Malcolm Glazer’s Legacy Is Manchester United’s Debt Burden
Before starting this piece in earnest, I think it’s only fair to acknowledge my personal view about the Glazer family’s ownership of Manchester United. I’ve never been a fan of the takeover, nor do I agree with the way in which it was completed. I fully understand that Manchester United were always susceptible to a takeover bid given they were a publicly listed company and that the purchase by the Glazers complied with the requisite rules and regulations.
This article is not about Malcolm Glazer the man, but about the consequences of his and his family’s ownership of Manchester United.
Since the Glazer takeover, Manchester United have won five Premier League titles, three League Cups, five Community Shields, a Champions League and a FIFA Club World Cup. Take into account two further appearances in the Champions League final, losing both times to Barcelona, and missing out on another Premier League title by virtue of a last minute goal on the last day of the season by Sergio Aguero, and it’s fair to say that on the whole United have competed for trophies on a consistent basis, barring last season of course.
In fact, despite the unpopularity of the ownership, which culminated in the Green and Gold campaign in 2010, the Glazer era has been arguably the most successful in Manchester United’s history. The key question is, though, were United successful because of the Glazers or in spite of them?
It’s worth looking into the events that preceded the takeover because despite the relative success United enjoyed on the pitch prior to the takeover, the club was going through a difficult period off the field.
It is no secret that Sir Alex Ferguson has a passion for horse racing. He struck up a friendship with racing tycoons JP McManus and John Magnier. The Irish pair took an interest in Manchester United by purchasing shares and owning as much as 28.89% of the club.
The roots of Glazer’s takeover of Manchester United can, arguably, be traced to a horse, specifically ‘The Rock of Gibraltar.’ Magnier had given Ferguson co-ownership of ‘The Rock of Gibraltar,’ who went on to have a successful racing career earning over £1million in the process.
The nature of the ownership, though, became the center of a dispute between Ferguson and Magnier. The former Old Trafford boss believed that he was entitled to a half-share in the ownership of ‘The Rock of Gibraltar,’ which would have allowed him a cut of the lucrative stud rights. Magnier was of the belief that only the prize money would be shared. This led to a very public falling out between the pair and resulted in Ferguson suing the racing tycoon.
Magnier and McManus didn’t take this action lying down and ratcheted up the pressure on Ferguson, using their clout at Manchester United. The pair demanded United answer 99 questions pertaining to the club’s finances, transfer dealings, and affairs. This was particularly sensitive as there were reports that Ferguson’s son, Jason, allegedly secretly benefited financially from United’s transfer activities.
Their actions put pressure on Sir Alex and weakened his position to a certain degree. Add to that the perception that United were waning on the pitch, culminating in a trophy-less season in 2004-05, and it appeared that Ferguson was skating on thin ice. Magnier and Ferguson eventually settled out of court with the latter accepting a settlement fee of £2.5million. In hindsight, Ferguson was the big loser in the battle and arguably had this dispute not arisen, the Glazers may not have had an opportunity to take over Manchester United.
The Glazers did take advantage of the strife to accumulate shares and eventually bought out the club, taking United off the stock market on the June 22, 2005. Even then, it was argued that had Ferguson stood against the takeover. The financiers funding the deal would not have provided the cash for the Glazers to complete the purchase of United as the Scot had been identified as being crucial to the long term success of the club.
However, that did not come to pass and the Glazers bought United for £790million in a heavily leveraged deal. The Glazers then loaded the debt, £525million pounds worth, onto the shoulders of Manchester United. A highly controversial and unpopular move with the United faithful.
The transfer strategy changed under the Glazers with a focus on purchasing players with potential for high resale value. Under this policy, United signed the likes of Anderson, Nani, Antonio Valencia, Ashley Young, Wilfried Zaha, Phil Jones, David De Gea, Chris Smalling, Michael Carrick, and Owen Hargreaves to name but a few. On the other hand, players over the age of 26 were not considered with respect to a big money bid. These signings varied in terms of success, but United only deviated from this policy a couple of times when they signed Dimitar Berbatov for £30.75million and Robin Van Persie for £24million.
Whilst the list of signings may seem impressive, United were quickly falling behind the likes of cash-rich clubs like Chelsea and Manchester City as well as continental counterparts like Barcelona, Real Madrid, Bayern Munich, and more recently, Paris Saint-Germain.
For all of Ferguson’s protestations about finding ‘value’ in the transfer market, the critics pointed to the fact that the debt had placed undue restrictions on United’s ability to compete for the best players. Ferguson, for his part, always backed the Glazers, saying that he had free reign in the transfer market.
Since the Glazers took over in 2005, United have spent a total of £382.9million including the deals for Fellaini and Mata. During that time Manchester City have spent £693.7million, Chelsea £600.2million, Tottenham £448.2million, and Liverpool have splashed out a total of £443.75million.
Perhaps the most damning statistic of all is that United have spent more on debt repayment, interest fees, and bank charges – over £680million – than on player acquisitions. It’s easy to say, but had United not been burdened with all that debt, the club would have and perhaps should have competed with the top clubs to sign the best players in the world.
It is a testament to Ferguson’s management and David Gill’s savvy that United, despite the debt, managed to stay on top of the tree for so long. The fact that United are now willing to spend up to £200million after a disastrous season speaks volumes of the degree of underinvestment in the squad in the preceding years, under Ferguson’s and Gill’s watch it must be said.
It also has to be pointed out that United have the second highest wage bill in the Premier League spending £182million in the 2012-13 season. Expect that figure to rise should Louis Van Gaal and Ed Woodward spend heavily this summer on player acquisitions.
What the Glazers were wise in doing was to leave all the football matters to Sir Alex Ferguson and David Gill. Indeed, the pair probably wielded more power in the Glazer era than anytime during the PLC period. It’s therefore natural and understandable that Gill and Ferguson were the Glazers’ biggest backers, even in the face of fan hostility.
Unfortunately for them, they gave Ferguson too much power when he anointed David Moyes as his successor. The suspicion was that the Glazers supported the appointment in part because of Moyes’ frugality in the transfer market. Add to that Ed Woodward’s ascension within the Old Trafford hierarchy to replace David Gill and club were in an extremely vulnerable position come the start of the post-Ferguson period. The worst fears of fans were realized as the club stumbled on the pitch and made a shambles of the summer transfer window.
The commercial side is where the Glazers have been successful at Manchester United. Prior to the takeover, the feeling was that Manchester United were not extricating the maximum value from their brand. In hindsight the Glazer family were correct, though that’s not to say that United wouldn’t have realized its potential and value had they not taken over.
Ed Woodward played a key role in Malcolm Glazer’s purchase and subsequent ownership of Manchester United. He advised the Glazer family on the takeover bid and was then brought into the club once the purchase was done. Initially employed to drive the commercial side of the club, Woodward managed to increase United’s income from £48million in 2005 to £152.5million in 2013.
Perhaps the biggest key in United’s commercial income boom under the Glazers was the decision to negotiate regional deals across the world, securing partnerships in Hong Kong, Saudi Arabia, Thailand, Turkey, Kuwait, and Japan to name but a few nations. Add to this the leveraging of United’s value to negotiate big commercial deals with the likes of Chevrolet, Aeroflot, Hublot, and other key brands, and it is fair to say that the club under the Glazers has been doing its utmost to maximize its profitability and there’ll be more deals to come. Currently, United are negotiating a kit deal which could see them rake in as much as £60million per year.
Despite the debt, the commercial side of Manchester United is extremely strong and indeed allowed the club to remain self sufficient. There is a recognition that there must be some form of success on the pitch with United challenging for trophies in order to keep club’s profile amongst the world’s elite. The Moyes experiment ended badly and it’s now up to Louis Van Gaal to ensure a quick return to winning ways.
In the 2008 Champions League final against Chelsea, United lined up with:
Van der Sar
Brown Vidic Ferdinand Evra
Hargreaves Scholes Carrick
Ronaldo Tevez Rooney
Six years on, only Edwin Van Der Sar has been replaced adequately. Up to the end of last season United still had Vidic, Ferdinand, Evra, Carrick and Rooney on their books with the latter being the only player under 30. Hindsight is 20/20, but could United have gone on to greater things had there not been any debt hovering over the club? Possibly, but then again perhaps not. What is certain is that without the debt United would have been able to compete for the top players in the transfer market and keep the squad fresh.
Prior to the takeover, Ferguson was not shy about making big money signings, recruiting the likes of Roy Keane, Rio Ferdinand, Ruud Van Nistelrooy, Juan Sebastian Veron, and Wayne Rooney. One could argue it marked a lost opportunity to have really taken the club to a truly exceptional level as a result of the financial restrictions placed on United.
Given the money that is awash in football, it is naïve, foolish even, to think that top football clubs could ignore commercial opportunities. Football is a business as much as it is a sport now so there is a need to ensure that clubs can earn money to ensure that the business is self-sustaining.
Let’s not kid ourselves either about Manchester United. Long before the arrival of the Glazers, United took full advantage of the commercial opportunities on offer. The club were floated on the stock market and aggressively cashed in on their global appeal. The club badge even dropped the words ‘Football Club’ from the logo for marketing reasons.
Fairly or unfairly, there was a certain distaste at how Manchester United were run commercially. Supporters of the Glazers are entitled to argue that they were just continuing what the club had already been doing, albeit at an accelerated pace. The success of the Old Trafford club after the takeover kept the fans satisfied as Ferguson reeled in trophy after trophy.
The main difference is the debt. Before the takeover, no matter how commercial Manchester United were, they were never in debt and the Glazers took advantage of the club’s profitability. As Gavin McOwan wrote in the Guardian, the Glazers used United’s money to buy itself. The purchase broke no rules, but the nature of the takeover and the extra burden laid on the club by the Glazers has and always will be a sore point.
Despite the increase in commercial income led by the Glazers’ business model, there will always be the lingering thought of ‘what if?’ What if the club wasn’t taken over? What if there was no debt? What if all the money used to service the debt was instead kept in the club to fund player purchases and improvements within the club.
When United fans look back upon this section of the club’s history, they will fondly remember Ferguson’s achievements. As for Malcolm Glazer, his legacy will be the huge debt he burdened the club with and the consequences of paying it off.