Manchester United - Football's Most Glorious Legacy up for Sale
Anjal Agrawal
M&A and Strategy at Virtusa || Ex-IB at Nomura (PPO) || IIM Shillong (17-19) || CA || Yes Bank FutureReady Scholar || Ex-JPM || Ex-Baker Tilly DHC || #ProudSINKWAD
The late tycoon Malcolm Glazer bought United in 2005 for ￡790m. Since then, United supporters have been critical of the leveraged nature of the Glazers' buyout that loaded debt onto the club, as well as a perceived lack of investment and the dividends taken out by the owners.
Under the Glazers, United won the Champions League title in 2008, five Premier League titles, one FA Cup, five League Cups and the Europa League. However, United has not won the league post-retirement of Sir Alex Ferguson. But the strength of the Manchester United brand remains strong and rests on the passion and loyalty of their global community of 1.1bn fans and followers.
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Key Events in the History of Manchester United
'Moneybags United' & Development of Old Trafford – “The Theatre of Dreams”: Back in 1902, wealthy Manchester brewer John Henry Davies took over the then Newton Heath club, and saved it from going out of existence. Davies, who became club president, invested heavily in the development of Old Trafford, and after completion in 1910 it became one of the most important stadiums in England.
During Davies' reign, the club became known as 'Moneybags United' and was censured for misleading financial statements. Davies died in 1927 and just four years later the club was back in financial trouble. In 1932, another wealthy tycoon stepped forward to save the club – James W Gibson, who made his fortune manufacturing army uniforms.
The Munich air disaster of February 1958: Gibson remained at the helm of the club until his death at the start of the 1951/52 season. His son Alan inherited the major shareholding from his father. The decade of playing success was shattered by the Munich air disaster of February 1958 – the darkest day in United's history, when 23 people - including eight players and three members of the club's staff suffered fatal injuries.
The club had to rebuild and a new director was appointed, butcher Louis Edwards, who went about buying up shares from people he knew owned a holding in the club. Edwards proved to be very persuasive in convincing people to part with their shares, and he eventually took over the club.
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Understanding Glazers’ Acquisition of Manchester United
Who are the Glazers Family? Malcolm Glazer founded First Allied Corporation, which has served as a holding company for the family’s business, including dozens of shopping malls across the US. In 1995, Glazer bought National Football League side Tampa Bay Buccaneers for a then-NFL record of $192m. Forbes estimated the family’s worth at $4.7bn in 2022.
How did it start? Glazer first bought a 3% stake in the club in Mar-03. By Jun-04, Glazer's stake rose to 20%, and 30% in Oct-04. At this time, United confirmed an approach from Glazer to buy the club. After being put down twice, finally in 2005, Glazer was given access to the club’s books. By May-05, Glazer launched a formal takeover bid for United after upping his stake in the club to ~70%. It also bought the stake owned by Irish racing tycoons JP McManus and John Magnier, who made a ￡70m profit from their stake.
Regulations: In case Glazer’s stake reached 75%, it could delist the club and Mr Glazer could transfer his debt onto the club. In case Glazer’s stake reached 90%, it could force out other shareholders by buying out their stake.
Deal Economics: Glazer’s takeover of Manchester United valued the club at ￡790m (~$1.5bn). This included a major debt exposure of ￡300m.
Fans Outrage: Manchester United fans were angry at the acquisition news. They formed a shareholders' association to buy club shares and try to protect it from Mr Glazer's clutches. They felt that essentially the fans were made to pay for his takeover, in the form of increased ticket prices and increased merchandising.
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Understanding Glazers’ Sale of Manchester United
The club remained successful on the pitch under former manager Alex Ferguson, capturing five Premier League titles in seven seasons between 2007 and 2013 as well as the Champions League title. However, since Ferguson’s retirement following the 2012-13 campaign, the club has endured a lean spell, with its last trophies being the Europa League and League Cup titles in 2017.
Why sell? Just like it started for the Glazers, fans have again become increasingly impatient and staged protests outside Old Trafford, while chants of “Glazers out” are regularly heard at games at the stadium. Protests flared up in 2021 after the owners were involved in an attempt to create a breakaway “European Super League” along with five other English clubs. Plans for the league fell apart in days due to widespread opposition. In May 2021, United’s league game against Liverpool was postponed after fans stormed the pitch to protest. Meanwhile, the club’s net debt, another bone of contention for the fans, grew by ~23% to ￡515m in 2022 ($620m).
At the end of 2022, Glazers Family announced that they were exploring “strategic alternatives”.
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Interested Bidders: Sheikh Jassim and Jim Ratcliffe
Sheikh Jassim
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Jim Ratcliffe
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Sir Jim Ratcliffe’s ￡1.5bn deal for a 25% stake in the Red Devils
Deal Structure: ￡26-a-share, i.e., ￡1.25bn deal will be structured as a tender offer to acquire 25% of the listed A-shares. The Glazers will also sell 25% of their B-shares, which carry greater voting rights, to Sir Jim as part of the deal. Sir Jim Ratcliffe will also commit ￡245m to United's ageing infrastructure as part of the transaction, with the bulk of that capital being handed to the club in the near term.
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Public Listings peaked in the early 2000s
In 2001 it was possible to buy shares in seven major English clubs: Aston Villa, Chelsea, Leicester City, both Manchester clubs, Southampton and Watford. All of the shares were delisted by 2011, though Manchester United’s owners listed subsequently 10% of the club’s shares on the New York Stock Exchange in 2012 to secure a new capital injection. In Italy, AS Roma and Lazio completed their IPOs in 2000, followed in 2001 by Juventus. The Bundesliga’s Borussia Dortmund also listed in 2000, followed by Ligue 1’s Olympique Lyonnais in 2007. The shares of these last five clubs continue to trade publicly today.
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American Families invade into the Premier League
Owners of clubs in major US sports added English football to their portfolio, starting with the Glazer family’s first investment into Manchester United in 2003 and most recently with the takeover of Aston Villa by Wes Edens alongside business partner Nassef Sawiris. Indeed, eight American groups or individuals invested in clubs either in the Premier League at the time or – in the case of Aston Villa and Leeds United –promoted to the division since acquisition. Only Swansea City, acquired by Steve Kaplan and Jason Levien in 2016, has been relegated since the time of investment.
Chelsea was recently sold to Todd Boehly and Clearlake Capital for ￡2.5bn plus a commitment of ￡1.75bn of further investments.
This concludes the fourth and final case study in the series “M&As in the Football World.” The series covered some of the major footballing clubs across the Big 5 leagues. In this series, we learnt about the business model of football clubs; how Sheikh Mansour’s investments and the vision of CEO Ferran Soriano, City Football Group has cracked the multi-club model and created the $5bn Man City brand; Milan’s acquisition by Elliott combined with strategic financial restructuring to help restore stability and drive long-term success; RB Leipzig’s rise from the lower divisions to the Bundesliga post Red Bull’s acquisition; and finally, the love-hate relationship of Manchester United with the Glazers’ Family.
I hope this was a wonderful learning experience for you as it was for me. Until next time, thank you for your time. Please post your feedback and comments.
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Please find below all the information sources that have been instrumental to the above article, along with some additional reading materials. Gratitude to all the creators –
Exploring the journey of Manchester United under the Glazers truly emphasizes the resilience and evergreen nature of the team's spirit! As Bruce Lee once said - Be like water. This is the epitome of how United has remained adaptable, flowing through victories and challenges alike ????. The narrative of Manchester United is a blend of legacy, highs, and the inevitable lows, showcasing that true strength lies not just in victories, but in the capacity to evolve and stay united with its global fanbase. Your series shines a light on this beautifully! ?????