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Why the Glazer’s will have to sell Manchester United

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Since the Glazer families purchase of Manchester United in 2005, hostility has emerged and grown around the American’s ownership of the club and their genuine intentions behind their use of the iconic football team.

However, the Glazer family are somewhat used to the negative opinion fans have on their ownership of United.

From the initial buyout 18 years ago, fans were vocal about their negative view on the new buyers. Similarly, in 2010, after three Premier League titles back to back to back and a Champions League trophy, protests re-emerged despite the success.

In a Champions League tie against AC Milan, former red David Beckham left the field wearing the famous green and gold scarf which represents the original colours of Newton Heath, the name which United originated under.

Fans at Old Trafford proudly wore and displayed their green and gold scarfs, with banners and ‘GO Glazers OUT’ leaflets around the ground.

Therefore, in 2021, when mass protests broke out about the Glazer families huge support in the European Super League idea, this would have come as no shock to the American owners.

On the 24th April, thousands of fans protested outside Old Trafford against the possibility of the club joining the Super League.

Then, on the 2nd May, ahead of a home game against huge rivals Liverpool, over 10,000 fans attended a protest, which saw around 100 people get onto the pitch and eventually get the game postponed.

The sheer enormity and scale of these protests, for the first time, majorly unsettled the Glazer’s, forcing them to introduce a fan advisory scheme for better communication between the fans and the board.

Getting a game as big as Liverpool vs United called off, was a huge statement of intent from the United fans.

Since then, hostility is still high, but protests have eased, although the desire to get the Glazers out still remains.

Therefore, when in November 2022, the Glazers announced their decision to put United up for sale, fans were joyous.

However, just under 10 months on since this announcement, United haven’t been sold and there’s increased rumours of the possibility of the Glazers staying.

Despite this, the Glazers will sell.

Here’s why.

Financial danger

As the Glazer’s purchase of the club was through a £550m leverage buyout, this debt was placed on the club rather than the Glazer family themselves.

As a result, from 2006-2020, United have had to pay £1.1 billion on financing costs. This includes £704m in interest payments from the buyout, £244m in debt repayments and £125m in dividends to shareholders.

£1.1 billion is an outrageous amount which has been lost due to these owners.

The Premier League have now agreed on restricting leveraged buyouts to a 65% cap which prevents other owners doing what the Glazers have done to United.

Thus, it’s well established the Glazer’s have leached a lot of money out of the club, but how have United been able to keep successfully running?

Revenue and Commercialisation

Due to the size and global appeal of the club, particularly under Glazer ownership, United have used their strong branding to create huge revenue streams.

Until the Covid 19 period, United’s revenue had been consistently growing since 2015. When the Glazers first arrived, United’s revenue was £173m, whereas by 2019 it had risen to £627m. Since then, after Covid, in 2022, it was back up to £583m and this was without Champions League football.

In addition, from United’s Q3 financial results, their revenue has grown by 11.3% from the three months ended March 2022. Crucially, commercial revenue increased by 5.8%, matchday revenue increased by 39.8%, but broadcasting revenue dropped by 1.6%. However, this is due to the lack of Champions League football. Then commercially, the rise was due to the acquisition of a new training kit sponsor in Tezos.

Conversely, despite United’s revenue growth, since 2006, both Liverpool and Manchester City have experienced greater growth in this period. This is epitomised by the fact that both these clubs have overtaken United as the top revenue generating clubs in England.

Crucially, commercial revenue specifically, is pivotal to the state of United’s finances.

In United’s financial report from 2022, they said: “Such a reduction could have a material adverse effect on our overall revenue and our ability to continue to compete with the top football clubs in England and Europe.”

In 2022, it represented 44% of United’s overall revenue.

Thus, for the Glazer’s financial model at the club, it’s essential that commercial revenues remain high.

However, from 2016-2020, United’s commercial revenue barely rose and in recent years has dropped, as the new sponsorship deal with Team Viewer was worth £17m a year less than the previous deal with Chevrolet. Similarly, since then, Team Viewer have backed out of the agreement and thus United are looking again for a new shirt sponsor.

Despite the increase this year, since Covid, United have failed to reach the commercial revenues they achieved under the deal with Chevrolet.

This is a major problem for United.

In their financial reports, the club have put this issue down to economic factors, United said:

“The underlying probability of being unable to renew or replace key contracts on similar or more favorable terms, or to partner with additional sponsors, has increased as the impact of COVID-19.”

“As a result, there may be a shift in focus for the majority of companies in the short- to medium-term, as these companies reduce perceived “excess” spend on marketing in favor of protecting the operational and financial stability of the entity.”

Whilst this is likely true, it doesn’t paint the whole picture.

A huge factor in less cooperation from sponsors was due to the protests. As United fans knew the way to ‘hurt’ the Glazers was through financial damage, they targeted sponsors by ‘boycotting’ them and leaving bad reviews on their websites and social media’s.

Subsequently, sponsors are bound to be put off from investing in the club at such a turbulent time, as fans could boycott your brand at any time and the inconsistent football means Champions League is never guaranteed, which is a further limitation.

Therefore, as a result, due to the lower sponsorship deals, this weakens United’s revenues. With the Glazer’s relying on United’s strength commercially, this pushes them closer to financial danger and thus the need to leave.

Fan Power

As mentioned with the boycotting of sponsors, the fans are the most powerful entity to this football club.

This is further illustrated in recent scenarios regarding Marko Arnautovic and Mason Greenwood.

In 2022, United tried to sign Arnautovic but were forced to back out after a wave of fan fury was unleashed at the club. This came due to the allegations around Arnautovic using a potential racist slur. He was cleared of discriminatory action, but as a club United has been built on principles and morals and fans felt the signing of the Austrian contradicted that.

Similarly, in the last month, United have backtracked on their initial desire to bring Greenwood back to the club due to huge backlash from fans. Richard Arnold had briefed people around the club of his upcoming return, but this news was leaked to the press and subsequently led to the protests which saw the decision changed.

Ultimately, these cases as well as the protests in 2021, just illustrate the power the fans have to change decisions at the club.

Therefore, with the takeover process stalling, if the Glazer’s were to officially announce their decision to stay at the club, it’s likely that it wouldn’t be long before huge scale protests begin again. Although they survived the ones in 2021, with the club in an even worse financial state than before, these could be bigger and even more damaging to the American owners.

As a result, they may look to avoid such disruption as if they’re forced to sell due to protests rather than in its current sale process, their seller power will significantly decrease and they may struggle to get as high a valuation as they initially desired.

This has been exemplified just recently, when a report around the potential of the Glazer’s staying due to their valuation having not been met, sparked a huge drop in share price. United lost £600m in value, in their biggest single day drop ever. The share price fell 18.22% in a day.

This is a clear indication to the Glazer’s of the financial consequence of not selling, which suggests there is no investor confidence in the club and the price of the club will only fall if they hold onto it.

Thus, fan pressure can be a huge factor in forcing the Glazers to sell.

The Last Straw

For many years, United’s cash reserves were incredibly strong due to the huge commercialisation and revenues.

However, in recent years, these have plummeted.

In June 2019, they stood at £308m and went as low as £24.3m in December 2022.

They currently stand at just £31.45m.

Such low cash reserves are not sustainable for a big club like United, who are looking to spend significantly in transfer windows without using owner financing.

In United’s financial results they said:

“We face competition from other football clubs in England and Europe. In the Premier League, investment from wealthy team owners has led to teams with deep financial backing that are able to acquire top players and coaching staff, which could result in improved performance from those teams in domestic and European competitions. As the Premier League continues to grow in popularity, the interest of wealthy potential owners may increase, leading to additional clubs substantially improving their financial position.”

“The increase in competition could result in our men’s first team finishing lower in the Premier League than we have in the past and jeopardizing our qualification for or results in European competitions.”

This is indirectly suggesting that without new ownership who can invest heavily in the squad, United could get left behind.

Consequently, in order for United to spend heavily in transfer windows with such low cash reserves and the Glazer’s unwillingness to invest themselves, they’ve had to use a credit system by taking out additional loans.

This initially was used during Covid as a result of the low cash flows, but then was used to fund the panic signings of Casemiro and Antony after United’s horrendous start to the season. Subsequently, £206.2m is owed to the Bank of America.

However, United are expected to have paid this back by now using their increased revenue this year.

Despite this, the need to use loans to fund transfers just illustrates the dangerous financial position United are in.

Transfer fees are only getting bigger and so with United’s low cash reserves creating a heavier reliance on using loans, the likelihood of being left behind by bigger financial superpowers is becoming a genuine possible reality.

Debt

With United’s debt still at 650m dollars, this remains a huge looming issue at the club.

Fans are getting only more infuriated by the ever-increasing debt and so if this continues it could spark yet another protest which leaves the Glazer family vulnerable.

In addition, this is further sparked by the payment of dividends each year.

From 2020-2022, £67.5m worth of dividends were paid. This comes at a time when the club consistently spoke about how the effects of Covid were damaging United’s financial position, yet the Glazers were happy to take another chunk of money out of the club whilst in these ‘difficult times.’

From 2010-2020, United paid out £122m worth of dividends, whilst being the only club in the Premier League to consistently have to make these payments.

Such decisions are only creating more hostility between ownership and fans, creating a likelier chance of future problems and disruption.

Overall

Since the Glazers bought the club in 2005, their first priority was to use it as a profitable asset to make money off. However, with the financial state the club is now in, this is no longer possible. This leaves the Glazers wondering what the point in holding onto United is, as this situation will only get worse and their overall goal is now unachievable.

The club’s cash reserves have dried up, they have a huge consistent debt and an ever-increasing amount of angry fans. The Glazers will soon be forced to sell the club, as if they wait much longer, the club will lose tremendous value and it could go as far as the family being pushed out of United.