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Home / unitedkingdom / £ 511m debt but dividends galore: the Glazers' legacy at Manchester United | David Conn | Football

£ 511m debt but dividends galore: the Glazers' legacy at Manchester United | David Conn | Football



T.Hrough the long years when Sir Alex Ferguson's Manchester United were amassing trophies and cash, and Liverpool stagnating in a derelict neighborhood, Anfield could only dream of today's reversal of fortunes. Liverpool, rebuilt and rebooted since 2010 under their US investor owners, arrive on Sunday as European champions and Premier League leaders at Old Trafford groaning under United's US owners, who have plundered the club and bungled the Ferguson succession.

Liverpool's owners, John Henry's Fenway Sports Group, didn't fully understand what they were taking on when they bought a club so steeped in history and emotion, but they learned from their early missteps and gradually refurbished Anfield with expertise. United's, the six siblings of the Glazer family, bought the club in their debt-loading raid in 2005, enjoying the fruits of Ferguson's genius but are now on their fourth manager since his 2013 retirement with their former banker Ed Woodward in charge of the club. .

The contrasts are stark: a new main stand at Liverpool and Anfield Road redevelopment in planning, while Old Trafford has leaked and lost its luster. Liverpool made key changes in 2012 after the early £ 35m signing of Andy Carroll undermined the “moneyball” hype, and have since justified it with analytics-informed recruitment of Jürgen Klopp, Mohamed Salah, Virgil van Dijk and the rest of the Champions League. winning squad.

United say they have put together a modern football scouting and decision-making structure that informed this summer's £ 145m signings of Harry Maguire, Aaron Wan-Bissaka and Daniel James, though they may not have a recruiting head like Liverpool's Michael Edwards or a director. of football, as Manchester City have in Txiki Begiristain. Liverpool carefully identified Klopp as their ideal manager, City waited four years for Pep Guardiola, while United, following the miseries of David Moyes, Louis van Gaal and late-José Mourinho, look to have gambled on Ole Gunnar Solskjær being able to vault several steps. on a managerial CV.

FSG does not buy sports clubs as a philanthropist; it works to increase their financial value. But it has taken no money out of Liverpool in nine years, except for a modest £ 10m loan repayment of £ 110m for the main building stand. The Glazers' takeover, designed by Woodward to load £ 540m borrowings on a debt-free club, has since cost more than £ 1bn in interest, fees, refinancing penalties and other dead money.

The Glazers have relocated Manchester United's company registration from Sir Matt Busby Way in Old Trafford to the Cayman Islands tax haven, floated on the New York Stock Exchange in 2012, and the club has paid a dividend, most of it to the Glazers, for the last four years. The latest, announced in the United Kingdom 2018-19 accounts filed last month, was £ 23m, of which the five Glazer brothers and their sister Darcie Glazer Kassewitz shared approximately £ 18m.

Henry and his FSG co-investors Tom Werner and Mike Gordon – who is credited with steering the revival since he took personal responsibility for Liverpool in 2012 – have never taken a salary from the club. All six Glazers are directors, and on the payroll. At United, the struggles to replace Ferguson and modernize operations are contrasted with clinical thinking and detail applied to Glazers' financial engineering.

Woodward, who worked for United for the Glazers and their late father Malcolm while at JP Morgan Bank, came up with the £ 275m “payment in kind” hedge fund loans at an initial 14.25% interest, to bridge the gap with a £ 265m bank loan and £ 270m the family put themselves in. When the debts were refinanced a year later, the hedge fund debt had escalated by £ 79.1m, which included a £ 13.2m charge for “early redemption”.

Documents in 2010 setting out another debt refinancing that had swollen to £ 700m revealed that the Glazers had paid £ 10m since 2006 in “management and administration fees” and Darcie and each of his five brothers had borrowed £ 1.66m, £ 10m in total, from the club.

Ed Woodward



Ed Woodward worked on the United acquisition for the Glazers and their late father Malcolm while at the bank JP Morgan. Photograph: Kieran McManus / BPI / Shutterstock

When the Glazers decided to register United in the Cayman Islands and float them in 2012, they split the club into two sets of shares, A and B. They hold all B shares, which are not listed on the stock exchange but do accrue dividends. payments and have 10 times the voting rights of the A shares. Ultimately the Glazers' route to a fabulously profitable sale is to convert the B shares into A, which are publicly traded and bought by investors such as banks whose executives hold those awkward public investor calls with Woodward every quarter.

United's annual report notes that a company registered overseas does not follow the New York Stock Exchange's standard corporate governance standards.

“Accordingly, we are following some corporate governance practices of our home country, the Cayman Islands,” the report states. "Specifically, we do not have a board of directors composed of a majority of independent directors, or a remuneration committee … composed entirely of independent directors."

The purpose of independent, or non-executive, directors is to apply objective scrutiny of how a company is run and hold its executives to account. United's board includes Woodward, Richard Arnold, the well-respected group managing director, chief financial officer Cliff Baty, three independents, and Darcie Glazer Kassewitz and all five of his brothers. Joel and Avi are acknowledged to be the only two of the Glazers involved in the day-to-day running of the club. They, with one of the independents, Robert Leitão of the Rothschild bankers, sit on the remuneration committee which decides the pay of the directors. The total paid to the board and executive management in 2018-19 was £ 10.7m, which the accounts would not break down individually. Woodward is paid by a subsidiary company, Manchester United Football Club Ltd; His salary in 2017-18, the most recently published, was £ 4.152m.

The Glazers have made more than £ 200m selling their shares to investors, and one day, surely, persistent speculation about a sale will culminate in them cashing in, perhaps as suddenly as they bought United, largely unwelcomed, in 2005.

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Defenders of ownership point to the reality that the Glazers' debts and payments are not a burden anymore, as they were in the early years when Ferguson's fire carried them through. Under the Glazers and Woodward, United are a commercial behemoth, with their latest multi-sponsor record £ 627m, though they will drop this season due to their absence from the Champions League. The debt remains huge, £ 511m, and costs £ 25m in interest, but United can wave that away, and the £ 23m dividends, without really feeling it. The club points to an average annual net spend on players of more than £ 100m over the last seven years, more than any other club except their Abu Dhabi-funded noisy neighbors.

Yet City's Barcelona-modeled structures mean they have spent their money more effectively and, like Liverpool, have comprehensively eclipsed United. The signing of so many players for so little reward at United prompts questions rather than answers about the culture at the club whose owners have taken such fortunes out since their host takeover 14 years ago.


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