about the banking system.

Protest groups around the world are trying to coordinate a world-wide cash-point withdrawal today, December 7, the number of Cantona’s United shirt, following an interview where Cantona told the French paper Presse Ocean:

“What’s the system? The system revolves around banks. The system is built on the banks’ power. So it can be destroyed by the banks. Instead of having three million people going out to demonstrate with a placard, those three million people go to their bank branch, they withdraw their money and the banks crumble. You go to your bank in your village and you withdraw your money.”

This statement has stirred some of Europe’s top economic decision makers into action.

“I find the operation you are referring to totally irresponsible,” said Luxembourg Prime Minister Jean-Claude Juncker.

European Union economic affairs commissioner Olli Rehn said he considered himself a Man United fan, but added: “I think Mr Cantona is a better footballer than he is an economist.”

I’m afraid Mr Rehn might have a point. Personally I don’t see too many benefits from a total collapse of the banking system.

Thank Heaven for the Glazers

General Than Shwe

I certainly never thought I’d write this headline, but the severe misgivings I have about the Glazer regime were sort of put into perspective today by the Wikileaks revelation that Burma junta leader general Than Shwe has been considering a Manchester United buyout. The general was optimistic enough to believe that USD 1 billion would be enough to secure a takover, money that most people think would have been better spent relieving some of the problems of the victims of the cyclone Nargis that devastated Burma.  The mooted price tag was the same as the aid bill to cover the most urgent food, agriculture and housing for three years after the cyclone, as estimated by international agencies including the UN.

Full story in the Guardian.

Another Glazer ship about to sink?

The leading business site Forbes reports that the value of the Tampa Bay Buccaneers is falling, and that the owners (the Glazers) “need to repair their ship before it sinks”. Fans are angry at the lack of money being spent on players and the season ticket waiting list has “essentially evaporated”. This comes just days after Andersred’s brilliant analysis of the severe problems in the family’s real estate business First Allied Corporation, where half the shopping centres risk going bust.

The big question is how these problems will affect the Glazers’ ownership of United. It might make them even more determined (or desperate) to hang on to United and the cash flow the club generates, but then again it might make them more open to offers that would see them leave United with a huge profit. Let’s hope for the latter.

The Unofficial Summer Shopping List

You don’t need to be an expert in neither football nor finance to read between the lines this morning. In “unrelated”(!?) developments the Glazers face an interest rate hike on the already costly PIK-loans, while Sir Alex claims that he’s happy with the balance of the squad and that there may be only one signing this summer. The rate hike increases the pressure on the Glazers to take even more money out of United to pay off the loans. This in turn means that the transfer budget for this summer will be even tighter than most of us anticipated. I expected Ferguson to make two important signings, but my summer shopping list has now been revised to include just one name.

Goalkeeper. There’s no question that we soon need a long-term replacement for Edwin van der Sar, but this won’t happen this summer and I think we’re allright for next season with VDS, Kuszczak and Amos. My only concern is that my prefered choice to replace VDS, Manuel Neuer, will move to Bayern Munich if we don’t snap him up this summer.

Defence. No desperate need for new signings even if I would love a world-class right-back (Lahm, Maicon) and some doubts remain about the fitness of Ferdinand and Vidic’s (wife’s) attitude to life in Manchester.

Midfield. Scholes and Giggs surely enter their last season and there are plenty of questionmarks over Hargreaves, Anderson and Carrick. This means that if money was available we should go for Jack Rodwell. I believe he will be a key player for England in the next decade. A perfect long-term signing, but if the owners only allow one new player it will have to be someone who will offer more immediate support for Rooney.

Attack. Ideally, the player we look for should be able to play alongside Rooney, just behind him as well as wide. And also be able to play up front when Rooney is missing. He also needs to be both goalscorer and playmaker, and be good enough to really make a difference, in short world-class. This, of course, limits the choice somewhat and takes us into a price-bracket where the Glazers might not be at all comfortable. I believe that the player who best fits this description, and might be available, is Sergio Aguero of Atletico Madrid. You have an opportunity to scout him in the Spanish Cup Final tonight.

Negotiations have started

Yesterday all three of my favourite newspapers (Guardian, Telegraph and The Times) were contacted by “a source close to the Glazers” and told that the family have rejected numerous offers for the club. One of those offers amounted to £1.5 billion from a Middle Eastern bidder. The source also insisted that the family is not interested in selling “at any price”.

This is of course rubbish. In the world of business all assets are for sale at a price. The only exceptions are cases where there is a strong emotional bond between owners and asset. I don’t believe for a minute that such a bond exists between the Glazers and Manchester United. If anything, the coordinated leak proves that the Glazers are indeed prepared to sell and have started public negotiations by indicating that they will want a lot more that £1.5 billion.

The rejection of a seemingly generous offer of £1.5 billion has been interpreted as stubborness. I think it’s got more to do with business logic. The family seem convinced, rightly in my view, that the club’s income could soar in the next decade by developments such as individual TV-deals for the big clubs, a European Super League, new broadband-based ways of selling the “product” etc.

My estimate (well, “guess” is probably a more appropriate word tbh) is that it will take a bid in excess of £2 billion to convince the Glazers to sell. I don’t think the Red Knights are prepared to pay that much. But someone in the Middle East or China might be. I look upon today’s stories in the Guardian, the Telegraph and The Times as the Glazers’ opening gambit to those potential buyers.

Lessons to learn from the Tampa Bay Buccaneers

Not only United fans are unhappy with the Glazers. Supporters of the family’s NFL franchise the Tampa Bay Buccaneers are getting increasingly fed up with the owners’ unwillingness to invest in new players to secure long-term sporting success. The Buccaneers won the Super Bowl in 2003, but since then sporting success has slipped. They finished last season with the dreadful record of 3 wins and 13 defeats (the worst since 1991).

Even so the Buccaneers is one of the most profitable clubs in the NFL. One of the reasons is the very favourable lease at the Raymond James Stadium, owned by the County of Hillsborough. Some say that the club uses the stadium more or less for free. But in recent years profits have also been increased by a strategy now familiar to United fans; lower spending on players. Last season the Bucs spent less than any other club in NFL on player wages.

Despite the almost total lack of sporting success, the revenues and value of the club have kept increasing steadily. In this context sporting success is only important to the extent that it’s necessary to maintain or increase income. And it seems that the Buccaneers’ poor performances on the pitch have yet to influence the financial results. One explanation could be that the brand still benefits from the Super Bowl triumph in 2003.

But it’s also interesting to note that high ticket prices and poor team performances have started to hurt gate receipts for the Bucs. Attendences were down more than 10% last season. A few years ago there was a 100,000 person waiting list for season tickets (probably exaggerated for marketing reasons, but still very long). Today anyone who wants a season ticket can buy one and prices have been slashed.

Still, the ominous conclusion is that, based on their experiences with Tampa Bay Bucs, the Glazers will be quite happy to spend less on players and accept several years without success on the pitch since they will feel that this is unlikely to hurt the financial performance. Indeed, they are probably convinced that such a strategy will improve the financial results.

Glazers have learned nothing from PR genius

David Beckham was a great footballer, but he’s an even greater PR genius. By wearing a green and gold scarf when leaving the Old Trafford pitch on Wednesday he sent a strong signal around the world of his support for the movement trying to get rid of the Glazers, even if he later claimed that the scarf had no other significance than the traditional colours of Newton Heath.

Compare this to the public relations disaster masterminded by the Glazer family and/or David Gill. To convince fans that their reign has a positive influence on the development of Manchester United they’ve banned players from discussing the issue in the media, forbidden MUTV from refering to the protests, edited questions about it from broadcasts of Ferguson’s press conferences, ejected a supporter from the audience of an MUTV show after he refused to remove a green-and-gold scarf as well as previously sacked a steward after 19 years’ service for attempting to return a confiscated anti-Glazer banner to its owners. If anything, these heavy-handed tactics just strengthens the impression that the owners are unable to present good arguments for their case.

If they firmly believe that such good arguments exist they should make every effort to get them across. I’m still waiting.