Floating Finances

Manchester United have, for much of the last twenty years, been at the head of the pack as far as English football is concerned. Whether it’s in terms of performance on the pitch, the establishment of the first dedicated club television channel in the shape of mutv, or the way the club has been marketed in the far East, United have been out in front.

When the Glazer family took over the club in 2005 many peopled questioned the wisdom of the deal. For a start, the Glazer’s didn’t have the cash to buy the club up front, and relied heavily on lending from hedge funds and other financial institutions that charged high interest rates.

Then there was the problem that the family didn’t know a huge amount about football, and Chelsea’s big spending was raising the bar for the kind of resources that owners were expected to put into the club.

The result was a certain section of supporters setting up a new club ‘FC United of Manchester,’ whilst supporters in Old Trafford protested by wearing scarves in the club’s original colours of gold and green.

In the last year or so, despite the selling of Christiano Ronaldo, United have continued to enjoy incredible success on the field, and reported strong figures off it. Some of the most controversial debts have been paid down with another first for an English football club: a bond issue on the open markets that raised £500m.

The Glazer’s have always argued that they knew what they were doing and that the club was fundamentally undervalued. The ‘Red Knights’ group tried to buy the club, but refused to offer the amount the Glazer’s wanted as they value the club at around £1.7m. The family is now going to sell from 25 to 30% of the club on the Singapore stock exchange, in the hope of raising between £400 and £600m.

This sum would, presumably, pay off the club’s debts, although the previous bond issue will be expensive to pay off early. The main thing concerning the fans is that there’s no guarantee that the money would be used to solely deal with United’s debt and put them back on the straight and narrow. The Glazer’s are notoriously secretive about both theirs, and the clubs, finances.

At the end of the day, the most important thing for fans is that United continue to perform well on the pitch, and with Ferguson still going strong and significant investments being made in the squad in the summer, the signs look good for as far as further silverware is concerned. More importantly for other clubs, who are always looking to raise new revenue, United’s Singapore IPO could set a precedent for big clubs around the world.