The hidden horror of Glazers' United
When Manchester United slapped AIG on their shirts you might have thought they were merely the sponsors. It appears they were secretly acting as the club’s business advisers as well.
What is happening at Old Trafford? The so-called ‘richest club in the world’ club has been revelling in the most successful period of its entire 131-year history and yet it is still posting an annual pre-tax LOSS of £44.8million.
How? Everyone knew the Glazer family’s buy-out of United with an unprecedented pile of borrowed money was a disgraceful and reckless gamble, but stark reality of the numbers being bandied about are almost beyond comprehension.
The club’s marketing clout and the success of the team under Sir Alex Ferguson generate a whopping annual turnover of £256m. But that windfall is being swallowed by the need to service interest on loans totalling £699m — a debt that is rising every year.
‘I don’t know what these figures tell you,’ said Ferguson yesterday. Run, perhaps? Admittedly, the accounts are horribly obtuse; deliberately so, no doubt. It’s a tangle of holding companies, parent companies, ‘secured’ borrowing, ‘debt streams’ and ‘payment in kind’ loans that would require the services of a professional expert to unravel, the kind of professional expert who helped lead us all to the brink of global financial disaster in the first place.
If you like calculus then they may be bedtime reading. But here is the scenario for you in a nutshell.
The Glazers are basically using their American Express card to pay off the £699m shopping bill they ran up on their Visa card. And next year, they’ll shove it all on Mastercard.
In the meantime, they are turning up at the casino and hoping the cards continue to be kind so they can cover the interest payments with their winnings.
What could possibly go wrong? Football is cyclical. Although the wheel turns much more slowly at the top than in years past, there will inevitably be a period when United are less successful. Ferguson mentions retirement more and more these days and other clubs will surely seize the initiative when that moment finally comes.
And then what? United are a bad season or two away from doing a Lehman Brothers, or a Northern Rock. The club is a sub-prime horror story, where hidden commitments, myriad loans and debts are complacently excused and numbers are crunched until they are unrecognisable.
These accounts don’t even cover the period when the credit crisis started claiming real victims, including the failed conglomerate AIG. The figures appear to show the Glazers aren’t paying off their massive debt and it’s not even clear if they’re covering all the interest.
More worryingly, the ledger seems to suggest huge repayments are due, starting in four years’ time, with bills landing on the doormat of between £75m-£150m every 12 months, followed by a massive £600m final demand in eight years.
(Note for diary: ‘January 1, 2017 — United go bust’.)
What does this mean in the short term? It means season ticket prices will probably go up in the midst of a recession. It could mean the likes of Cristiano Ronaldo are sold, as it’s hard to turn down £75m when there is a black hole in the books.
We can only guess at the implications. The Glazers decided to remain undercover in Florida and say nothing about these figures, the ignorant cowards. Supporters deserve better than that.
But to help explain the situation to the worldwide fan base their debt empire is built upon, here is a helpful Q&A with one of the family’s trusted advisers:
Q. Where is Malcolm Glazer? He is never seen in public. Is he even alive?
A. We believe he is alive because his face still appears on packets of Quaker Oats. Malcolm Glazer does venture out in public but only when disguised as John McCririck, and to date nobody has dared to approach him due to concerns over hygiene.
Q. Do the Glazer family actually understand United’s history or the English game?
A. Yes, of course they do. To use the football vernacular, this is a family that knows how to step up to the plate, adjust the groin cup of caution, swing the bat of success in the fourth down and dunk the hoop of victory — even if they then pull the hamstring of recklessness and fall face down on the pitch of stupidity with the snot of greed dribbling out of their nose. Yeah, these guys live and breathe football, from their base in Tampa.
Q. How confident are you that the Glazer family have a real grip on these nightmare numbers?
A. On a scale of one to 10, I’d say they’re at eleventeen
