Between the Lines

"Of all unimportant subjects, football is the most important" – Pope John Paul II

Posts Tagged ‘Jim O’Neill’

Red Knights Likely to Come Up Against Brick Wall

Posted by hakanrylander on March 2, 2010

The Red Knights today confirmed that they are putting together a bid for United. The group, led by Goldman Sachs chief economist Jim O’Neill, said that for their proposals to be viable, they would need the backing of Manchester United fans around the world. Well, at least they most certainly have the backing of Between the Lines (That’s a done deal then?/Ed). An ideal solution would be for a number of wealthy investors to own the majority of the shares, with 10-20 percent spread among ordinary fans.

A spokesman for the Glazers has told the Guardian that “Manchester United is not for sale”. This is of course rubbish. In the world of business virtually all assets are for sale, at the right price. And I think I can guarantee that the Glazers’ attachment to United is not of the kind that will make them reject any offer.

The crucial problem is whether the Red Knights will be able to put together an offer high enough to tempt the Glazers. Unfortunately I believe there are two main reasons why they will fail to do so. Firstly, a group of City investors, however devoted to United, are likely to expect a decent return on their investment. Fair enough, but this puts a ceiling on the amount of money they will be prepared to pay for the club. Secondly, the Glazers have manouvered themselves into a position, most recently by way of the bond issue, where they are able to move a huge part of United’s cash flow into their own pockets. They probably reckon that they can keep the cash flowing for several more years with only a minimum of investment in new players. The conclusion is that the club is most likely worth more to the Glazers than the Red Knights are willing to pay.

Which leaves one option. The balance of the deal could change if it’s likely that the future revenue streams will look different depending on who owns the club. If OT is not filled for every league game, if lots of fans stop buying offficial merchandise etc the Glazers will be forced to take another hard look at the expected return on their investment. And they might just come to the conclusion that selling is the sensible thing to do.

For anyone who wants to delve further into the financial situation and the apparent Glazer strategy I recommend the excellent Andersred.


Posted in Financial, Manchester United | Tagged: , , , , , | 1 Comment »

United fans in the City our best hope for salvation

Posted by hakanrylander on January 26, 2010

Two articles in Telegraph today point to a remote but perhaps not completely impossible solution to our debt problems. Paul Marshall, co-founder of hedge fund Marshall Wace and a United fan, says it’s time for supporters to combine forces to return the club to the community – debt free. Marshall is highly critical of our present owners and says “debt has acted like a leech on the club, sucking money out of the football budget to feed the Glazers and their bankers”. As you might remember this fits well with the views of Between the Lines.

In a separate article Jim O’Neill, star economist at Goldman Sachs, declares that “there is too much leverage going on with Manchester United”, despite the fact that the investment bank is making millions in fees from the fund raising.

The idea is very appealing. For the club to be owned by the fans, Barcelona style, would be a perfect solution to the Glazer problem.

But it will be very difficult to realize. Most of all because of the huge amounts of money involved. By a very rough estimate it would cost us £1.2 billion to buy 100% of the shares and pay off all debt.  If each member was willing to pay £1,000 we would need 1.2 million(!) fans to sign up. Sounds impossible, doesn’t it? On the other hand, United have over 6 million registered fans and more than 300 million fans worldwide, according to some sources. But apart from the difficulty in finding the money it would also take an awful lot of administration to create such an ownership structure.

Any initiative would depend heavily on the financial expertise of people such as Paul Marshall, Jim O’Neill or others with a similar standing. Hopefully the article by Mr Marshall and the statement by Mr O’Neill could trigger some discussions among United fans in the City. It would also take a lot of efforts and commitment from MUST and supporter clubs around the world to market the proposal. Maybe even bloggers could get involved.

It’s probably an impossible dream. But I think it’s worth a try.

Find out more in these highly interesting articles by Paul Marshall and about Jim O’Neill.

Posted in Financial, Manchester United | Tagged: , , , | 1 Comment »