The Red Knights, a consortium of wealthy Manchester United supporters whose first tentative meeting took place in London yesterday, intends to bid for the club, the group revealed today. The Knights hope to pursued 40 wealthy backers to invest £20 million each in a £1.2 billion bid to remove the Glazer family from ownership.
Led by financier Keith Harris, who has brokered takeover deals at Chelsea and Manchester City, the Knights hope to raise around £1 billion from wealthy backers and borrow another £200 million on the financial markets to formulate a bid for the club.
“We can confirm that a group of high net worth individuals, who support Manchester United (known as the ‘Red Knights’), met in London yesterday,” a statement read today.
“This group is supportive of current management but are looking at the feasibility of putting together a proposal to be put to the Glazer family regarding the ownership of Manchester United.
“These discussions are in early stages and no contact has been made with the Glazer family.”
The Glazer family bought United in a £790 million leveraged buyout but has loaded the club with around £716 million in debt. Recent information provided in the Glazers’ bond issue prospectus revealed that the club will haemorrhaged at least £565 million in interest, dividend payments to the Glazers and other fees charged by the family over the next seven years.
However, with turnover increasing substantially during the Glazer fiver-year regime as a result of increased TV money and far higher ticket prices, any bid for the club will necessarily be in excess of £1 billion. Some analysts believe that it may take a bid of around £1.6 billion to pursued the Glazers to sell.
“For such a proposal to be viable it would require the involvement and support of Manchester United supporters worldwide,” the Knights’ statement adds pertinently.
“The Red Knights have been liaising with the Manchester United Supporters Trust and their representatives attended yesterday’s meeting.
“As a first step, the Red Knights want supporters to demonstrate their commitment by joining the free online membership of the Supporters Trust, www.joinmust.org.
“Any new ownership model would aim not only to put the club on a sound financial footing, but would also aim to put the supporters at the heart of everything the club does,” the statement concludes.
The Knights have set MUST a membership target of 100,000 in the first instance, it is reported. The organisation, which has more than 66,000 members at the time of writing, began as Shareholders United Against Glazer 12 years ago.
But MUST membership has rocketed since the Glazers’ bond issue in early January, with anger over United’s finances translated into member sign-ups and the growing green and gold protest movement.
“Our role in this is to generate interest among supporters and grow numbers to give us confidence that the groundswell of support is there for us to pursue it,” said MUST CEO, Duncan Drasdo.
“A bid could then go in quickly. I don’t know what the timescale will be, things keep surprising me with this, but I would imagine that it could probably be months rather than days or weeks.”
Whether the Glazer family, which said today it intends to keep hold of the United cash cow for at least seven more years, will sell is another matter altogether.
Do i see another portsmouth the next owner must be better.
These guys are in it for what they can get for them selfs.
can anyone tell me why the suggested 1.5 bn, to be paid by the red knights if a takeover occurs, would not include payment of the debt outstanding? Some say the glazers would want more of a profit on top of the 800m they paid 5 years ago. But, the glazers did not pay 800 million. They paid 250 and borrowed 500 million. So 1.5 Bn should pay the 700Mn debt, pay the 250 mn back and give them a fat 550 Mn profit. But recent articles suggest that 1.5 Bn would go to the Glazers and still leave us with the 700Mn debt. That would be a 1.25Bn profit for the Glazers. Please Correct me if I’m wrong, but for me, any takeover is useless unless the entire debt is cleared in the transaction.
As of this morning there are over 82,400 MUST members.
The rise has been exponential in last few days.
The Glazers must be rubbing their hands and drooling at the trough as we all get sucked in and the Knights keep adding to their number.
Jesse is correct to point out that any takeover is useless unless the entire debt is cleared, including PIKs, bonds, u-name-it.
At this rate the present owners know their bate and could hang in for even more, in which case there is the real threat of mass boycott and downward spiraling.
(I had a nightmare last nite watching Milano in an empty OT – not nice!)
Let’s hope sense prevails and, if there is a successful takeover, the Knights don’t end up squabbling round the table as to how the club moves forward.
Too many Gordon Ramsey’s in the kitchen could prove pretty hot.
“Jesse is correct to point out that any takeover is useless unless the entire debt is cleared, including PIKs, bonds, u-name-it.”
Not so, it all depends on how the debt is proposed to be repaid! It is the interest that is killing United since the Glazers arrived, not to mention, no debt being repaid at all, just rolling up into more debt. Added to which are the ‘management fees’ and ‘directors loans’ the glazer gang are syphning off, plus bad bets like the interest rate swap by the glazer’s financial geniuses (sic) on Pall Mall (rent must be pretty steep almost next door to buck house) that cost the club an extra 35 million last year. Get rid of that lot, lower interest repayments and a sensible repayment structure and the club can eventually recover from the disaster that is the ghastly glazers
Under the terms of the bond, bond holders must be paid 101% of value on change of ownership and 121% of value to call them in early. The Red Knights can make the club debt free but they’re going to have to raise a huge amount of money to do it. That’s why the support of hundreds of thousands of United supporters via MUST is vital.
Ed, why is the support of MUST vital ?
Preferable, yes.
But the Red Knights could go ahead, financially, without them on board if the latest figures are correct.
One thing that may make it harder is that yesterday’s formal accounts announcement (sic David Gill et al) can be argued to make the club look even healthier, so the Glazers can play even harder to get.
I’d say because at some stage fans will be asked to translate backing into two things
1) – Cash investment through a collection investment fund
2) – Strategically withholding customer to force the Glazers out
Ja, when the Glazers took over United were debt free.
I agree that if any debt is serviceable without killing the club, it is to be welcomed given the current predicament.
But which circumstance would you rather be in?
Living with a mortgage or having paid it off.
Especially if your income may falter at some future date.
Just my opinion.
As a former and likely future shareholder, should this takeover succeed, I would rather have the debt cleared.
Well obviously debt free would be best. However my initial post was in response to:
“Jesse is correct to point out that any takeover is useless unless the entire debt is cleared, including PIKs, bonds, u-name-it.”
i.e. anything other than a debt free takeover would be useless. Which, I argued was not the case.
The glazer legacy will take years to rectify, like in a different way, Munich was. One rarely discussed effect of the Munich crash was the premature rushed promotion of young kids to the first team, Alex Dawson and others, whose careers ultimately suffered for this.
This could potentially be the case if the Glazers cling on, as sellable players like Vidic (and Anderson if he had not been crocked) would have been sold to fund untried incoming players like Smalling etc and the too early promotion of youth players
I’d like to see the business plan of the red knights. It will take a lot of money to take over the club and I wonder how they will finance it. Will they use their own money or will they borrow parts of it? What does either alternative mean for the club regarding dividends/interest?
That being said, I wouldn’t mind a more sensible debt/equity ratio and, more importantly, a less risky interest coverage ratio. It is not all important to make us debt free, it is enough to lower the risk to a point where the interest payments required are manageable even if we should fall into hard times (missed CL etc).
I am highly sceptical towards people from investment firms actually running/owning a business. Usually they leverage take overs even more than the Glazers have done. I’m not overly convinced they are doing this for altruistic purposes, but I am more than happy to be proven wrong.
There are several articles in today’s press concerning the likely funding, eg Manchester Evening News, London Standard, etc.
Example 50 Knights, 20 million each plus 200 million raised on tick yields 1.2 billion on table.
However, as Ed points out, to clear the bond AND satisfy the Glazers could take even more. They ain’t stupid. They are now drooling at the proverbial trough now they know we smell blood.
Personally, I couldn’t agree with you more about being highly sceptical about any investment personnel – I used the term swapping slugs for leeches yesterday which beckoned Ed to suspect me as a possible Glazer lacky.
Let’s just hope that with a morally good intentioned MUST on board, our fears will not be manifested.