This bid isn’t dead, it’s just pining

May 25, 2010 Tags: , , Opinion 10 comments

To paraphrase, Manchester United fans may wish to register a complaint. The Red Knights’ bid that fans bought into not six months ago is dead. Passed on, no more, ceased to be and gone to meet its maker. For the 150,000 fans who signed up to MUST and waved green and gold protest scarves this bid is bereft of life. Rest in peace!

At least that’s what the BBC’s Business Editor Robert Peston would have us believe, blogging today about the investors who are unwilling to put money into a Red Knights bid this summer. Peston’s story, following so quickly on from Daniel Taylor’s exposé in the Guardian last week of machinations within the consortium, is a body blow for those who wish to see the Glazers depart Old Trafford this summer.

Former stockbroker and Financial Times correspondent, Peston has strong links into the investment community but his failure to quote a source is telling. The wider investment community may well see no value in a bid for United, which is massively over-leveraged at a time when the financial sector barely dares to raise its collective head over the parapet. The Knights’ bis was never purely about economics.

Peston’s failure, much like that of Taylor, is the frustrating anonymity of sources. While the Guardian man claims the word of senior Knights who chose to break rank, Peston’s highly ambiguous piece adds little clarity to an increasingly murky picture.

Interesting then that Peston’s BBC colleague, newly appointed Sport’s editor David Bond, added to the debate today, having been briefed by the Glazers’ commercial team this week. Bond argues, with a hugely embarrassing misunderstanding of the facts, that the Glazer family is more interested in building a team than paying off Payment in Kind (PiK) debts this summer.

It’s an argument that falls down on even the most superficial of analysis. After all if the Glazer family had no wish to pay down the PiK debt then the January bond issue had the effect of adding to the club’s interest bill and little else, while the PiK debt balloons to more than £600 million by 2017.

In truth while the Glazers will take large amounts of cash out of club funds this summer it will probably take place after the quarterly accounts are published on 28 May. It makes little sense for the Glazers to tacitly admit there will be no investment in the playing squad this summer before the 13 June season ticket renewal deadline.

If Bond is right, then the Glazer family will surely release millions for investment in a leading player prior to  the World Cup’s opening match on 11 June. Few with even the most basic financial understanding believe the BBC man.

Even if the Knights’ bid is permanently dead – the group itself has not yet publicly admitted defeat – the Glazers have reacted to events on the ground by freezing season ticket prices after five years of huge rises. It cost the family just £1 million for the significant media publicity.

Indeed, the phony PR war between MUST and the Glazers has taken a turn in the past few weeks with first the ubiquitous ‘Glazer family spokesperson’ and now the club’s chief of staff regularly briefing journalists against the Knights. PR 101 – create fear, uncertainty and doubt.

With a huge vacuum created by the Knights’ inability to communicate the media have lapped it up.

Meanwhile, Sir Alex Ferguson continues repeat the same tired line that there is no value in the transfer market while competitors seek to bolster their playing staff. That’s one parrot which remains alive at least.


Seanyboy - May 25, 2010 Reply

Not sure what to make of that piece. Are the Red Knights floundering? Been abit too quiet for my liking. I wonder if the continued uncertainty in the Worlds markets resulting in wealthy backers considering their position?

Kerry - May 25, 2010 Reply

The Red Knights were never serious bidders. They were just publicity seekers. Also, Ed, you misunderstand David Bond’s piece. It says that the Glazers see the current squad rebuilding as more important than paying off the PIKs right now. So if SAF wants funds, he gets them, if not they might go to pay off the PIKs once the transfer window is closed. If that is right (and it’s still all off the record briefings) it would be a sign that the Glazers understand fan concerns.

Ed - May 26, 2010 Reply

I’ve been pretty critical of the RK’s in recent days but to say they’re just publicity seekers is way off the mark. For what end? No they’ve found raising money for an investment with no return impossible.

Bond’s piece is wrong though because it doesn’t paint the full picture and is spun straight out of the Glazers PR machine – or on this case Edward Woodward the commercial chief. The PiK debt is ruinous so the Glazers will use club cash to pay it down and very quickly. Maybe not in this quarter while everybody is potentially renewing season tickets but soon. With interest at 16.25% there’s really no choice.

Or do you honestly believe that they’ll buy a load of players and then borrow more money to pay off the PiK debt?

Bond I’m affraid is a sports journo with far too little understanding of the economics of United’s debt.

Yergen - May 26, 2010 Reply

Your theory might be true, that they are waiting for people to renew their season tickets.

But you can’t be sure.

Another theory is that since the PIK’s don’t draw any cash until maturity, they might have reconsidered and decided that the cash is better used for transfers, because transfers require cash.

Even though you may think they are evil, they are not dumb.It is perfectly possible that they have a business model in which they see greater cash flows in the future and that they will pay the PIK’s then.

The article by Bond, I think, includes some areas where United see great opportunities for growth in revenue, so this is perfectly possible.

On the topic of the Red Knights, it’s difficult to know what’s going on. But one thing is for sure. It’s better that they argue before a possible take over, than after it. It is hard to keep 40-50 benevolent owners happy at the same time. If they come through this patch, I might be ready to jump on the band wagon, because then they have shown us that they can actually work together.

Ed - May 26, 2010 Reply

Can’t see the Glazers waiting until 2017 to pay down the PiKs – they’ll be worth more than £600m by then and compounding at 16.25%.

Yergen - May 28, 2010

That’s your opinion, but there are other possibilities. That’s my point. Of course, this is your blog, but you claim that is Bond is wrong, rather than claiming you think he is wrong.

If the Glazers have a business model that shows that if they invest in the team they will get a return on that investment that is greater than the interest, investing in the team is more profitable and the right way to go. This is perfectly possible, however your theory may be more likely (compound interest of 16.25% is a lot of ground to make up).

It is also possible that the PIK’s will never hit United. If the Glazers sell they will use the proceeds to repay the PIK loan, rather than to draw the cash directly from the club. Then it is up to the new owners to decide how to spend future cash flows. This might occur before 2017 when the PIK’s reach £600m.

just - May 26, 2010 Reply

Sir Alex using junk of players.those player not improving squad.
Sir Alex Knows if he sell carrick & berbatov value not coming in transfer market. and he also have 2 sign those 2 player replacement.and he has 2 pay at least double money he receive from sale of berbatov & carrick.

he afraid of spending now.

ja - May 26, 2010 Reply

Anyone who thinks the Glazers give a shit about fans concerns or anything else except their own pockets is either naive, an idiot or on the Glazer pay roll.
The only way to get those parasites out is to starve them out by boycotting tickets and merchandise.

Prince Valiant - May 28, 2010 Reply

How at you my noble fellow countrymen. The bid may be dead but us red knights will live on through legend forever! Merlin has forseen a new beginning, one where the mighty Arthur will reign Supreme. The dragon that is Glazer will be slain. Merlins apprentice has been developing an alchemy technique to create gold. This will be used to fund a new bid for the club. Failing that the red knights will storm Old Trafford and take the club for ourselves! (sorry I meant the fans!) Raise a mug of ale to a new dawn!


Prince Valiant

Red Knight

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