Glazers not united over world’s richest club

It was hailed as the third-most valuable sports franchise in the world by Forbes magazine this year, with a value of £2.8bn.

After a spate of football club takeovers fuelled by the Premier League’s TV rights deals, insiders say the time may be right for the Glazers to cash in. Rumours persist that the secretive family, who made their fortune through suburban shopping malls and other property, may soon offload more of the club — five years after a partial stock exchange float on Wall Street.

United overtook Spanish giants Barcelona and Real Madrid to become the world’s richest football club last year, according to the advisory firm Deloitte, as revenues rose to £515m.

Deloitte’s Tim Bridge said that the Premier League’s £5bn TV rights deal with Sky and BT would stuff even more cash into clubs’ coffers: “We’ll continue to see the traditional broadcast revenue remain in place in the next cycle. As long as this revenue continues to grow, football clubs’ profits will remain healthy.”

In addition to the TV cash, the Glazers have engineered a series of commercial mega-deals, with United leapfrogging more successful outfits, including Real Madrid, in terms of financial firepower.

The club has a favoured a Japanese noodle maker, a pharmaceutical partner in South Korea, and even a consumer banking partner in Indonesia. There are rumours it could have a new “sleeve sponsor” in the form of the dating app Tinder.

The club’s commercial revenues leapt to £268.3m last year, up 36.3%, and a £750m sportswear deal with Adidas should keep it top of football’s financial league.

On the back of the commercial bonanza, the club has lifted its revenue and profit forecasts for the year.

It is nearly five years to the day since the Glazers sold an initial 10% of United on the New York Stock Exchange on the promise of future profits, helped by its bumper $559m sponsorship contract with car maker Chevrolet. The club has had a rocky time on the public markets. The shares listed below their expected price and raised about £150m, significantly less than the Glazers had hoped.

The Glazer children then sold a further slug of shares in 2014, shortly after their father’s death. Their economic interest in the club stands at about 80%.

Despite initial optimism that the shares would soar, the sale has not been a roaring success. United shares worth $14 in 2012 traded at just $17.10 on Friday.

Critics of the 2012 stock offering say it has been used by the Glazer family to squeeze cash out of the club, rather than improve its financial position.

United’s net debt is £366m — a legacy of the Americans’ leveraged buyout 12 years ago. The Glazer siblings received a £15m dividend last year and are expected to rake in another £18m this year.

They exercise control over United through Red Football, a holding company that owns about 57% of the club. Red Football’s directors are listed as Malcolm Glazer’s six children — Avram, Bryan, Darcie, Edward, Joel and Kevin — according to Companies House filings. With the exception of Edward, the children each hold a 4% stake through personal trust funds.

They retain an iron grip over the club through a share structure that gives them near total control of voting rights. United’s public shareholders — including the hedge fund Lansdowne as well as investment managers Jupiter, Fidelity and Baron — hold “class A” shares, which have only one tenth of the voting rights of the Glazers’ “class B” stock. Investors complain this is too heavily skewed in the Americans’ favour.

Shareholders have expressed doubts over whether United will ever become a proper listed company with a large, liquid market and a shareholder base with real voting rights. Impatient investors say they do not have the liquidity to sell large blocks on the open market.

One investor believes this has been a key reason for the dismal performance of the stock since 2012, saying: “The share price hasn’t budged in dollar terms. The issue is liquidity — people who like the shares don’t believe they will be able to get enough of them. If, as a fund manager, you wanted to buy a big block, you’d find it difficult. The only solution is the owner [the Glazers] selling more stock.”

One shareholder said he had been contacted by Asian investors looking to buy a large holding, but buyers had been deterred by a lack of available stock.

The Glazers are approaching an impasse with their City and Wall Street investors, according to one senior figure at a Premier League rival. “Many bought into the listing when United had a brilliant manager who kept them at the top. He left, then the chief executive David Gill left, and there was a void. Now they have been left with these shares with no rights.”

The deadlock is likely to lead to a review of the Glazers’ holdings in United, sources said. There are persistent City rumours that Darcie, Edward and Kevin Glazer are keen to sell their stakes, while Avram and Joel, both executive co-chairmen, and Bryan, a director, are believed to be keen to hang on to their holdings. While a further offloading of shares is expected, people close to the club say an outright sale of United is unlikely, particularly amid restrictions on Chinese takeovers.

A former United board member said: “Once you float any stock, it can put you in play. But the club is gaining value in the current climate, and I hear no sign of the family wanting to sell the whole thing.”

Yet deal-making continues in the Premier League, and United is by far the most attractive brand. American investors have even ploughed millions into less fashionable Premier League clubs such as Crystal Palace and Swansea City. In December 2015, Manchester City sold a 13% stake in its parent company to the Chinese consortium CMC, valuing the club at $3bn. Manchester United is surely worth more than its $2.8bn market capitalisation, given its commercial prowess.

For now, United remains the Premier League’s trophy asset. As the new season kicks off, the club will try to lift more silverware on the pitch. On Wall Street, though, its sheen has faded.