Football and finance have become uneasy bedfellows.
Monday signalled a grim new twist in the Glazer family's Manchester United saga. It's been a terrible two weeks. United supporters have stood by helplessly as their club, once the wealthiest in the world, was largely ignored when the Glazers made an initial public offering (IPO) on the New York Stock Exchange (NYSE) a fortnight ago. The Glazers, who also own Tampa Bay Bucs, seemed headed for a major FAIL with the two-tiered IPO of "Class A" and "Class B" stock. The story was that all the money raised from the IPO would be used to service the huge £400 million debt created by the leveraged buyout of United in 2005. On Monday, enraged Red Devils fans learned that the Glazers now intend to pocket half of the $300 million they hope to raise from the offering on the NYSE, rather than invest the whole in the debt.
The two-tiered option, with "Class B" stock allowing 10 times the voting power of the average investor-targeted "Class A" stock, clearly represents a desire on the Glazers' part to retain control of the club regardless of how successful the IPO may be. No prizes for guessing who owns all the Class B stock: The Glazer Family. United fans have been frothing over the antics of the Americans and numerous conspiracy theories have emerged since 2005. It's been feared that even the hallowed name of Old Trafford could be auctioned off to the highest bidder, turning the Theatre of Dreams into just another funbowl owned by a distant corporation - in name at least; the only people who currently own anything of United's are the banks. The Glazers are listed on the NYSE under the ticker "MANU" - itself a derogatory term used by United supporters to mock the new generation of corporate fans invading their precious stadium.
"Taxi for Mister Glazer!"
But there's more: Yesterday, it was revealed that Joel Ewanick - the overseer of the recent sponsorship deal between United and General Motors - has been fired following his failure to adequately vet the finances involved in the deal. Exactly which aspect of the finances this refers to is unclear, but something has displeased the top echelon lizards at GM's helm. Ewanick was also responsible for pulling GM's ads from Facebook just days before that ill-fated IPO happened, as well as making the decision not to buy ad time during the Super Bowl. Whether his dismissal is connected to all of the above, or it is a direct result of the United deal we'll probably never know. United supporters will be hoping their beloved club has become a toxic presence in the market, and that this toxicity will inspire a paradigm shift of some kind on the part of the Glazers, but this is highly unlikely.
And still there's more. United recently agreed to a new shirt sponsorship deal with Chevrolet
. Chevrolet VP of US Sales and Service, Alan Batey, said, "We are extremely proud to connect our brand, Chevrolet, with Manchester United and its passionate supporters all around the world. Manchester United's statistics are impressive, but this relationship goes far beyond the numbers – this relationship is about connecting our brand with the deep-seated emotion that surrounds the team everywhere it goes."
Let's hope this "deep-seated emotion" doesn't turn out to be the opposite of what Batey imagines, or more heads may roll at GM.
Mexican United star Javier "Chicharito" Hernandez hoists a trophy for his country.
When one considers the cost of United's elimination from the UEFA Champions League in the group stage last season, one would think the Glazers would be eager to make some ground on the £400 million debt rather than pocket half the money raised from the IPO, around £90 million ($141 million). Many people are giving good reasons why you shouldn't invest in Manchester United at this time, despite their reputation as a leading global brand. The Champions League flop aside, there's also the issue of overall revenues not just shrinking year over year the past two years, and the small matter of growth being limited to 14% over the past three years. That said, the IPO doesn't even provide dividends to shareholders. The only way these shares could possibly increase in value is if the club is purchased by a billionaire who doesn't mind cleaning up the Glazers' £400 million mess and investing untold millions into buying new players. With Sheikh Mansour presiding over Manchester City on the other side of Manchester, it will take deep pockets indeed to regain that place on the top of the English Premier League mountain, and few super-rich contenders will fancy the challenge.
And there's more. United supporters are a proud and sentimental bunch, like most sports fans, and when it was discovered that the "Manchester United company" is now "based" in the Cayman Islands and that the Glazers' entity, Red Football LLC, is registered as an entity in the low-tax US state of Delaware, the frothing increased. It's a far cry from the locally owned and supported club that began its life in Manchester's Newton Heath, where workers of the Carriage and Wagon department of the Lancashire and Yorkshire Railway played games against other railway teams and companies. Manchester United is probably the best-supported football club in the world, having dragged itself up from the blue collar crofts and canals and survived the horrific Munich Air Disaster in 1958 that threatened the legacy of Matt Busby, one of United's most cherished managers. 23 people died at Munich, among them some of the most talented footballers of their (and some would say any) generation. Ten years later, United became the first English team to win the European Cup, with Matt Busby, who survived the Munich Air Disaster, still at the helm. The club has grown in stature over the past several decades, overtaking Liverpool as the most successful British football club of all time. Until the Glazers decided to borrow money and transfer that debt onto the club, United was the wealthiest sports outfit in the world. Unfortunately, they now play with a negative £400 million disadvantage in that department.
Statue of Sir Matt Busby outside Old Trafford.
All things must pass, the mystics tell us. It's just a shame that in this case the passage was induced by craftiness and moneylust by the very people usually charged with the task of protecting and feeding. Instead, we have only seen abuse and drainage. It is interesting to note that both General Motors and AIG, a former shirt sponsor of United, received Troubled Asset Relief Program (TARP) loans from the United States government. These loans are for billions of dollars, and yes, the two companies have repaid the vast majority of their loans. But it shows the bigger picture, of a world where nothing is what it seems and money really is just numbers on a computer screen. Unfortunately, the moneymen have no use for tradition, class and history, so those things are slowly being swept into the gutter.