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Government to blame for Glazers owning United

Don’t believe that headline? Just read the following piece from David Maddock published in the Daily Mirror on June 19. The British Government whose financial laws allowed it to happen, the Football Association and the Premier League all have a lot to answer for. This is not simply a white collar crime against Manchester United and Liverpool but one against football itself. There’s no need for any more comments, you only have to read the following.

Why it’s time for the Premier League to take a long hard look at themselves

David Maddock –, 19 June 2010

In August of this year, a documentary will be released which explores the murky world of leveraged buy-outs in football. It is called The Potemkin League, and I urge every single Liverpool and Manchester United fan to watch it. The film is being made by an independent production company called queuepolitely, led by a talented young film-maker called Mike Horwath, who explores the relationship between some of our top clubs, and predatory businessmen.

You can watch a trailer for this film on the queuepolitely website , and it really does make fascinating viewing. It has been suggested for some time that the most insidious aspect of capitalism, the leveraged buy-out, is behind the worst excesses of greed that ultimately caused the global financial collapse we are all still suffering for.

A leveraged buy-out works, in basic terms, like this. An opportunist – they like to call themselves entrepreneurs – finds a company that is under-performing in some way, borrows money (usually from willing banks) to buy that company, turns the company around while repaying any interest on those borrowings with money generated by that company, and then sells at a profit. Using little if any of their own money.

For some reason, football, and in particular, English football, seems to have become a magnate for these people, presumably because of the promise of future growth offered by huge TV contracts, with Liverpool and Manchester United the most high-profile of several who have been bought in this way.

I’m not going to descend too deep into boring financial jargon, because I know most of you would rather watch a damp patch grow, but consider these figures.

Manchester United have been revealed, recently, to currently have more than £1billion worth of debt on their club. Yep, that’s right, a thousand million pounds of debt on the club. That is because the Glazer family bought the club with money borrowed from the banks, and now the club itself must repay a large chunk of the interest on that borrowing.

Liverpool, for their part, have a ‘mere’ £350million or so of debt on the club. What is fascinating, and truly depressing, is that more than 40 per cent that debt is now owed, get this, to their American owners themselves. You don’t believe me, do you? Can’t be possible, can it? It can and it is. Tom Hicks and George Gillett bought Liverpool with money borrowed from the RBS and an American bank called Wachovia.

In the middle of the credit crunch their type of business model helped create, the banks started to lose their nerve, and said that the Americans had to reduce their borrowings. So what did they do, dig into their own pockets? Err, sort of. Hicks and Gillett paid down the debt by almost £150million in total, but only by LENDING it to the holding company that owns the Football Club.

So now, Liverpool HAVE to pay interest to the Americans. It is set a rate of 10 per cent per annum, and isn’t actually being repaid, but merely added as compound interest to the total sum that the club must pay to the Americans.

So not only do Liverpool effectively owe the RBS £228million, they also owe the Yanks £150million…and growing at £10 per cent per year. So in three years’ time, they will owe Hicks and Gillett £200million, for the privilege of the Americans buying the company.

It doesn’t make sense does it? And yet it is allowed to happen. It is this sort of thinking that has put the world economy into the sort of mess that sees people being thrown out of work and whole nations on the verge of meltdown.

And it is the biggest single threat to football as we know it. Liverpool were actually declared by their auditors to have a “material uncertainty” about their ability to continue as a going concern, the second successive year that they have issued such a warning.

Both Liverpool and United are continuing to operate only because of the patience of their banks and the extent of their credit, in United’s case after a series of complicated bond issues that basically allowed their owners to find cheaper debt.

What the Potemkin League documentary asks is, can these sort of figures be sustained? I’d like to ask you the same sort of question. Do you really think that, even in the medium term, clubs like United and Liverpool can sustain debts of billions of pounds and still operate at the very summit of the game?

No one in their right mind can believe they can, surely, not even their American owners? Perhaps that question is most pertinent for the Football Association and Premier League. And another question for the football authorities. Why have Hicks and Gillett and the Glazers bought sporting clubs in England? Answer, because they can’t do it back home.

In the United States, there are severe restrictions on the manner in which sports franchises can be owned and operated, because their government – a fiercely capitalist government – realises that sport should be treated differently from business.

But in this country, nothing. So let me ask another question of the Premier League. What would they think if one of their big TV money earners like say, just for an example, Manchester United or Liverpool or hypothetically both, should see a material uncertainty about their ability to continue turn into a full blown collapse?

It’s not far away. And then what? It could spell the collapse of the league itself.

Do the Premier League really want to stand by and fiddle while football burns? Do they really think that a model based on wringing profits out of clubs and selling them on should be allowed to be the basis for most of the clubs in their league?

In virtually no other league in the world is such shameless, naked profiteering allowed, and certainly not in the United States. Which is why they are over sexed, overpaid, and over here. Oh, ok, well, at least the last two of those.

It is time to act, because English football’s authorities have to realise they cannot preside over this potential disaster. FIFA are trying to do something about it, they are introducing rules designed to prevent clubs having debt stacked on them.

But those rules don’t go far enough.

What is required is for the Premier League to take a long, hard look at themselves, and their role in what is one of the most sinister developments in football history.

They have got to ask, is it right that the two biggest clubs in England – and possibly the world – can be allowed to sail along with combined debts of more than £1.5billion, without anyone in authority even asking questions of them?

Perhaps they could start with a request for a private viewing of the Potemkin League documentary.

Should leveraged buyouts be outlawed by the Government?


No Responses to “Government to blame for Glazers owning United”

  1. OP says:

    The most intelligent thing I have seen recently written about the Glazers was down the following lines. They will not sell, why? Because within 5 years you will see highlights packages becoming available on mobile phones globally. This will create a new area for the PL to negotiate the collective television agreement. Currently mobile content is run on an individual basis with clubs doing their own deals and their being no tie ins to the collective agreement.

    The Glazers will no doubt turn down the opportunity to join a collective agreement negotiating their own deals – which with 330m fans world wide will effectively be a license to print their own money and clear the loans/give the value of the club a massive add on, making themselves more money. This seems to make a lot of sense to me, and explains why they will resist bids so strongly. What is also clear is that they need the club to remain successful till this time.

  2. JB says:

    Please understand this Man utd ARE NOT £1b in debt,The glazers have a combined debt of £1b which is a total figure for all of there businesses and company as a whole. The club itself has roughly £520M in debt and a further £200M in PIK debt which is the Glazers. Yes the club is in debt but these figures keep getting blown up to increase hostility towards the Glazers and create an uncertainty amongst fans. This is why we now have a situation where fans are calling the manager and chief exec liars because they say theres money in the bank to spend yet none is spent on a raft of new players, Why not! the fans ask and according to near enough every media source the club are broke and unable to compete. What they need to do is maybe consider the fact that the new 25 man squad rules which come into effect for the new season are the real reason why the club is not spending millions on new players,Theres no room!. There are however a large section of fans who are unable to get that fact through there thick sculls and choose to believe the media bollocks of doom and gloom.

  3. RedScot says:

    Good Read on this very devisive topic.
    Here Here. Totally agree legislation is required to stop “forever” these Bandits being able to take over magnificent football institutions in this way.
    Others may mock at Manchester United and Liverpool just think for the grace of God your club may well be next to get stalked and then raped and plundered.
    The only practical way is through British law to drive this quickly through the Houses of Parliament and the lords.
    Do we have a date/time in August as to when the programme will be aired.

  4. Frank says:

    @OP, Agree totally. The eventual individual club television agreements is the reason why owners like the Glazers will do everything in their power to hang on to their future goldmines. That same point was made in a recent article here –

    It was pointed out that “It’s a future which should not be of great concern to owners who have invested their millions in some of the world’s biggest clubs because the return on their money will be enormous. It will include individual, rather than collective, club television rights and a European Super League.

    That is no longer a question of being an ‘if’ but simply a matter of time. It is one of, if not the prime reason, why people like the Glazers are determined to hold on to Manchester United irrespective of what short term inconvenience fan protests may present. But that’s perhaps another story best left for another day.”

    @JB, Good point. United currently has a very large squad so to bring in new players will necessarily mean a large clearout of some great talent

    @Red Scot, A date has not yet been set to my knowledge, I suggest you keep the link to the queuepolitely website for more details. The biggest problem facing football fans in this matter is that our Governments do not have the balls to do what’s required. Can you imagine these crimes taking place in a country like Venezuela? It’s leader Hugo Chavez would not only pass legislation to prohibit such practices in a heartbeat, he would also make it retrospective



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