15-02-2005 02:08									#1
	Manchester United: A case study on the dangers of 'public' sports teams Support Apolyton buy from Amazon

ManU went public (on the stockmarket) a while back and this led to amazing profits for the club, but now comes the downside. American Malcolm Glazer (owner of the Tampa Bay Bucs) is trying buy the team outright by a hostile takeover (he currently owns 28% of the club, which makes him the second largest shareholder). The problem? He can't pay for it himself and needs to borrow (right now from J.P. Morgan) around $450 million. How will he pay this back? That's right, by putting the club up for collateral and plunging ManU into debt. You get a perverse situation where the club will be finanacing Glazer's hostile takeover.

Of course this is not met with approval in all areas. ManU fans are LIVID! After all, ManU is highly profitable and debt free, but this sale will plunge them into debt, meaning they may have to sell off more players and not be able to make as many transfers are they are used to (can you say, bye, bye Christiano Ronaldo?). It would really doom ManU. Many former ManU players and now Ole Gunner Solskjaer, a highly popular ManU player, has come out against the takeover bid.

There have been pictures of Glazer hung in effigy at the stadium and death threats have found their way to Glazer.

The problem, of course, is that the Chairman of the club has to act in the shareholder's best interests, and a high buy price offer would HAVE to be recommended, usually. Though the Sports Minister has said the Chairman has to look at the present and future shareholders of the club's benefit. We'll see if the British ministry in charge of corporate fiduciaries sees it that way.

This seems to be a wake up call for those teams which are looking to go public. It may lead to great profits, but it may have some very bad consequences.

	15-02-2005 02:11									#2
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never was a fan of ManU, but... Glazer sucks.

	15-02-2005 02:13									#3
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Seriously though, I don't think Glazer realizes how rabid English soccer fans can be. This isn't going to be a "oh after a while they'll be ok" thing. They will DESPISE the man for as long as he becomes the majority owner.

	15-02-2005 02:43									#4
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The fans that have beem protesting 'Man U will never be sold' are the same ones who were gloating that their club was the biggest football PLC in the world a few years back.

The PLC chicken has well and truly come home to roost!

I hope he moves the 'franchiase' to London were most of the Man U fans are from anyway....

	15-02-2005 02:48									#5
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Soccer sucks.

	15-02-2005 02:49									#6
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quote: Originally posted by chegitz guevara Soccer sucks.

very constructive

	15-02-2005 02:50									#7
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Ah, the LBO hits the sports world.

	15-02-2005 02:54									#8
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quote: The PLC chicken has well and truly come home to roost!

Indeed! Great unintended consequences, though it had to be seen coming. For such a successful and rich club, you knew someone was going to engage in a hostile takeover sooner or later, and they'd have to borrow to do so. Even for clubs not as successful, I think you'd end up seeing the same thing.

	15-02-2005 02:55									#9
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quote: Originally posted by chegitz guevara Soccer sucks.

Kind of, but compared to such disgraces as American Football or baseball, it's heaven on earth.

	15-02-2005 02:57									#10
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Now, now... let's not make this a my-penis(er... sport)- is-bigger-than-yours. I enjoy all three sports mentioned so far. Talk about the economic implications, not just for ManYoo, but for other public franchises.

	15-02-2005 03:03									#11
	Re: Manchester United: A case study on the dangers of 'public' sports teams Tired of ads?

quote: Originally posted by Imran Siddiqui ManU went public (on the stockmarket) a while back and this led to amazing profits for the club, but now comes the downside. American Malcolm Glazer (owner of the Tampa Bay Bucs) is trying buy the team outright by a hostile takeover (he currently owns 28% of the club, which makes him the second largest shareholder). The problem? He can't pay for it himself and needs to borrow (right now from J.P. Morgan) around $450 million. How will he pay this back? That's right, by putting the club up for collateral and plunging ManU into debt. You get a perverse situation where the club will be finanacing Glazer's hostile takeover. Of course this is not met with approval in all areas. ManU fans are LIVID! After all, ManU is highly profitable and debt free, but this sale will plunge them into debt, meaning they may have to sell off more players and not be able to make as many transfers are they are used to (can you say, bye, bye Christiano Ronaldo?). It would really doom ManU. Many former ManU players and now Ole Gunner Solskjaer, a highly popular ManU player, has come out against the takeover bid. There have been pictures of Glazer hung in effigy at the stadium and death threats have found their way to Glazer. The problem, of course, is that the Chairman of the club has to act in the shareholder's best interests, and a high buy price offer would HAVE to be recommended, usually. Though the Sports Minister has said the Chairman has to look at the present and future shareholders of the club's benefit. We'll see if the British ministry in charge of corporate fiduciaries sees it that way. This seems to be a wake up call for those teams which are looking to go public. It may lead to great profits, but it may have some very bad consequences.

Unless Glazer is being purely vindictive against the club and has money to burn he obviously believes that the move will benefit the club. From what you say (I haven't been following this other than the protests), even if Man Utd are footing the debt by being collateral Glazer will be the majority shareholder and most damaged if ManU go under from debts that are crippling.


IMHO the issue here is the fans and the continuation of a cultual icon, not the shareholders interest. If you are a current shareholder who fears the takeover, sellout at a huge profit and let him take the club down.

	15-02-2005 03:06									#12
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Well, there are plenty of shareholders who are also fans. They may consider that the long term investment possibilities for ManU on the current path are MUCH greater than Glazer's future ManU or even Glazer's offer. The best money making may be to continue as is, and that may be an argument to resist the takeover on the part of the shareholders.

	15-02-2005 03:11									#13
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The money making potential of the club should be reflected in the share price already, and additionally the takeover will inflate the price in the short term.

Fans who are shareholders need to make sure they are not confusing love with money.

	15-02-2005 03:14									#14
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I gotta ask: Why didn't the team give 51% of the shares to Manchester? Why did they leave themselves vulnerable?

	15-02-2005 03:21									#15
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You mean to the city itself? That would be strange, don't you think?

quote: The money making potential of the club should be reflected in the share price already, and additionally the takeover will inflate the price in the short term.

What about the long term? Perhaps the shares would be more valuable in the long term if the current situation would be continued, than if Glazer increased the price in the short term.

	15-02-2005 03:23									#16
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You're taking about gambling and risk spread now, which is a different topic.

That is to say, you are suggesting one outcome is preferable to another, when there is no evidence to support it.

	15-02-2005 03:26									#17
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quote: you are suggesting one outcome is preferable to another

I'm saying MAYBE one is better than the other. And with the huge debt load that ManU will be saddled with, it isn't idle speculation.

	15-02-2005 03:32									#18
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Is it possile to only float 49% of a company when it turns into a PLC?

	15-02-2005 03:32									#19
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One may be worse, it may not be, but that doesn't lead you any closer to deciding which outcome is better for the club as many will see the flip side as better. Having debt can be healthy for a company, without see the gearing ratios I couldn't pass more comment.

	15-02-2005 03:33									#20
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quote: Originally posted by reds4ever Is it possile to only float 49% of a company when it turns into a PLC?

IIRC BP was like that for many years.

	15-02-2005 03:44									#21
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quote: Originally posted by Dauphin One may be worse, it may not be, but that doesn't lead you any closer to deciding which outcome is better for the club as many will see the flip side as better. Having debt can be healthy for a company, without see the gearing ratios I couldn't pass more comment.

That's my point! Since you can't be sure which is better for the club, the Chairman can make the argument that he assumed the long term growth of the club would be better without the takeover and that's why he did not recommend it. It allows for Gill to say no to Glazer without getting into too much trouble.

	15-02-2005 05:36									#22
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they can just put in a poison pill and they wont have to worry about a hostile takeover.

	15-02-2005 07:31									#23
	Re: Re: Manchester United: A case study on the dangers of 'public' sports teams Support Apolyton, buy Civilization III: Complete

quote: Originally posted by Dauphin Unless Glazer is being purely vindictive against the club and has money to burn he obviously believes that the move will benefit the club.

Not necessarily - he just thinks the move will benefit himself.

This takeover reminds me so much of a bygone era, where huge hostile takeovers were financed by high yield bonds, while the companies taken over usually ended up in various pieces.

KKR, anyone?

	15-02-2005 10:29									#24
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quote: Not necessarily - he just thinks the move will benefit himself.

Indeed... what benefits Glazer doesn't have to benefit the club . After all, I'm sure ManU could make more money by spending less on transfers and raising ticket prices.

	15-02-2005 10:37									#25
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quote: Originally posted by Imran Siddiqui quote: Not necessarily - he just thinks the move will benefit himself. Indeed... what benefits Glazer doesn't have to benefit the club . After all, I'm sure ManU could make more money by spending less on transfers and raising ticket prices.

In some ways ManU's status as a PLC restricts its spending in the transfer market in that it must justify the expense of any new player to the shareholders (ultimeatly). Although United do spend big it's always on young players that won't depreciate in value before United can sell them. They don't have the freedom of the big continental clubs.

	15-02-2005 11:14									#26
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quote: Originally posted by reds4ever Although United do spend big it's always on young players that won't depreciate in value before United can sell them.

I dunno. Rooney caused them 25m pounds - you think somebody like Real Madrid is going to pay a higher price for him?

	15-02-2005 11:16									#27
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We are talking about Real Madrid here, UR .

	15-02-2005 11:23									#28
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DP

	15-02-2005 11:24									#29
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quote: Originally posted by Urban Ranger I dunno. Rooney caused them 25m pounds - you think somebody like Real Madrid is going to pay a higher price for him?

But they were left unable to buy for all the next season because that was all the board had allocated for 2 years . A question to ask is whether, if the roles were reversed, ManU would've been able to justify to the board/shareholders buying a 28 year old Real Madrid player that the manger wanted rid of, thats that Real bought in Beckham. Beckham's worth a lot in marketing so that skews it somewhat, but I think the point is the same, the money at Uniteds disposal is small and more tightly controlled as a PLC than if it were run like Real, Juve etc.

	15-02-2005 12:36									#30
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quote: Originally posted by reds4ever Beckham's worth a lot in marketing so that skews it somewhat, but I think the point is the same, the money at Uniteds disposal is small and more tightly controlled as a PLC than if it were run like Real, Juve etc.

I wasn't disputing that point. I was wondering if Rooney would turn out to be an investment, i.e. would heincreasein value, or would he be somebody like Liverpool's Hesky?