Outstandingly detailed analysis of Manchester United’s recently announced plans to float on the NYSE via an IPO. All this to crawl out from under the debt burden that resulted from the current owners’ highly leveraged takeover in 2005. Much to learn here. Among the many reasons the author gives for this effort to raise much needed capital, two stand out in particular:
(1) Although the exact figure is open to debate, there is no doubt that United have wasted around half a billion pounds that could have been spent on the football club, purely for the dubious pleasure of having the Glazers as owners. […] The money wasted in the Glazers’ reign is now estimated at £553 million, comprising £295 million interest payments, £128 million debt repayments, £101 million for various bits of financial reengineering (fees for takeover, refinancing, interest swap termination, bond issue and IPO) and £29 million payments to the Glazer family via consultancy fees and dividends.
(2) United are under pressure to increase their wage bill of £153 million, as they have now slipped to third in the English wages league behind Manchester City (£174 million) and Chelsea (£168 million). In 2008, United’s wage bill was £67 million higher than City’s, but it is now £21 million lower, a turnaround of £88 million in just three years.
Tough to remain competitive like that. Add to this that Ferguson, the manager, has announced that he’ll be retiring soon. He’s probably the only person alive who could have managed a very succesful team under these conditions. As the prospectus drily puts it, “Any successor to our current manager may not be as successful as our current manager.”