10 questions for the Red Knights



The Red Knights group of wealthy Manchester United supporters will unveil their plans to buy the club, with supporters set to discover how the investors will finance a summer bid. The Knights will offer the Glazers around £700 million for the club, with the £500 million bond retained. But the minimal details pose more questions than answers…

How many Knights are there and will their details be revealed?
Is transparency part of the bid? To date we know that following people are part of the group: Goldman Sachs’ Jim O’Neil (above), Keith Harris from Seymour Pierce, Paul Marshall of Marshall Wace, Freshfields’ Mark Rawlinson, former United chairman Sir Roy Gardner, Richard Hytner of Saatchi & Saatchi and Jon Aisbitt, the chairman of MAN Group. Additionally the group’s advisor is Nomura Bank’s Guy Dawson. However, reports suggest there are up to 40 investors in the group. Will supporters be give details of each investor and how much they are bringing to the table?

What’s the finance behind the bid?
Reports suggest that a £1.2 billion bid is on the cards for the club, which will retain the debt held by the football club but not its parent company. This will enable the Glazer family to pay off their Payment in King (PiK) loans and make a substantial premium on the 2005 purchase price. Structured as such, United will still have a £500 milllion bond on the books after the Glazers have long gone. But is there any other debt within the bid or have the Knights raised the £700 million themselves?

Why retain the bond and how will it be paid back?
The decision to keep the bond within any bid means that the club will continue to pay interest on the notes until maturation in 2017 and must then refinance or pay down the principle of more than £500 milllion. It’s a very expensive decision to make, with the club paying £45 million in interest per year for the next seven seasons. Early redemption is expensive but retaining the bond is even more so. Does this mean the Knights have not raised enough money to pay off the bond?

What dividends and salaries will the Knights remove from the club?
It is safe to assume the Red Knights are not going to buy the club as a philanthropic exercise and will require an annual dividend on their outlay. How much will this dividend be on top of the bond interest payments and what will the club keep as profits? Profits will then pay off the bond in 2017 and be invested in the football transfer market.

Are the Knights calling for a boycott?
If the Glazers refuse to sell at £1.2 billion will the Knights raise their bid or up the stakes by calling for a boycott of season ticket renewals? How much money do the Knights have in the kitty for a bid and if it’s more than £1.2 billion why is the bond being retained as part of the bid? The Manchester United Supporters Trust (MUST) has refused to back a boycott but there appears little other leverage the Knights or supporters have if the Glazer family is unwilling to sell at £1.2 billion.

How much are fans expected to put into a bid?
Earlier reports suggest that the Knights will ask supporters to find up to £200 million as part of the bid. It’s a sum that equates to more than £1,300 per MUST member, which is probably highly unrealistic. If fans cannot put up the cash who will front the money before a special rights issue at a later date allows fans to buy into the club?

What say will fans have in the future running of the club?
Under new ownership will fans have a say in the club’s management? It’s a question that is as yet unanswered by the Knights, although the group has intimated fans are central to the bid and future of the club. The Glazer family’s secrecy and bullying tactics have alienated many supporters. Will the club become more supporter-centric in the future?

What restrictions are there on future sale of Knights’ shares?
Without restrictions on future sale of individual Knights’ shareholdings, resale of the club to a single, possibly leveraged, investor is a very real possibility. Under the PLC structure United had more than 35,000 shareholders but over time consolidation allowed the Glazer family to build a block of more than 30 per cent and launch a bid for the club. How will the Knights make sure that this never happens again and do any restrictions on share sale mean there is no exit strategy for investors?

What will the new board look like?
The club’s board includes Joel and Avram Glazer as co-chairmen, alongside Chief executive David Gill. In addition to Chief operating officer Michael Bolingbroke and Commercial director Richard Arnold there are another four Glazer family members on the board. While it is widely expected the Knights will ask David Gill to stay on as ceo, Bolingbroke and Arnold, together with the Glazer family will leave the club. What role will prominent Knights such as O’Neil want in the club? Harris, for example, has held a long-term ambition to act as the club’s chairman.

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  • Real Red

    This is turning out as I initially feared.

    My worry has always been that a group of Knights with moderate wealth are concerned primarily with just that. No different to the present regime EXCEPT that they are a group of different individuals and those differences will soon manifest around the boardroom.
    That’s the first negative.

    It now looms that the bond will remain – Negative number 2.

    Negative 3. They want – in fact they look dependent on – fan’s support.
    Not just vocal – but financial.

    Now as one of those who did buy a nominal stake, when United went plc, I know only too well that the only payback from that is a lousy divi with a possible capital gain on sale.
    As a fan you buy to ‘ have and to hold ‘. Love of the club and all that.
    All you really get is an expensive bit of share-certificate paper to frame onto your wall.

    There are not many cash-strapped fans who will do that, as Ed points out.

    Especially as the real profits will end up in the pockets of the majority shareholders – the Knights – who will benefit from all sorts of ‘perks’ such as Centennial suites and exec boxes while the smaller shareholding fans are still scratting around to fund their STs.

    Again, most ordinary MUST fans are not gonna subscribe to this.

    Many will therefore conclude it’s not worth boycotting their ST renewal to risk their place at the Theatre of Dreams for the sake of these relatively wealthy Knights.

    Sounds to me that the only REAL alternative is another seriously wealthy individual putting his bid in – and he/she could end up just like another Glazer clone.

    Quid pro quo.

    • http://www.unitedrant.co.uk/members/admin/ Ed

      It’s interesting to note that two so-called superknights were turned down who apparently wanted to put £500m each into a bid.

      • Real Red

        Then it’s obvious what those 2 superKs should do.

  • Mickyp

    How much of the glazers own money was spent buying the club? If they get £1.2b for selling the club and pass on £500m debt then that surely leaves £700m for them. They cant have spent much more than £200-300m of their own money so that suggests a significant profit. They may be tempted.
     
    I don’t really like the idea of the red knights, aside from the fact that we know nothing about them I don’t see a model of 40 owners working very well. But even so, if they did bid and the glazers accept then it appears their bid would be £700m in cash and taking on £500m debt. If they expect the fans to put in £200m, does anyone know if this would make up part of the £700m?
     
    If it didn’t then maybe they could say that the debt represented approximately 40% of the club and sell shares to fans for this amount and limit the number of shares any one individual could buy, thus reducing the possibility of future takeovers. If the fans could buy shares then this would get us involved in the club and ultimately could lead to a model of fan ownership and the money raised could go to pay off the debt, reducing the interest payments.
     
    Don’t know if these things are even allowed too happen but I’m just floating a few ideas.

    • http://www.unitedrant.co.uk/members/admin/ Ed

      £271m is the answer although much was borrowed from Deutsche Bank and possibly more was refinanced through their US property company. Their personal exposure is minimal.

  • elvido

    From the frying pan into the fire!! I still say back the club until we have proper viable options, including the Glazers! I am not complaining about the trophies we have won since they have been here, and I have complete faith in SAF to take a stand if and when it is necessary! Till then back the club and it’s business as usual. However this season pans out, I have a lot faith in the current squad and the manager! I am still privileged to support a club with the mentality and talent that it has!! GGMU!!

  • simpson

    red knight is the right way 2 go forward. but they still has to clarify about lots of their plan about .how club will run mainly financial if there is no financial problem with our club at this moment then this type of idea want come forward .if someone else buy just like glazer one owner that owner won’t be telling us then how he will run club. but i think with Red Knight much better that at least we all knows .how they will run club. i m sure they will clarify with fans and supporters trust. like of must and imusa. supporters own the club is the right way to go forward. rather than anybody else buying.

  • Redforever

    The RED KNIGHTS ARE DEAD

    If we continue to endorse the Red Knight takeover we will be seen as HYPOCRITES, their we are on the terraces waving are scarfs, stating we “hate Glazers”, because they have burden the club with DEBT, yet were openly saying it OK to except the RED KNIGHTS?, who allowing the Glazer debt 509m to passover?

    I say tell the RED KNIGHTS to piss off, Lets wait & see who comes alone in the future, better the devil you know!

  • http://manunitedyouth.wordpress.com Nick

    Better the devil you know? Bloody hell…

    Let’s wait and see exactly what the RK’s plans are, yeah? People dismissing them before those plans are revealed baffle me (as do, in fairness, anyone hailing them as saviours before that time comes). I agree with all the ten questions in the article and want to know the answers, but I’m prepared to wait to have them answered rather than jumping to conclusions.

    On the issue of retaining the bond – it obviously wouldn’t be ideal but much better to just have that and at least eliminate the PIKs. You have to be realistic, raising £1.2bn outright is a tough ask and you’re basically ruling out anyone but an Abramovich or Sheikh Mansour as a new owner, and I don’t know about you but I’ve almost as little desire for us to go the way of City and Chelsea, to be a rich man’s plaything, as I have to see us run into the ground by the Glazers.

    Hating the Glazers isn’t solely because ‘they have burdened us with DEBT’. It’s because they are money-grabbing wankers with no understanding or love for Manchester United who have tried to get us to pay for their acquisition of the club in order for them to use it as a cash cow. As it happens it seems they have severely overestimated just how much cash they could milk for the club while servicing the debt, and as such the club is now starting to feel the pinch in the transfer market (big-time) and the fans are starting to feel the pinch regarding ticket prices. They have absolutely shafted us. Give me the RK’s (assuming certain assurances are made) and the bond still in place over the Gimps, the bond and the ridiculous PIKs any day of the week.

    Basically – wait and see. Anyone making any decisions or judgement on the RK’s either way at this stage is… moronic frankly.

  • Redforever

    nick,
    NO DEBT… NO DEBT.

    If the Red Knights think they can place debt on the club, they are NO DIFFERENT THAN THE GLAZERS, +++THEY ARE BANKERS++++. anyone who think they going stick in 500m, from 40+ investors not wanting a return, are moronic.

    We’ll become a laughing stock, if we bend over & allow the DEBT to continue, with are blessing!!!

    WAKEUP.

    NO DEBT.

  • Redforever

    I think you’ll find most supports hated the glazers the day they arrived, even before the GREEN & GOLD campiagn started? So the really reason the GREEN & GOLD campiagn started was because the DEBT is still their!! we MUST not allow BANKERS to place DEBT on ther club, or the Green & gold campiagn will make all look like bunch of Retards, if we allow the DEBT to ROLL whilst we support the RED KNIGHTS.

  • Redforever

    ED,

    Any idea who these two so-called superknights that were turned down who wanted to put £500m each into a bid.

    These are one’s that should be championed.

    Some need to understand the symbolic reasoning for placing the GREEN & GOLD scarf around your neck, its a chain; its whats happening to are club, being strangled to death by DEBT.

  • http://www.ibizablog.co.uk Gary

    I agree with all of those questions. I am also dubious of what the red nights are planning.

    The Green and Gold needs to continue but are the Red Knights really the people to take over?

    Are we all being used by the Knights to help them get what they want? The more time goes on, the worse it sounds.

    Have MUST been aware of their plans from the start?

  • Linda

    nick is right of course we don’t really know what the bid is and until they put it on the table we won’t know . i have been trying to google the red knights and see what i can read . the little thats out there has not made me feel very comfortable . the 2 articles i have read here (the one quoted above , and the one called united bid out of ideas and money )makes me feel even less comfortable . a lot of united fans are supporting the red knights , from what i have seen they are so doing because they are’nt the glazers not because the knights have anthing worthwhile to contribute to the club we all love . i fear so much that my fellow united fans are being used . so far all we have is a polticans promise form the red knights . nothing concrete . i hope they come up with something we call can work with . glazers out for sure but lets be careful about who we let in to replace them . redfrever is right in one thing he saiod . if we get rid of the glazers and then get taken over by people like them it will make a laughing stock of the green and gold campagin .
    by the way when the bid is on the table and we all get to see what it is . i hope i am worng and that it is a bid i can feel comfortable with and that the MUST faith in the red knights in justified . i still have my doubts though .
    just for the recrod according to the daily mail on the 23rd feburary last , red knight keith harris did call for a ban on people buying tickets . link to it here http://www.dailymail.co.uk/sport/football/article-1253026/Rip-tickets-Boycott-way-rid-Glazers-says-Manchester-United-prospective-buyer-Keith-Harris.html and according to the same newspaper keith harris has had his seat in old traffird taken away from him by david gill . i don’t see him staying on as ceo in that case .

  • Linda

    p.s i have just noticed a couple of glaring spelling errors in my post this is due to dyslexia .

  • elvido

    When there are substantial amounts of money involved, all other emotions, including loyalty, usually is out of the window. Us fans are in the unfortunate position of having Sophie’s choice. We should aim not to destabilise the current set up until we have a far better option lined up and the Red Ks are still a way from there….

  • Wakey

    The 1.2bn valuation for the club is with the 500mill debt attached to it so they actually need more than the 700mill to buy the club as the 500mill doesn’t come into it.

    If you see the first report about the current offer being discussed the deal is

    - 700mill from 30-40 Red Knight
    - 200-250mill from Normal Fans
    - ~300mill Bank loan

    The Bonds aren’t paid off as part of the buy out. There is however a requirement for the new buyer to offer to buy the bonds back for 101% of the issue price. The Bond holders are not required to accept this but apparently there are also clauses which will see them receive extra payments if they do. However as they are on to get 800mill if they let the Bonds play out it makes more sense for them to hold out which combined with the fact the RK’s can’t find a further 500mill forces the RK’s not pay the Bonds off

    • http://www.unitedrant.co.uk/members/admin/ Ed

      Yeah I think the 101% isn’t a redemption figure. They’ll have to offer 101% on takeover but the bond will still be in place. Early redemption of this type of bond normally costs 120%.

  • KD

    Tell me what you think about my theory …. Get the Red Knights to raise the money and buy liver-shity-pool and turn it in a park car. Ok I understand that we need to get free from cheap ass American shits… but we can do that in time. Any one agree….