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Manchester United fans have cause for concern but should not panic

July 4, 2012


The club’s decision to float shares in New York will certainly raise a few eyebrows as the Glazers look to tackle their debt

Manchester United supporters should be concerned at the news that the club is to be floated on the US stock exchange. Yet at this juncture, at least, they should not panic when reading what appears in the more incendiary sections of the document filed by United’s owners, the Glazers, to the US Securities and Exchange Commission on Tuesday.

It is the word “indebtedness” – which appears 43 times in the papers – that will cause most concern worry the many of the millions of United supporters (and any true fans of English football) throughout the world who have made the 19 times champions the most popular club on the globe.

The term is apparently used at its most chilling at the bottom of page 25. Here, the document states: “Our indebtedness could adversely affect our financial health and competitive position.”

This is the Glazers publicly conceding – after seven years of denials from them, Sir Alex Ferguson, the manager, and the chief executive, David Gill – that the £423m debt loaded on the club by the US-based family when buying it in 2005 “increases the risk” of their ability to operate it as competitive busine ss.

This section goes on to state: “As of March 31, 2012, we had total indebtedness of £423.3m. Our indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. It could also have effects on our business.”

Of the six ways this could happen three are of particular concern. The debt could “affect our ability to compete for players and coaching staff; limit our flexibility in planning for, or reacting to, changes in our business and the football industry; [and] increase our vulnerability to general adverse economic and industry conditions”.

It is worth noting, though, that the Glazers are legally bound to outline to the US Stock Exchange the “doomsday scenario”: the direst – and in some cases, almost impossible – factors that might affect United, which when valued at around $2.24bn by Forbes in April confirmed the club as the world’s richest for the eighth successive year.

In to tal there at 21 pages that come under the heading of “Risk Factors” and alongside the incendiary paragraph about “indebtedness” another scenario listed that could affect United is titled: “Business interruptions due to natural disasters and other events could adversely affect us and Old Trafford.”

After listing every act of God imaginable it goes on to state: “Our operations can be subject to natural disasters and other events beyond our control, such as earthquakes, fires, power failures, telecommunication losses, terrorist attacks and acts of war. Such events, whether natural or manmade, could cause severe destruction or interruption to our operations, and as a result, our business could suffer serious harm. Our first team regularly tours the world for promotional matches, visiting various countries with a history of terrorism and civil unrest, and as a result, we and our players could be potential targets of terrorism when visiting such countries.”

All the abo ve may happen but the threat of an earthquake, for example, is far more unlikely than that of terrorism – and even how that could terminally affect United is as difficult to see as the further risk described as: “There could be a decline in our popularity or the popularity of football.” There is more likelihood of England ending as a sovereign state than football ever falling away – never mind dying – in popularity in this country.

What is clear, though, is that Ferguson, despite his famed prickliness toward journalists, is about to be faced with a summer of awkward questions regarding just how weak this leaves United in the key arena of the transfer market. And why he and the club have spent so long denying that the debt leveraged against United by the Glazers on buying it was seriously hobbling the club’s financial operations.

For Manchester City and their supporters, after the club claimed a first championship since 1968 with the final kick of the season , and which is owned by the seemingly financially immune, Sheikh Mansour, their summer of celebration just got even better. Read More


From → Sport

One Comment
  1. jumpingpolarbear permalink

    This will make the Glazers even more popular :).

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