Love United Hate Glazer — The Numbers
Fittingly given the photo we featured here yesterday, United supporters who remain dubious about Malcolm Glazer’s purchase of the club continue to be vocal about their concerns. MUST, the Man United Supporters’ Trust, issued a statement that you can read on the Man United fanzine the Red Issue’s website calling the debt issue a “time-bomb.”
Despite appearances to the contrary, the Glazer family continue to face an extraordinary and growing debt problem. Since last year’s debt refinancing, United and the Glazers have been faced with a series of interest rate rises which have increased the annual debt service bill from £62m a year on the total debt of £660m.
The interest bill is currently an annualised £100m-plus, of which £73m is payable this year and the other £27m in the future — a ticking debt time-bomb.
Tellingly, MUST link the debt to the recent turmoil in global financial markets, which they argue make it likely that time-bomb could go off sooner rather than later. And in the meantime, it’s the fans picking up the cost.
The recent and continuing turmoil in financial markets has not only forced the Glazers to postpone indefinitely any further refinancing but has also seen the six-month LIBOR rate (the variable inter-bank lending rate to which the United debt is undoubtedly tied) increase to almost one per cent above the bank base rate.
Today it stands at 6.69 per cent, driving up the annual cost of servicing United’s debt to painful pre-refinancing levels. No wonder, for the third season running, the Glazers forced the club to pass on this eye-watering extra finance cost to the fans by way of a 14 per cent ticket price rise.
The Glazers, of course, could not let such claims stand unchallenged, offering a rather pithy response:
The debts continue to be comfortably serviced by the business, which is performing better than ever.
As always there have been substantial funds for the manager to purchase players over the summer.
If the Glazers really want to ameliorate the concerns of supporters, though, they’d be better off challenging MUST’s complains in their damning specifics rather than offering bland statements such as the above. Whilst it’s their business and their prerogative not to do so, such a stance only makes it more likely that greater numbers of United fans will vote with their feet and go and watch FC United instead, especially if MUST’s worst nightmares come true.
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Thomas Dunmore
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This is interesting, but I’m sceptical – we’ve been hearing these kind of scare stories ever since the Glazers arrived. And yet the team’s transfer spending hasn’t noticeably declined – last year was a thin year, but this year’s purchases were amongst the largest in the club’s history. Surely if financing were an issue, transfer spending would have to be down, no?
Because the contrary argument is much harder to sustain – that the Glazers are both ravenous, machiavellian capitalists and, simultaneously, too stupid to balance a cheque book.
Besides, with Fed rates heading down, unless commercial paper suddenly becomes completely toxic, they’ve got Bernanke working in their favour…
The sad thing is, yet again the only people to suffer are the fans. The rise in ticket prices is driving more and more people away from the game and into the arms of the TV companies with the result that the atmosphere inside even our biggest stadiums is incomparable with what it was ten years ago.
One only has to look at Wembley to see how bad things are becoming. Who would have thought that England fans at home would be outsung by the Germans?
Goodness only knows what it’ll be like against the Russians!
Good point about the spending Antonio, though I’d just add that according to Red Issue, “The Glazers have not put any money in at all for new players. A lot has been made of the £50m transfer fees spent in the summer but this all came out of club funds and is being financed on the never-never.”
Dougie — I agree. Hopefully more fans will embrace their local teams instead (or the likes of FC United) rather than just resting in their armchairs.
Do we know if the “Glazer Debt” was primarily placed in London or the US?
If the former, the European Central Bank is more relevant than the Fed, and they have been less eager to cut rates, at least so far. If the latter, the base rate is probably not LIBOR. I also don’t know what currency it is denominated in; the article presumes Sterling, but that doesn’t necessarily have to be the case. A reasonable proportion of Man United’s revenues are denominated in euro and other currencies.
Love United hate the Glazers is more appropriate than ever. Hurt the Glazers where it hurts, I long ago stopped buying programmes/beer/food inside the ground, if fans just stopped doing this the effect would be mind boggling. They are mugging/milking us for everything and we are lying down like lambs. Thank God for MUST.
Being a Man Utd hater I can only point out the threat of debt is a small problem for the lower league clubs struggling for survival. The rich are getting richer and the poor are getting poorer without and realistic chance of competing in the competitions which bring in the money.