Tag Red Knights

Tag Red Knights

United bid: out of ideas and money?

Ed April 13, 2010 Tags: , , Opinion 6 comments

The much vaunted bid by the so-called Red Knights for Manchester United, expected this summer, may never see the light of day if structured as now proposed. The bid, which will amount to around £1.2 billion according to recent reports, consists of Knights’ money, a rights issue and £500 million in bond debt.

Although a bid is not yet on the table the proposal will see around 40 Knights putting £500 million into the summer offer for the club. United supporters – estimated at nearly four million in the UK alone – will also be asked to find at least £200 million, while the bid will retain the £504 million bond issued by the Glazer family in January.

The proposal, if structured as such, must overcome a number of significant barriers to success.

Although the Glazers have held a firm ‘not for sale’ stance in recent months it is commonly recognised that the standard route to profit in a leveraged buyout is through sale of the asset. After all the club’s parent company made just £6.4 million in profit in the last financial year despite the sale of Cristiano Ronaldo to Real Madrid for £80 million.

It is not without reason that the family has leaked their £1.2 billion asking price in recent weeks. Devised, no doubt, with the aim of creating an auction for the club between the Knights and other potential investors. After all, the Glazer family reportedly turned down an £1 billion bid from the club from Far East suitors last year.

Indeed, the bond issued in January had the sole aim of restructuring United’s finances so the Glazers can reduce their personal exposure through the Payment in Kind (PiK) loans currently attracting 14.25 per cent interest per annum. Refinancing bought the Glazers time to draw down significant reserves of cash from the club, ensuring the risk within the leveraged model is born by United itself.

Although there is good reason to believe the Glazers’ US property business is in serious financial ill-health the only voice the family will hear is the sound of cold hard cash. Whether £1.2 billion, including debt, is enough to bring the family to the negotiating table is open to question.

Should the Knights bid keep the Glazers’ bond issue in place, interest payments of £45 million per year until 2017 will follow. On the bond’s maturation the prospective owners must find £504 million to pay back the original principle.

Under the terms of the bond new owners must pay a 101 per cent premium on the bond on takeover – essentially a refinancing charge and re-issue of a new bond. Should the Knights redeem the bond early a 120 per cent charge is normally liable.

Eye-watering sums of money.

One route to early redemption is via a new rights issue, which would pay down the debt but dilute owners shareholdings by up to 40 per cent. Unliklu unless the Knights are the philanthropic type.

Moreover, any new shares issue by the Red Knights on the open market will raise the spectre of ongoing ownership – potentially opening a back door to a future leveraged purchase of the club.

This is all moot unless United supporters can find at least £200 million under the proposals. It’s an astonishing sum of money and probably highly unrealistic. While the Manchester United Supporters’ Trust (MUST) has seen membership rise to more than 150,000 in recent weeks, the free registration presents few barriers.

History says that United supporters will struggle to find the large sums of money required. Fans did not in 1991 on flotation, nor in 1998 when Rupert Murdoch’s much despised bid for the club lay on the table, nor in 2005 when the Glazer family finally acquired the club.

With ticket prices higher than ever, asking 150,000 MUST members to find more than £1,000 each is perhaps a stretch too far.

It places the current MUST strategy in a new, less favourable light. While the social media and billboard advertising campaign harnessed the genuine anger among United supporters it has generated not a dime towards a potential buyout. It never could, with paid MUST membership probably in the low thousands.

United supporters are right to ask what next of the organisation, which recently surveyed season ticket holders on renewal intentions. Will MUST openly call for a boycott of season ticket renewals to force the Glazers’ hand? Not so unless there’s a major change of strategy.

Working in the background during the Glazers’ tenure, MUST has achieved significant political clout. Indeed the Labour party recently committed to mutualism within football. If the manifesto promise sees the light, a legislative programme will have a real and lasting effect on both the beautiful game and United.

But until then MUST’s particular brand of militantism amounts to little more than hitting the beast with a major leaflet campaign.

MUST: pay £25 to own part of club

Ed March 26, 2010 Tags: , Opinion No comments

The Manchester United Supporters’ Trust (MUST) will fans to contribute a symbolic £25 towards a summer bid for the club, emails to members revealed today. MUST ceo Duncan Drasdo sent the annual survey, which also asked season ticket holders if they are considering not renewing this summer, to 145,000 members.

“Thanks to the passion and leadership of people like you, the Manchester United Supporters’ Trust is now over 145,000 members strong,” said Drasdo’s email today.

“But in truth this campaign has never been about numbers alone – it’s been about putting us in a place where we can have all our voices heard and make a real difference.”

That difference is financial, with the Glazer family apparently unmoved by the sea of green and gold at Old Trafford on matchdays this year. While the well orchestrated protest has forced the family to reconsider a planned season ticket price increase, only an acceptable bid will drive the Glazers out of the club.

“As Season Ticket holders, we are the most powerful members of this campaign. The Glazers rely on our financial commitment to the club. We are the lifeblood of United,” continued Drasdo.

“For too long, we’ve acted merely as individuals, leaving us with no choice but to accept whatever conditions have been imposed upon us, but if we act collectively we can have much greater power.

“That’s why we need every Season Ticket holder to tell us what they intend to do at renewal time. We will share that information with you so we can all make the best decisions about how best we can utilize that collective power.”

That may include a call for a collective boycott of season ticket renewals as MUST and the Red Knights attempt to force the Glazers’ hand this summer.

In recent weeks the club has embarked on a high-profile campaign to recruit fans to a “season ticket waiting list” that has not previously existed under the Glazer regime. Indeed, while no official boycott has taken place at Old Trafford other than those fans who formed FC United of Manchester five years ago, many thousands of season ticket holders have not renewed during that time.

Meanwhile, the Knights conceded today that a bid is not forthcoming before the season’s end, with the group of around 60 wealthy people formulating a strategy under Japanese investment bank Nomura’s guidance.

“In the next few weeks we will continue to work on our proposal,” a spokesperson for the Knights said today.

“We do not expect this to be finnalised before the end of the season. This will have the advantage of minimizing disruption during a crucial phase of the season.”

In a separate email to non-season ticket holding members, MUST asks if fans are prepared to invest money in a potential bid. This investment is unlikely to swing the bid in the Knights’ favour but will stand as a symbol of supporters’ desire for new ownership at the club.

The opening bid is expected in the time between the Champions League final on 22 May and the start of the FIFA World Cup in South Africa on 11 June.

Fergie will put his own money into bid

Ed March 7, 2010 Tags: , , Shorts 3 comments

Sir Alex Ferguson not only supports the Red Knights’ bid to oust the Glazer family but will put his own money into a successful offer for Manchester United, reports the Observer today. The Scottish manager, publicly supportive of the American owners since the summer 2005 takeover, has refused to denounce the Knights.

Led by Seymour Pierce banker Keith Harris, with Goldman Sachs chief economist Jim O’Neil and Freshfield’s lawyer Mark Rawlinson, the so-called Red Knights have raised more than £1.5 billion in pledges from up to 60 wealthy backers towards a hostile bid for the club as momentum towards a change of ownership grows.

“Alex Ferguson is not only supportive of the bid but would be prepared, if successful, to back it,” the paper quotes an unamed source. Meanwhile, another senior figure, claims the paper, is counting on the legendary manager’s support although the group is not prepared to embarrass Ferguson into going on the record.

O’Neil, long friendly with Ferguson after the economist’s time on the United board from the late 1990s, is the driving force behind raising City finances for a bid in the coming months, while membership of the Manchester United Supporters’ Trust (MUST) has swelled to more than 120,000.

While the Glazer family has declared the club “not for sale,” Ferguson’s tactit support for a Knights’ bid, even if it is not publicly stated, would rally supporter involvement in a potential season ticket boycott of the club this summer if the Glazer family refuses to sell.

Knights raise £1.5bn but questions remain

Ed March 5, 2010 Tags: , Opinion 15 comments

The Red Knights’ numbers have swollen to more than 60, with a bid war-chest of more than £1.5 billion now available, according to reports today. Publicly led by Keith Harris with key figures including Jim O’Neil, Paul Marshall and Richard Hyntner, the Knights could formulate a formal bid for the club in the coming weeks to test the Glazer family’s determination not to sell.

News that the group of nine principal investors has swollen so rapidly comes amid the continuing grassroots campaign by the Manchester United Supporters’ Trust (MUST) to raise member numbers beyond 100,000.

In a rapidly developing situation Manchester United managing director first denied that the Glazer family is prepared to sell, mocked Harris’ record and then questioned the potential management structure under a hypothetical Knights’ ownership.

“The better-run clubs are where there is clear single decision-making and it’s quick and efficient – Roman Abramovich at Chelsea, Sheikh Mansour at Manchester City, Silvio Berlusconi at AC Milan,” said Gill this week.

“Having a number of wealthy people involved – they will all want to be involved in decision-making. I’m not sure what their endgame is but the endgame is irrelevant.

“The vast majority of fans of Manchester United should be happy with what we are doing and staying at the top of domestic and world football.”

It is, of course, a ridiculous argument by Gill who was also managing director of Manchester United Plc, which had more than 35,000 investors but an executieve management team to make day-to-day decisions.

There are also plenty of high-profile legal and accounting firms, such Price Waterhouse or Proudfoot for whom Gill both worked, with wealthy partners in the executive team that function well.

Gill, who mocked Harris as a publicity seeker with “no track record” in football, vehemently denied that the Glazer family is ready to sell, while defending the over-leveraged model they have installed at United that has placed £716 million debt on the club’s books.

It is not for nothing that Gill’s pay is significantly above market rates for a £300 million turnover business – he’s quite happy to sit on whatever side of the fence pays best.

But questions do remain over the Knights’ proposed bid, with the speculated £1.5 billion fund as yet unconfirmed. Moreover, the Knights have not yet unveiled a transparent business model for the club, including how much debt will remain within the company after takeover.These are questions that MUST will seek from the investment group in the coming weeks.

Meanwhile, Sir Alex Ferguson, who has been steadfast in his support for the Glazer family has given his most equivocal endorsement of the green and gold revolution yet.

“We take all sinners – I would even take City fans,” Ferguson joked this morning.

“I have no problem with protest. There were plenty of green and gold scarves on Sunday and I was delighted to see them supporting the club.

“We are quite happy. As long as they are supporting Manchester United they can wear whatever they like.”

Ferguson, who believes that the single-ownership structure is easier to work with than the Plc, cannot ignore the wave of sedition at Old Trafford. But the Scot, who famously fell out with former-United investors JP McManus and John Magnier, says that takeover was always inevitable once the club floated in the early 1990s.

“When United became a plc a long way back, they were always going to be bought,” he added.

“People forget that point. Once you are a plc your company can be bought and people bought shares. The Irish trio bought shares. There were quite a few people stalking the club.”

It’s an important point to remember. While the Knights have the club at heart, each will likely invest multiple millions in any future takeover. The exit strategy, which could include flotation or resale, is therefore key. Ousting the Glazer family is only worthwhile if the club is never allowed to be put in this position again.

“But David Gill summed it up earlier this week. The club is not for sale. He has made it quite clear. The Glazer family have said it is not for sale,” added Ferguson.

“I have no issue with the Red Knights. I know some of them. I don’t deny them their right to protest.

“If they want to try and buy the club that is entirely up to them.”

Indeed, Ferguson is friendly with Goldman Sachs Jim O’Neil and it seems unlikely that the manager will not have been given forewarning of last Monday’s Red Knights’ meeting.

Should the takeover happen Ferguson will undoubtedly remain. As for Gill, the new owners’ first act should be to fill in his P45.

Glazers will “topple like the Berlin wall” as MUST membership tops 85k

Ed March 3, 2010 Tags: , Shorts 4 comments

The Manchester United Supporters’ Trust (MUST) membership broke through the 85,000 barrier today as thousands of fans joined the anti-Glazer rapidly growing anti-Glazer protest. The tsunami-like revolution will bring down the hated Glazer regime at United, according to leading Red Knight, Seymour Pierce banker Keith Harris.

MUST, whose membership stood a little over 50,000 on Tuesday morning, is charged by the Red Knights with generating 100,000 members to back a takeover bid. At the current rate of growth the organisation will pass 100,000 members some time on Wednesday. There are more than 300 million United fans worldwide.

Meanwhile, Harris says the revolution mirrors that in East Germany during the 1980s when ordinary people forced down an oppressive regime.

“Twenty odd years ago in Eastern Europe there was something which triggered the revolution when someone said ‘now is the time to take down the Berlin Wall’,” said Harris, who brokered takeovers for Manchester City, Chelsea and Newcastle United in recent seasons.

“You sense, although I don’t want to draw parallels for obvious reasons, that the momentum is gathering and that these fans truly mean it.

“The fans have the power to vote with their feet. We saw that 10 years ago with Barcelona where the fans said this president is causing this club to come to the brink. They voted with their feet and it caused a change. So these fans do have that power.”

The Red Knights, a collective of nine wealthy United-supporting businessmen intend to raise more than £1 billion in order to make a bid for the club. Industry analysts believe that it will take a bid of £1.2 – 1.6 billion to force the Glazer family out of United for good. In addition to Harris the group includes Goldman Sachs economist Jim O’Neil and equity trader Paul Marshall of Marshall Wace fame.

“The fans are saying enough is enough. This protest is really taking off,” Harris added.

“People are reviled by what they have read about the purpose of this bond issue and the behaviour and attitude of the owners. This is truly nothing other than an attempt by them to raise money for their own purposes.

“They are not investing in a sporting organisation, which is at the top of the world tree, they are investing in something to try and get money out for their own purposes.

“You’ve got to think that their businesses in America haven’t done well. They can’t have done and the world generally hasn’t done well, and they are probably highly geared in their business activities in America.

“So if this is an opportunity for them to take the money and go, I would hope they would listen carefully to this, provided the money can be raised and I’m very confident that it can be.”

United supporters can join MUST for free at www.joinmust.org.

Red Knights: bid is on

Ed March 2, 2010 Tags: , , Opinion 11 comments

The Red Knights, a consortium of wealthy Manchester United supporters whose first tentative meeting took place in London yesterday, intends to bid for the club, the group revealed today. The Knights hope to pursued 40 wealthy backers to invest £20 million each in a £1.2 billion bid to remove the Glazer family from ownership.

Led by financier Keith Harris, who has brokered takeover deals at Chelsea and Manchester City, the Knights hope to raise around £1 billion from wealthy backers and borrow another £200 million on the financial markets to formulate a bid for the club.

“We can confirm that a group of high net worth individuals, who support Manchester United (known as the ‘Red Knights’), met in London yesterday,” a statement read today.

“This group is supportive of current management but are looking at the feasibility of putting together a proposal to be put to the Glazer family regarding the ownership of Manchester United.

“These discussions are in early stages and no contact has been made with the Glazer family.”

The Glazer family bought United in a £790 million leveraged buyout but has loaded the club with around £716 million in debt. Recent information provided in the Glazers’ bond issue prospectus revealed that the club will haemorrhaged at least £565 million in interest, dividend payments to the Glazers and other fees charged by the family over the next seven years.

However, with turnover increasing substantially during the Glazer fiver-year regime as a result of increased TV money and far higher ticket prices, any bid for the club will necessarily be in excess of £1 billion. Some analysts believe that it may take a bid of around £1.6 billion to pursued the Glazers to sell.

“For such a proposal to be viable it would require the involvement and support of Manchester United supporters worldwide,” the Knights’ statement adds pertinently.

“The Red Knights have been liaising with the Manchester United Supporters Trust and their representatives attended yesterday’s meeting.

“As a first step, the Red Knights want supporters to demonstrate their commitment by joining the free online membership of the Supporters Trust, www.joinmust.org.

“Any new ownership model would aim not only to put the club on a sound financial footing, but would also aim to put the supporters at the heart of everything the club does,” the statement concludes.

The Knights have set MUST a membership target of 100,000 in the first instance, it is reported. The organisation, which has more than 66,000 members at the time of writing, began as Shareholders United Against Glazer 12 years ago.

But MUST membership has rocketed since the Glazers’ bond issue in early January, with anger over United’s finances translated into member sign-ups and the growing green and gold protest movement.

“Our role in this is to generate interest among supporters and grow numbers to give us confidence that the groundswell of support is there for us to pursue it,” said MUST CEO, Duncan Drasdo.

“A bid could then go in quickly. I don’t know what the timescale will be, things keep surprising me with this, but I would imagine that it could probably be months rather than days or weeks.”

Whether the Glazer family, which said today it intends to keep hold of the United cash cow for at least seven more years, will sell is another matter altogether.

Glazers field first shot fired across bows

Ed March 1, 2010 Tags: , , , , Opinion 23 comments

Negotiation 101. Don’t admit your possession is for sale unless you are absolutely happy for the price to plummet. It’s a refrain familiar to many a football club in the player transfer market. Today Manchester United’s owners, the Glazer family, warded off the first shot in a drawn out war for moral and legal ownership of the club.

Reports today suggest that a group of wealthy investors, known colloquially as the Red Knights, met at leading law firm Freshfields’ London office on Tuesday to flesh out a possible bid for the club.

Those involved in the Red Knights group include Goldman Sachs’ Jim O’Neill and Freshfields’ Mark Rawlinson, while international hedge fund trader Paul Marshall of Marshall Wace and Bet Fred founder Fred Done have also been linked to the group in the past.

In recent weeks financier Keith Harris, the Manchester United Supporters’ Trust (MUST) and wealthy fans have formulated plans to make a bid for the club, bought by the Glazer family in a highly leveraged £790 million deal during summer 2005. Urgency to mount a bid, fueled by growing anger at the Glazer family’s ownership of the club, has accelerated since details of United’s finances became transparent as the club sought to market a £500 million bond issue in January.

However, the Glazer family has consistently claimed that it is a “long-term” investor in United. It is a message repeated today in a terse one-line response from a family spokesperson: “Our position is that Manchester United is not for sale.” The oft-repeated refrain that almost certainly means the club is available – for a price.

In the parlance of the day everything has its price, despite denials to the contrary. Debt-laden United, which owes £716.5 million to financial institutions and bond holders, will haemorrhage more than £565 million in interest, fees and dividends over the next seven years according to the Glazer family’s own figures.

While the Red Knights’ desire to buy out the Glazers is genuine, any bid will come at a very heavy price. Probably more than £1.2 billion, including outstanding club debt of £509 million. The Glazer family will also use club funds to reduce the £200 million payment-in-kind loans under their name.

Since the 2005 takeover United’s turnover has increased considerably, driven by a new Premier League deal with Sky, huge rises in matchday ticket prices and increased commercial revenue from partners such as new principle shirt sponsor Aon. As such, the multiplier required to mount a successful bid that includes a premium for the current owners and covers club debt is much higher than the 2005 £790 million buyout price.

In a move not lacking in irony, the group has also lined up Finsbury to advise on public relations matters, according to a report in The Times today. The firm also advised the club in 2005, and its London office was subjected to repeated pranks by angry United supporters including a denial of service attack on the company’s website.

The Red Knights is not only potentially wealthy but includes some internationally recognised minds of true clout. Seymour Pearce-based Harris is an outspoken critic of the Glazer regime, adding in recent weeks that the family is placing the club in danger, while accelerating arrangements to bring the Red Knights closer.

Meanwhile, Marshall recently called for a fan ownership model at the club, similar to those employed in Europe’s leading clubs such as Barcelona.

But perhaps the most vociferous of the Red Knights is O’Neil. It is not without pertinence that Goldman Sachs’ head of global economic research is a leading figure in the anti-Glazer movement.

As thousands of terrace fans don the green and gold of Newton Heath, modern United will need each of the Red Knights as the long battle for control commences.