Negotiation 101. Don’t admit your possession is for sale unless you are absolutely happy for the price to plummet. It’s a refrain familiar to many a football club in the player transfer market. Today Manchester United’s owners, the Glazer family, warded off the first shot in a drawn out war for moral and legal ownership of the club.
Reports today suggest that a group of wealthy investors, known colloquially as the Red Knights, met at leading law firm Freshfields’ London office on Tuesday to flesh out a possible bid for the club.
Those involved in the Red Knights group include Goldman Sachs’ Jim O’Neill and Freshfields’ Mark Rawlinson, while international hedge fund trader Paul Marshall of Marshall Wace and Bet Fred founder Fred Done have also been linked to the group in the past.
In recent weeks financier Keith Harris, the Manchester United Supporters’ Trust (MUST) and wealthy fans have formulated plans to make a bid for the club, bought by the Glazer family in a highly leveraged £790 million deal during summer 2005. Urgency to mount a bid, fueled by growing anger at the Glazer family’s ownership of the club, has accelerated since details of United’s finances became transparent as the club sought to market a £500 million bond issue in January.
However, the Glazer family has consistently claimed that it is a “long-term” investor in United. It is a message repeated today in a terse one-line response from a family spokesperson: “Our position is that Manchester United is not for sale.” The oft-repeated refrain that almost certainly means the club is available – for a price.
In the parlance of the day everything has its price, despite denials to the contrary. Debt-laden United, which owes £716.5 million to financial institutions and bond holders, will haemorrhage more than £565 million in interest, fees and dividends over the next seven years according to the Glazer family’s own figures.
While the Red Knights’ desire to buy out the Glazers is genuine, any bid will come at a very heavy price. Probably more than £1.2 billion, including outstanding club debt of £509 million. The Glazer family will also use club funds to reduce the £200 million payment-in-kind loans under their name.
Since the 2005 takeover United’s turnover has increased considerably, driven by a new Premier League deal with Sky, huge rises in matchday ticket prices and increased commercial revenue from partners such as new principle shirt sponsor Aon. As such, the multiplier required to mount a successful bid that includes a premium for the current owners and covers club debt is much higher than the 2005 £790 million buyout price.
In a move not lacking in irony, the group has also lined up Finsbury to advise on public relations matters, according to a report in The Times today. The firm also advised the club in 2005, and its London office was subjected to repeated pranks by angry United supporters including a denial of service attack on the company’s website.
The Red Knights is not only potentially wealthy but includes some internationally recognised minds of true clout. Seymour Pearce-based Harris is an outspoken critic of the Glazer regime, adding in recent weeks that the family is placing the club in danger, while accelerating arrangements to bring the Red Knights closer.
Meanwhile, Marshall recently called for a fan ownership model at the club, similar to those employed in Europe’s leading clubs such as Barcelona.
But perhaps the most vociferous of the Red Knights is O’Neil. It is not without pertinence that Goldman Sachs’ head of global economic research is a leading figure in the anti-Glazer movement.
As thousands of terrace fans don the green and gold of Newton Heath, modern United will need each of the Red Knights as the long battle for control commences.