ESPN Soccernet - Editor's Blog
soccernet blog
Soccernet Home Soccernet Home
Soccernet  Home Blogs Home
RSS feed
Editor's Blog
Posted by John Brewin on 01/12/2010

English football's unwanted American families again dominate our headlines and it is a delicious irony that the country's greatest footballing rivals share such similar problems.

Around the time Tom Hicks Junior's email abuse of a member of a fans activists group forced him to resign from the board of Liverpool FC came news of the Glazers' latest financial plan for Manchester United, a £500 million corporate bond that, in the 24 hours following its release, has come under severe scrutiny.

Neither story should provide much comfort for followers of either club. Hicks stepped aside but his father remains in co-control with George Gillett. The source of the ire that caused the younger Hicks to pen the fateful words of "blow me f**kface" is believed to be the sending of an article about Rafael Benitez's transfer policy being forced to service the club's debts. Andriy Voronin and Andrea Dossena may be gone for a combined £6.5 million but a paltry £1.5 million is all the Spaniard has been granted to spend.

The "Spirit of Shankly" group, whose hectoring methods may well have annoyed the great man who gave them their name, have a victory but it is a small one. A junior partner - the dumb son - has departed but exasperation with crippling debts and on-field inertia can hardly be lessened by such playground activity.

Over in Manchester, the Glazers have, as ever, kept their own counsel yet have yet again swamped the back pages with their activities. When the Floridians arrived at Old Trafford, a significant proportion of the club's fans adopted a "wait and see" policy while others, a loud and active minority, publicly protested and then took their leave of the stadium, many never to return while the club remained under the control of the debt model used to buy the club.

The prospectus released on Monday, which features glossy pics of United stars past and present, and Michael Owen, has done little to assauge feelings of anger among those already in the dissenting camp. And those who have reserved judgement until now may now be feeling the burn of unease.

It did not take long to drill down, to use business parlance, below the headline figures. The pre-tax profit of £48.2 million would have been a heavy loss without the sale of Cristiano Ronaldo, the Glazer family themselves have taken £20 million out of the club in "management and administration fees" and loans, and it seems the purpose of the bond itself is to raise cash to pay off the steepling "Payment In Kind" notes the Glazers themselves took out as part of their takeover.

The rest of the debt would seem to be still placed on the club, the very sticking point that forced so many away in 2005. In nearly four years of success on the field, United's debt has increased while interest payments, which totalled £41.9 million last year will likely rise as a result of the bond issue, which sees no paying off of the principal, being in essence "interest only" until it is due to be repaid in 2017, at which point another refinancing will almost certainly be necessary.

Unpleasant reading for United fans then, and equally so for who are angry at Mammon's grip on the game. Its effect has been, at the very basic level, to lead to a huge rise in ticket prices, which, on examining United's prospectus, hardly look likely to stop rising. Meanwhile, warnings to potential investors in the bond are signalled with the following sentence:

"We are dependent upon the performance and popularity of the First Team. Our revenues and, therefore, our ability to meet our obligations under the Notes, is dependent upon the performance and popularity of the First Team."

Considering the team's recent playing performances such foundations have a sandy look to them. Sans Ronaldo, United no longer possess the superiority they exerted for three seasons and have so far failed to take any advantage of their rivals' slips. Quality reinforcements are required yet the transfer window is already closed according to Sir Alex Ferguson, whose public backings of the Glazer plan and talk of satisfaction with his squad have riven a rift with supporters that few could have ever imagined a decade ago.

There are those who attack critiques of the Hicks-Gillett and Glazer regimes as Anti-American. Again, there may be those among the dissenters who do not care for those across the Atlantic, just as the reverse can clearly be true, but an American owner can be welcomed if his practice is not to leverage and pile the cost of financing on to fans and their beloved club. Aston Villa's benign Randy Lerner serves as proof of this.

If anything, the anger is levelled at a business practice which is by no means purely an American approach, as the collapse of finance across the UK, Europe and further afield have shown us.

For something that was once a source of enjoyment, a pure bloody joy, football fans now have to live in the real world and accept that what was once a game is now a business that must live by the rules of finance; lacking in romance as that is. United and Liverpool's debt models are nothing less than real and, for fans of both, likely to be a worrying constant for a long time to come.


Posted by Z Usman on 01/12/2010

With the level of debt Man U is carrying, the future is not looking bright. How will they pay off such a huge loan? The year 2017 is not as far as it seems.

The way Liverpool and Man U are loaded with debt does not bode well for the Premier league.

Posted by Will Payne on 01/12/2010

Maybe the FA needs to step in and start some sort of regulation on club finances.

Posted by SCREW GLAZER on 01/12/2010


Posted by Jon on 01/12/2010

Breaks my heart.

Posted by Bill D on 01/12/2010

I'm from Liverpool and a huge Liverpool fan but I have lived in the US for the last 28 years. What the British public have to learn is that living on debt is a way of life in the US, heck that's how the country runs after all (so does Britain by the way).

What concerns me is that US sports owners have a tendency to run the business for profit, not for glory. There are many professional sports teams over here that are highly lucrative for the owners but don't win a thing.

If you are a business man, you don't need to have the best team to turn a good profit. As long as the team is good enough to put bums (as in parts of the reflection on football supporters) on the seats that's all they need.

It's a different mentality from the life long supporter who works his way up to be the owner. Robert Kraft of the NE Patriots (US football) was a supporter and they have won 3 super bowls in the last 10 years.

Unfortunately, I think people need to lower their expectations.

Posted by Cliff on 01/12/2010

I am an American, and I hope that the Glazers sell, and soon.

Posted by JCM on 01/12/2010

I thought sending months worth of hate mail to the Glazers via the Tampa Bay Bucs website was good enough. I wish I could have done more. It was such a nice escape to look overseas and see some purity left in sports. Now it's just like the "franchises" of American pro sports.

Posted by fred17 on 01/12/2010

The house of cards will eventually crumble. All to satisfy the egos of the leveraging buyers. Pity!

Posted by dave barker on 01/12/2010

Makes me even more proud to be a supporter of "The People's Club"!

Posted by Jack on 01/12/2010

How about Manchester City, Chelsea and Spurs, they are also in big trouble. Worst is Real Madrid and Barcelona in Spain where they also borrow heavily to buy players for success. I think football as a business must have a rethink. Or else the whole business will collapse like the corporations in the financial crisis.

Posted by Neil on 01/13/2010

I, an American, can't stand the fact that we are so saddled with debt that we can't go out and compete for new talent to join our side. Ferguson is, without a doubt, a terrific manager, but you can't compete for all the hardware without a deep talent pool. We can only hope for a rich fan to buy the current owners out and give us the money to keep the talent coming.

Posted by kevinaux on 01/13/2010

Still proud of your biggest club in the world, biggest earner in the world claim?

Posted by Kelvin Poh on 01/13/2010

It has ben one big scam hasn't it, that has only come to light with the collapsed of the finance world in the last few years.

Basically buy the club, and borrow almost 100% of the the costs, and then load this back to the club you just bought. Milk it for whatever you can whilst you are the boss...then if things go bad....bankrupt the club, take whatever plunder you have got in the time in charge.

How can you lose?? If I caould have got a bank to loan me (or rather ManU) GBP 500M, I cold have owned ManU for nothing!!!!

All the bankers and agents and other scum take their broker's and whatnot fees...and the fans are sc***ed.

Posted by Jeremy on 01/13/2010

breaks the heart of all the fans

Posted by Bleeding Obvious on 01/13/2010

Manchester United are in more trouble than most people realise. The club's debts have risen every year since the Glazers took over without fail.

Even in the year when United won both league and the Champions League the club's debts increased, and if they can't make a profit in a year where they win everything in sight then that's really saying something.

£200 million of the debt is at an astronomical 14.25% but under the terms of their other loans United can't pay back this most expensive debt first, so it just grows and grows. Next year, it'll be near £230 million.

The Glazers latest intent seems to be selling off the clubs training ground (to one of their other companies) and then leasing it back to the club: exactly the sort of dodgy thing that happened at Leeds United shortly before they fell from grace.

Less than five years after it was sold, a £830 million, debt-free club has over £700 million in debt hanging over its head.

This isn't football, it's a disgrace.

Posted by Kevin McMahon on 01/13/2010

People - this is the way of the world. I was involved in a similar, leveraged deal 12 years ago. The new owner puts up 5% of the purchase price, and borrows the rest secured on the (increased) cash flows of the acquired business.
It's nothing new. Football clubs are businesses. End of. Stop thinking they're non-profit corinthian type organizations.
The level of debt is not a worry provided the club generates enough cash flow to service the repayments (in this case, interest only). At some point the Glazers will sell the business and make a healthy profit, and the new owners will continue to run it as a business to service the debt. As long as the team continue to be successful and generate increasing cash flows, everyone will be happy. The only people unhappy are those who don't understand how business works. It's not 'your club', it's a company you happen to have an emotional soft spot for.

Posted by Denice Els on 01/13/2010

It is done in expectation of success being a given-right. However, football clubs rose as a club for recreational, evolved into todays as profitable (if ever), and has never started as a business. Business side of it was never the main purpose of these clubs, it is to the enjoyment of the viewers, and for players, as a source to perform, earning wages are bonuses. If not, why are there grassroots clubs? It is never the way of the world, it's the capitalists people who forced it into us and call it the way. People at the board, only works out ways to make profits, good times or bad, never taking the cuts on themselves, but passing the added cost to the rest (consumers). Ever wonder why board members increases, yet basic staffs can get culled off? It's time when people take control in the say of who joins the board, demand the debt be removed for a sale is an outright purchase like the rest of us. Pay full what it cost (since they expect us to pay in full for merchandises).

Posted by David Saxon Jones on 01/13/2010

Reffering to Man Utd, on having watched last nights show, Shakka really annoyed me. He inferred that Utd were going to face financial problems even before the GLazers. That's utter rubbish. Utd were the richest club in the world with ZERO debt and hey were making around $60-70 million profit year in year out. The Glazers used "financial Assistants", a term used in similar cases where a debt is raised against the colateral of the business you are buying. Without doubt it should not be allowed but the fact that it is ok in the UK is the ONLY reason why Utd are now the worlds most debt ridden club! It is appalling and as a Utd fan for 35 years, i am furious. As for Liverpool, well in fairness to the owners, the only fault lays with Rafa. Simply if Liverpool were top of the league and winning football matches, we wouldn't even be talking about Hicks and Gillette. It's Rafa's squad that he has put together. The owners didn't make him sell Keane for a loss or Alonso!!!

Posted by David Saxon Jones on 01/13/2010

Additionally, The same is said for Utd when reffering to winning football matches. I think the gamble the glazers took was a simplt one. The year we did the CL and EPL double, only 2 years ago, Utd received 75 million in prize money alone. I think it was 30 million just for the EPL. The point is that 1 big trophy and a couple of decent cup runs/snd place and that is enough to pay the loan, especially when added to the other revenue streams Utd enjoy. Luckily, Utd are more than capable of winning trophies. OK, so things are not perfect right now on the pitch but we are 2nd in the EPL, in the knock out stages of the CL and in the Semi-s of the Carling cup. Is it really that bad? Finally, we apparantly have money to spend if we want to. Personally, i think the GLazers should remove "their bedt" from the club and no longer be allowed to use 130 years of die hard tradition for a 5 year business plan as collateral!!!

Posted by Mig22 on 01/13/2010

Only English footie fans could possibly take issue with the American's owning their clubs. The entire industry is in debt, of course. Glazer provides an open platform for ManU's success. Hicks/Gillette spent buckets in the past 4 years for little silverware but that's not their fault.

It is anti-american bigotry, nothing more.

Posted by Rummy Dummy on 01/14/2010

KM - Did you read the article? Or any article on this subject? Neither takeover has hope of being profitable unless some rich idiot pays way over the odds for these debt riddled club. And cashflow is already not covering current debts, so your "businesses" are losers which only survive because of many people's "emotional soft spots." And in many cases, those soft spots are starting to harden up. Certainly Liverpool is lurching towards the abyss.

By the way something, what's the point of running a business just to service its debts? Do you work for the government?

Posted by Dustin on 01/14/2010

Here's a position I've advocated for some time now, not just for the Premier League, but for all domestic professional football (and other sports) leagues-- Look at the NFL. They have a salary cap, and a set of financial rules each team must abide by. The rules aren't so many, complex or harsh as to stifle teams. Instead, the salary cap assures that all teams are on equal financial footing. Thus, teams can't simply "buy" their way to a championship (as is so often the case with any of the handful of 'big clubs' in Europe), and must instead compete on guess what-- yes, their skills both on the field as well as by their coaches and staff (not to mention management/drafting, etc.). That's why the NFL has had so many teams win the Super Bowl over the years, and that's why even the crappiest team can become a top contender in just a few years (e.g. Arizona Cardinals). To be sure, owners can still be rich (e.g. the Kraft family), it just ensures that the focus is on what really matters

Posted by Anti-Glazers on 01/14/2010

wat the hell r the glazers trying to do? ruin ManU since they came taking over ManU.. cant they just back off themselves and selling themselves to pay the debt? this really disappoint the fans of ManU.. 80m highest record fees paid but they used it to pay the f**king debt? rotten brains they hav.. disgrase.. nt deserve to live.. o0o

Posted by Ben H on 01/14/2010

Sad that this happens but what's the alternative? Surely every club can't be owned by sugar daddies like Chelsea and Man City.

Posted by Charade on 01/15/2010

The issue is that it's not a fan of the club running it, it's a greedy, profit driven, and empty family of fools who do nothing for the club if not drag its name down into the mud. The troubles at Old Trafford are less apparent, but at Anfield they are immense. American sponsors should stay out of English football if they lack true passion. They understand nothing about it and are vampiric to the degree that they use the club as some sort of corporation to enjoy success at its expense.

It is time for the Glazes, the Hicks/Gillets, to go. Their time has passed and they have tarnished the names of their clubs in recent times so completely that they will be held in disgust by true, red-blooded football fans. There is no place for cold profit in passionate football.

Posted by WJ on 01/15/2010

Now, that is why SAF keep saying no signings will be made especially they have 700m debt..

Posted by Kelvin on 01/15/2010

BTW....these rape and plunder "owners" mostly do not buy the clubs in their personal capacity..then they would be liable for debts....they buy via holding if they need a "get out of jail" card....they file for the mean time, draw a nice salary, sell off assets like stadiums and training facilities. Even if you did not make a profitable exit are still up on "benefits" whilst calling the shots.

Posted by Jarrod AL US on 01/15/2010

This is obviously a very polarizing issue. I can understand and empathize with arguments from both sides. My opinion is that, like most contraversial stories, the truth lies somewhere in the middle. I think the Glazers have tried to give Utd fans what they want in the form of decent players and winning teams while at the same time enjoying the profits they have taken from the club by putting the cost of the purchase back on the club. A level headed person can see that they are neither heroes nor villains but simply businessmen who like to win both on paper and on the pitch. For those who missed it, they have made money off of United up to this point in various ways so in their minds they have made a profit and helped Utd. to win titles. I hope one day fans will understand this.

Posted by Cantona7 on 01/16/2010

There is a sign showing Man U will be collapse if The Glazer family still holding The Legendary Club..So as Liverpool...

Man City & Chealsea will be replaced them in next decade..

All Man U & Liverpool fans, pls do something to prevent it..

Posted by subash on 01/16/2010

ya they need new owner from abu dhabi.....

Posted by jb on 01/18/2010

Sport is business, period.

ManU is the most valuable franchise in the world. Glazer paid $1.45b for it. And guess what? According to Forbes, it's worth $1.8 billion now -- including their current debt load.

So, let's review -- 5% leveraged buyout, cash flow easily covers the interest cost, sell off assets (or insert naming rights -- yeah, "McTrafford's" is probably on your horizon, Devils), raise prices on tickets and merch (which is fine, since there's no market competition -- it's not like you'll all become City fans), and you still have a 20% return in 5 years ... and why wouldn't any investor do that again?

BTW, for reference -- almost *all* of the NFL teams are on the most valuable franchise list. Even the crap ones. AND there's unparalleled parity in the league. Huh. Maybe American owners know what they're doing.

Or, you could buy the team yourselves. Google "Green Bay Packers". I guarantee you Glazer would sell if you offered the right price.

Otherwise, stop whining.

Posted by JB on 01/20/2010

"football fans now have to live in the real world and accept that what was once a game is now a business that must live by the rules of finance"

English football fans, you mean. This ain't happening in Germany.

Posted by Vincent on 01/20/2010

look at tevez scoring the 2 goals. we could had signed him up that time if we had the money. if we signed him, losing ronaldo isnt that bad, but losing both tevez and ronaldo at the same time look at what happened. ronaldo banging goals in real. tevez scoring for man city. berba and owen dried up. this is the proof of the debt crumbling man utd.

Posted by Zaid on 01/20/2010

Sad to think that Roman first looked at Man U b4 purchasing Chelski. At the time Manu was not for sale. GLazers will sell eventually, but not until they have squeezed what they can out of Man U without any regard for the club. The next step after selling off our assets is to sell the players. Looking at Sir Alex's body language on the bench, I don't think he is up for the fight. Expect him to quit soon, especially if the likes of Rooney, Rio, Vidic and Velencia et al are sold.

Posted by Steelio on 02/04/2010

Let me get this straight. English Football fans, citizens of one of the most violent countries in the history of the world, and who are the most violent fans in the world, suddenly have a problem with foul language?

What a bunch of hypocrites. I don't remember foul words being an issue at the match I went two a few years back.

I hope Microsoft, Budweiser, and Walmart purchase all the English football leagues now.

  Post your comment
Email Address:
characters left
© ESPN Soccernet 2009