Look away now if you still believe that the Glazer family has plans for Manchester United that are anything but malevolent and would rather not know the truth! In an occasional series investment analyst Andy Green – andersred.blogspot.com – publishes further information on the family’s US property business, First Allied Corporation.
The report makes uncomfortable reading for United supporters still harbouring hopes of a late investment in the transfer market this summer, with the Glazers’ US strip-mall businesses failing an alarming rate as predicted by Green earlier this year.
In May Green identified 34 of 64 Glazer-owned shopping malls that were at serious risk of defaulting on their mortgages, with the entire portfolio highly indebted. In fact First Allied is failing so fast that several shopping malls have failed to pay their mortgages in the past quarter alone.
“Mortgages of five of these centres have become “delinquent”, that is to say the centres have started to miss mortgage payments,” explained Green yesterday.
“These five centres, originally valued at over $38m with over $7m of equity, have become delinquent in the last four months.”
Additionally, says, Green, “five new centres, which had previously been covering their mortgages, have now joined the “at risk” list after seeing falls in occupancy.”
Worse still, while occupancy rates remain low across the group some malls reported as fully let by the Glazer family have also fallen into delinquency because they have come out of interest-only periods on their mortgages.
Green estimates that many more of the family’s malls will fail even with full occupancy because the group is so highly leveraged.
“First Allied’s problems are not just a product of a weak US economy struggling to come out of recession, they are in large part due to aggressive financing structures put in place before the credit bubble burst,” explains Green.
“For 15 shopping centres, the terms of the mortgages on them make insolvency virtually inevitable.”
In fact the entire property business is now in such a poor state that it made just $9 million before taxes and other costs in the past year. The true group position is worse, with Green’s estimate deliberately ignoring the centres with negative cash flow. Each centre is non-recourse, meaning it can fail without impacting the group position.
Insignificant in a portfolio of 64 centres? Probably not, with the family’s NFL franchise Tampa Bay Buccaneers also heavily in debt, United is and will remain the family’s only cash-cow.
Indeed, given the lack of free cash-flow in its empire and the family’s extreme indebtedness, the Glazers have little choice but to remove hundreds of millions in dividends from the club’s coffers under the terms of the £504 million bond issued last January. This will pay down the so-called Payment-in-Kind (PIK debt), while Sir Alex Ferguson remains short of transfer funds and seeking “value” in the market.
There is, to paraphrase the Scot, no doubt that, although inexplicably some supporters still doubt this is the family’s intention.
The picture is of course similar to that unveiled by Green, the Guardian’s Daniel Taylor and BBC Panorama last May, with the Glazers’ property position deteriorating in the past quarter. It explains almost entirely the family’s motivation for issuing a bond that actually increased United’s interest payments, why Sir Alex Ferguson is suddenly seeking “value” and the reasoning behind both the Bucs and United’s “investment in youth” – read cheap – strategies.
While the Bucs came off disastrous 3-13 losing season on one of the lowest wage budgets in the NFL, United had ‘only’ the Carling Cup to show for a largely disappointing campaign in a mediocre quality Premier League after selling Cristiano Ronaldo last summer.
The response to relative failure?
Tampa Bay has invested in a range of younger free-agent players during the off-season, while the fans have walked away in droves. The franchise sold less than 40,000 season tickets and the club must now black-out TV coverage as games have not sold out for the first time in decades.
Meanwhile, following a remarkably similar strategy United has spent around £10 million net this summer on three youngsters this summer as the club also failed to sell all available season tickets for the first time in recent memory.
The strategy has failed at the Bucs since the franchises’ 2002 Super Bowl win, while the future is still unknown for United. There are, however, few examples in professional sports where a club bucks – no pun intended – the market and reaches greater heights on a negative investment strategy.
Indeed, in context the 1996 double winning side, including a youthful Paul Scholes, Ryan Giggs, Gary Neville, Nicky Butt and David Beckham, is an historical aberration.
With the Glazers’ finances unlikely to improve in the medium term, Ferguson must now repeat the trick.
36 thoughts on “Going, going, gone as the Glazers’ property business turns delinquent”
Summing up then……..we are well and truly buffered. Is there any reson to be optimistic?
If the Glazers don’t leave united soon I am considering cancelling my sky subscription. I think that this will be a better move than not buying season tickets. What do you think?
Both company,s owned by ruthless business men, who are screwing their customers,drop Sky as the grasping bastards, have just stopped people viewing sky sports news,from the free view boxes, how petty is that! just how much money do they want? if they made there sky deals affordable people would subscribe to it, it,s a total dis grace and will force ,more and more people to download their service illegally.
YES. I will always believe in Sir Alex Ferguson, Manchester United, our squad, the youth, the legends and our chances of winning trophies and maintaining our dominance. surely the time has come for the “red knights” – if they are still around or even exist – to make a bid for the club. glazers, time to sell up (to someone who can afford us) and fuck off. always BELIEVE in Sir Alex Ferguson and Manchester United.
Isnt there reason to think this might encourage the Glazers to sell up to pay off their debts?
Probably not as United are their only revenue stream.
The Glazers are drowning in debt. Right now they don’t need a revenue stream, they need a big pile of cash.
Aj, whilst I do believe in SAF, I’m not sure if his managerial abilities extend to manipulating dire economic realities to United’s advantage.
AJ, am i right in thinking you are starting t see the situation fo what it actually is now?
Earn some credibility with your response and dont deny the facts as you have before..this is your chance to redeem yourself AJ and admit we were right all along re the glazers….dont forget some of your earlier ramblings denied wrong doing on their behalf
Like i say, dont blow this chance to recuperate some credibility….
captainhormone, I remember the glazers take over and will admit that I for one welcomed them and supported their ownership , but things changed this spring and after five years of backing them I have had enough, the bond was the beginning and now I am sick and tired of them and want them to just fuck off. I have always known the facts but gave them a chance, but when your club sits in £700m glazer debt, interest going up, money getting took from the club, them being happy and so on you get sick of them.
fair do’s AJ, takes a bigger man to admit they were wrong
I can tell you something else that is WRONG……….the glazers. time they sell up and go, I’m not a red knights fan but does ayone know what the hells going on there, I heard that they are gone, they gave up and accepted the glazers “wont sell” and another story that they are infact waiting for the right moment to make the bid. either way, the glazers time is up. if the knights are waiting then I for one think now is a good time with two pieces of bad news for the glazers in like a week, time to move.
@AJ – The Red Knights are waiting for the price to come down essentially.
Which won’t happen without a significant shove from the fans… which won’t happen cause most fans don’t give a shit.
Sadly, this is true. They will start caring once we stop winning trophies.
isn’t this good news for United fans hoping for the Red Knights to come in. Surely this will force them into selling the club at the 1 billion mark that is being reported.
This could be good news. The Glazers’ financial plan seems to be to muddle through, using United’s profits to pay off the interest on the PIKs, while spending very little at the club but still somehow keeping us in the Champions’ League.
These financial problems could be a reality check for them. They may be forced to take action. That could mean selling the Buccs to pay off the PIKs and sort out their shopping mall business. That would be good for us. Or they may sell or refloat United for a big profit on their investment.
What do you mean the Glazers are wrong and it is time for them to go… Sir Alex has told us that they are great owners – he should know, not you.. How dare you disrespect the great man and go against what he says!
Cancelling Sky subscription means that Sky don’t get your money but if you buy your season ticket you will be putting money in to the Glazers pockets.
So we’re paying for the PIKs then
Sir Alex Ferguson is GOD, He is the greatest manager of all tìme and will always keep us at the top challneging for titles. we are building for the future as Fergie is working on his last great team of dominance that will be winning after he is gone. hopefully Sir Alex stays a minimum of five more years, if I had my way he would NEVER LEAVE MANCHESTER UNITED.
Only total twats buy this ‘we’re building for the future’ Glazer PR bollocks
Aj… what is the weird reasoning behind your pitiful contribution here on Rant?
You talk complete and utter shit, with all the finesse of a turd in a hot tub… and no one here thinks you’re at all clever… and yet you continue to post here, the same ridiculous rhetoric, with ever increasing zeal… ???
I’m not telling you to go elsewhere… this is after all a free and open forum… in fact, regarding Manchester United, it is the best, free and open forum, as Ranters here aren’t deluded twats that blindly swallow all the stale treacle, and misleading bullshit that comes out of the United offices… like most other forums do… and it seems, just like you… and this is my point.
Are you just a sad little tool, with a sad little life, that reckons negative attention, is better than no attention at all?
Or are you one of those tedious little twerps that thinks he’s a cyber warrior, wading into arguments, looking to pick fights, swinging his limited vocabulary around like a busted pike, and screaming, “COME AND HAVE A GO IF YOU THINK YOU’RE HARD ENOUGH”?
It’s annoying as fuck Mate…
And you come across as a right fool.
So why bother?
to be fair alf, AJ does have downs
IF we all agree that the glazers are bad for our club then really it is quite simple to address the problem. I have chosen to give up my season ticket but RESPECT all those fans who continued with theirs. BUT dont support the glazers when you go and that means not buying anything -is it that hard. If enough fans did this within a very short period of time they would be flapping more than they are now
No matter how much we loathe the Glazers… in fact, even complaining about ticket prices, players wages, even SKY Sports prices… it’s all our own fault for paying up, instaed of putting our money back in our pockets, and demanding our rights as fans… that ours is truly the most important opinion.
Well around 4000 fans gave up their season tickets so fair fucks to them, and this was when the momentum had gone. I reckon we only need something like 15,000 empty seats to cause the Glazers serious problems – not all 75,000.
When Glazers spend our profits on the PIK debt and the performances on the pitch suffer due to a lack of serious investment the issue will come back ’round again and there will be lot’s more empty seats, like at the Bucs.
I agree, the hardest to say and what really hurts is that if our club have a really bad season thats when the momentum will increase even more against the glazers. So in effect you want Man Utd not to win, and that is why the Glazers are such dreadful owners for our club and why they are dividing our fans. Manchester United Footballl Club is too big to be run by a bunch of scumbag carpetbaggers who are screwing up big time in their own back yard, never mind over here
put your hands up who has a new united shirt, or bought their kid one…put your hand up those who still pay sky…put your hands up those who visit the MUFC website everyday thus allowing them to charge for ad’s etc…i could go on…thing is most UTD fans are wind and piss, and are not militant enough
now hang your head in shame
Captainhormone, my thoughts entirely, actions speak louder than words, the glazers are good business people, you know why because when push comes to push they know that fans will not give up their sports team. All I can say is that if it was’nt for the actions of MUST they would be running ( ruining ) our club with so much control we would’nt even be allowed to fart in the ground
i buy fuck all but i go to a couple of games a year and watch united at the pub so I guess that makes me a cuntbag!
not only do I now buy the shirts, go on the website, go to games, pay for sky or buy merchandise, I don’t support the team
Personally I think this is your best post in months
I go to the odd game (when I can afford it) but I don’t buy any of the pointless merchandise bollocks in the Megastore and I don’t use the official website because its shite; there is no real content, and of course the Glazers vermin scum make money from it
Don’t have Sky either because Murdoch is a cunt and they show far too many inane American dramas that have don’t appeal to a cunt like me
Steal Sky, stream United games, jump the turnstile, borrow a ticket, use the BBC site for info, boycott etc.
Anarchy in the UK.
And I’m a party member.