Manchester United co-owner Avram Glazer has held talks in Qatar with potential investors
It is three weeks since the Glazer family announced their intention to “explore strategic alternatives” for Manchester United “including new investment into the club, a sale, or other transactions”. That statement dropped and reverberations went around the world of sport — finally, after 17 years of ownership and protests, the Glazers were officially looking at ways out.
In the time since the news broke, The Athletic has spoken to people across the spectrum of the football-business world to try to find out how long this process might take, what the prospects are for a full takeover, and why United are on the market now.
At the World Cup, The Athletic even spoke to Avram Glazer outside the Al Bayt Stadium in Qatar after France’s 2-0 win over Morocco.
Asked for an update on the sale of United, the 62-year-old said: “It’s not necessarily a sale, it’s a process and we’re going forward with the process, so we’ll see what happens.”
Most of what we’ve been told by others is assured, other bits fall into the category of rumour; all should help you navigate what is a complex story.
Here is what we’ve been hearing…
The Raine Group, an investment banking firm, is acting as United’s exclusive financial advisor, which means it has a brief to get the best deal for the Glazers. The person leading these talks on their behalf is Joe Ravitch, co-founder and partner of Raine.
Ravitch, a New Yorker, had the same role in the Chelsea sale this past summer and informed people believe the blueprint in place then will be followed again.
Despite being a distressed asset due to the UK government sanctioning outgoing owner Roman Abramovich, Chelsea sold for £2.5billion because several bidders joined the auction. That figure was above expectations and as the dust settles, members of hierarchies at rival clubs have let it be known they feel Todd Boehly and his consortium overpaid.
Nevertheless, that market appetite to own a Premier League club is said to have encouraged the Glazers, and Ravitch is described as confident a much larger sum can be achieved at United.
Raine is aiming for a full sale in the first quarter of 2023 at a price between £6billion and £7billion. Pushed for an update in Doha, Avram Glazer said: Pushed for an update, he said: “That’s the update, it’s the process and the process is proceeding.”
Whether that money and timetable can be achieved, only time will tell — and there are people in the City of London who believe such a valuation far surpasses reality, which we will explain later.
It is the job of Raine staff to be positive about prospects. They want to amplify optimism to increase the amount of cash that bidders are willing to pay. They have privately communicated that many parties have registered an interest. Negotiations are intended to start at a high number.
But while planning for a swift resolution, Raine also insists there will not be the same hurry that accelerated the Chelsea sale, when the UK government had imposed a deadline.
That brief window of opportunity to get the keys to Stamford Bridge perhaps elevated the size of offers, and there is no such countdown clock ticking at Old Trafford, which has left some to believe potential bidders will wait for United’s financial position to worsen before making a move. “How long is a piece of string,” was the assessment from one source, who had to remain anonymous in order to protect their position, about a timeline.
This is not Ravitch’s first involvement in a prospective takeover of United.
He was a banker at Goldman Sachs in 1999 when UK broadcaster BSkyB attempted to take the club private before the Glazers even started buying shares. Goldman Sachs was a joint corporate broker to BSkyB. Fans protested that bid by tycoon Rupert Murdoch, too. It was eventually blocked by the Department of Trade and Industry as anti-competitive after an investigation by the Monopolies and Mergers Commission.
Those same regulations may jeopardise any approaches by media companies now.
Amazon has been mooted as a possibility by some close to the talks — the company has a sleeve sponsorship with Napoli, current leaders of Italy’s Serie A, and also holds broadcast rights to Premier League matches. A spokesperson said: “Amazon declined to comment on rumour and speculation.”
Apple was reported to be considering a move, only for sources, who had to remain anonymous to protect their position, to confirm to The Athletic there is no interest in tabling a bid.
The only time Apple buys other companies is to integrate intellectual property into products. Apple is also careful about sponsorship too — you won’t find its logo on team shirts or other third-party brands. Apple has instead put its money into streaming coverage of football matches, signing a 10-year broadcast deal worth $250million per season with North America’s Major League Soccer which begins with its 2023 campaign.
The motivation for floating companies as forward-thinking and powerful as Amazon or Apple as potential buyers appears clear: to add a layer of attractiveness to United.
Clothing empire Zara was also linked with taking over United, but again a swift denial followed. A statement was released on behalf of Amancio Ortega, the billionaire owner of Zara. It reads: “Pontegadea, investment and asset management company of the Ortega family, denies the existence of signs of interest in the acquisition of the Manchester United club.”
Mukesh Ambani, the Indian businessman who according to Forbes is the world’s 10th richest person with a worth of $90.7billion, has been proposed as making a shift into football by experts.
Simon Chadwick, professor of sport and geopolitical economy at the SKEMA Business School, said: “There is an increasing appetite in India for non-cricket investment opportunities in sport. This links to India’s digital and entertainment economy. City Football Group invested in Mumbai, and Mumbai is the digital, entertainment and financial capital of India. If you look at some of the things Abu Dhabi’s wealth fund is investing in, they have invested in digital start-ups in Mumbai.
“There is a sense India could be the next great frontier. We’ve already had China, and now we have Saudi Arabia.”
Ambani’s son Akash, 31, is, however, reported to be a big Arsenal fan and The Athletic has been told by sources who have to remain anonymous to protect business interests that the London club is the one the family would go for if they did enter the football world. The Ambanis, who live in a vast 27-storey mansion in Mumbai, have also been linked with Liverpool.
When it comes to offers to Raine, serious talks are yet to materialise.
Those with means of surveying a decent pool of investors believe that is because the price is being pitched too high. These are early days, though, and there is a school of thought that Raine wants to keep genuine bidders out of public discourse.
They had those intentions at Chelsea too but the process became a battle for the hearts of the masses, with fans courted to gain support because the decision was not just based on money but also the most compelling plans for their club.
There is no imperative for United’s potential buyers to win over the supporters because the Glazers will ultimately want the best financial return.
Irwin Kishner, co-chair of the Sports Law Group with New York law firm Herrick Feinstein, has worked on various sporting mergers and acquisitions, including a joint venture between baseball’s New York Yankees and Manchester City. He can convey the American view.
“It (United) is a very marketable, enticing potential investment for the right owner, not least its storied history and its ability to generate a fanbase,” Kishner says. “This is a crown jewel a lot of folks will be very interested in trying to obtain. It will come down to questions of valuation.”
He adds: “Raine will handle this in a very professional way, they will try to get maximum sterling, dollar, euro for this asset. Typically you’ll get a dozen or so declarations of interest, maybe more. They’ll whittle it down to a handful or less, and make them each think the other guy, or girl, is going higher. As far as disclosing names, often you’ll do that as part of the strategy to drive value.”
After riding through so many storms, from the green and gold protests of 2010 and the parallel campaign by the Red Knights, to the risky IPO launch on the New York Stock Exchange in 2012, to Mancunian billionaire Sir Jim Ratcliffe’s proposals in the summer, the lingering question is: why have the Glazers decided to sell now?
More specifically, why have Joel and Avram become open to the idea? Because in truth, the other four Glazer siblings have wanted to cash in for a long time. One source, who remains anonymous to protect their position, says that rather than go through the tortuous process to take United public 10 years ago, Edward, Kevin, Bryan and Darcie Glazer would have preferred to sell up entirely then.
Undisputed, and not previously reported, is that Joel and Avram tried to buy out their siblings last summer. That is what those talks with Apollo, a private equity firm, were really about, rather than finding funding for a stadium rebuild.
Joel and Avram would have needed to raise an enormous sum of money, however.
The other four siblings hold between them 71,701,268 of the Class B shares that are worth 10 times the voting rights of the Class A shares traded on the New York Stock Exchange. The share price on August 17, when news broke of the Apollo talks, was $13.67, meaning the cumulative portion for Edward, Kevin, Bryan and Darcie was worth $980million. Darcie also has 603,806 Class A shares, equating to another $8.3million.
The theory is that Joel and Avram felt letting their brothers and sister go would free them to run United in a more unified, streamlined manner. Having four voices on the board whose focus has been on realising the value of their stakes, rather than the betterment of the club — be it infrastructure redevelopment or squad spending — clogged progression.
That would be a generous reading for Joel and Avram, given they have not shown any determination to implement genuine, lasting improvements at personal cost.
A further element to consider is how, when sold on the NYSE, the Glazers’ Class B shares automatically convert into Class A shares.
This happened with sales by Kevin and Bryan, and also Avram in the past two years. This maintains the Glazers’ voting power but also reduces the value of the shares — people will not pay as much for stock carrying a reduced say on decisions by a factor of 10 — so if money is your motivation, the mechanism would presumably be a frustration.
Some have wondered if there is a private shareholder agreement between the siblings forcing the conversion. Otherwise, the four could out-vote Joel and Avram to maintain any sales as Class B shares, thus “unlocking” their full value. The conversion is in fact baked into the rules of the B shares — ie, they can only be owned by members of the Glazer family and when sold they automatically convert to A shares.
Even on a basic level, there is talk that the four siblings who have wanted out before this year might feel money has been left on the table. United’s share price in August 2018 was $26.20, equating to an extra $900million in the value of their cumulative stock compared to the price this August.
People who have an understanding of Joel and Avram have supposed they would have believed that if United could be restored to the Premier League champions status they last held in 2013, and be playing in a new stadium, the price would triple in time.
All this was the backdrop to Joel and Avram approaching Apollo to raise funds. It is believed they would have needed to offer equity in United in exchange. Apollo declined.
Another company approached for financing was Ares. It is unclear whether that money was earmarked to buy out their siblings or fund work on Old Trafford but either way, there was no deal.
It was around this period that United’s board were shown detailed proposals about the various plans for stadium renovation.
The scale of the investment required is said to have taken Joel and Avram aback, and laid bare to executives the serious difficulties of major reconstruction.
There was a spectrum of improvements presented and at the top end, for a completely new stadium, the cost was estimated at £1.2billion to £1.6billion.
Building a new home for United from scratch on land adjacent to their current Old Trafford ground, therefore allowing games to still be played and money to be made during the years of construction involved, was tabled as an option. At the lower end of the scale was an expansion of the South Stand, but even that would require a major structure to be built over a nearby railway line to enable the demolition.
No choice is cheap.
Still, rather than the typical Glazer black hole that work of this significance usually falls into, there was momentum behind the plans. Joel and United chief executive Richard Arnold gave detailed feedback, geared towards a rebuild of the current stadium, while respecting its heritage and tradition — something fans have made sure is present in conversations.
So the sale announcement came as a surprise to those familiar with that dialogue. A prospective takeover naturally places any stadium progress on hold.
Another person who seemed caught off-guard by the turn of events was Ratcliffe.
He held talks with the Glazers in the summer but then said at a speaking engagement with the Financial Times in October: “They don’t want to sell it.”
There is a suggestion Ratcliffe actually made a bid for United in the summer, hence his clarity over the Glazers’ position.
He could be forgiven for feeling bruised about the episode, given the club is very much on the market now, but he is expected to put that aside to enter the running. Sir Dave Brailsford, director of sport at Nice, the Ligue 1 club owned by Ratcliffe’s firm Ineos, knows Manchester well, having managed the successful British Cycling programme from the city’s velodrome.
Crucially, it is felt that Joel Glazer has shifted position since those days of dialogue over the stadium and with Ratcliffe. Exactly why is unclear, but an inability to buy out his siblings, the cost of improving Old Trafford, and the rising debt could have created a perfect storm, together with ongoing protests in person and against sponsors.
United’s quarterly results, released last week, paint a bleak picture of creaking bank balances.
One alarming detail is that United are very close to, or might be already exceeding, £1billion of debt. That is made up of approximately £580m in gross debt from the Glazers’ leveraged buyout in 2005, plus £200m on the revolving credit facility (which was used to make signings in the last transfer window), and £250m net owed on transfers. Those figures do not take into account the strengthening of the pound against the dollar — the currency United use with US banks — since Liz Truss resigned as Prime Minister, and ongoing shifts to the net transfer debt, but whatever the precise number, it is an enormous sum of money and something any new owners will have to account for when valuing the club.
There is a suggestion in finance circles that Raine could have acted for Liverpool but got a sense United would follow, so waited.
So, who could realistically buy United?
Well, the names on any such list depends on how much money the Glazers are going to demand. At Raine’s top-end valuation of £7billion, the pool shrinks.
Even someone as wealthy as Ratcliffe could not supply that kind of money on their own, as he alluded to in his talk with the Financial Times.
He would also, it is anticipated, need to have dialogue with his partners in Ineos, of which he owns two-thirds. In April, he made a bid of £4.25billion for Chelsea — £2.5bn to take ownership and £1.75bn committed to future investment — with some suspecting he left it until then to step forward because he was waiting for the price to come down. The jump from that Chelsea bid to Raine’s £6bn to £7bn target for United is significant.
Ratcliffe could join a consortium, as happened when a group of wealthy United fans created the Red Knights to try to buy the club 12 years ago, but getting the balance of individuals right is a delicate task.
Fans will press for the Glazers to make the club affordable to people who have sporting success as a primary motivation. Joel has given the strong impression he does care for the future of United, so walking the walk would mean accepting a fair price from a bidder so money can be freed up to invest in the team and infrastructure such as the stadium.
The Manchester United Supporters Trust (MUST) appealed to that sentiment in an open letter to the Glazer family, writing: “Now you can do two things for your legacy — the first is to prioritise the best interests of Manchester United Football Club over the financial interests of the selling shareholders. Our club, at this moment in time more than ever, needs the right ownership and that should be the priority rather than simply the highest bidders and highest return for you. Second, we implore you to move with speed.”
The Glazers are capitalists, so that rhetoric may fall on deaf ears, but they are already in profit from the £270million they paid for shares in the 2005 takeover, so whatever happens now they will earn huge amounts extra.
The Athletic has explained how valuing football clubs is an inexact science. And Football Benchmark, an offshoot of accounting giant KPMG, last week released its appraisal of the United landscape. In a report, Andrea Sartori, Football Benchmark’s founder and chief executive, wrote: “The gap between the rumoured transaction price and the theoretical value of Manchester United FC appears enormous.”
Football Benchmark provides a value based on a formula relating to revenues that places United’s worth at £2.425billion, second only to Real Madrid at £2.679billion.
Billionaire Sir Michael Moritz, who co-authored former United manager Sir Alex Ferguson’s 2015 book Leading and is known to members of the Red Knights group, wrote an analytical piece in The Times on how the price tag being mooted is unrealistic.
But Sartori adds that elite clubs are seen as “trophy assets… often viewed by investors in a way that goes well beyond pure financial metrics. Competition is often intense for such assets. The result is a seller’s market in which the current owner has more power and influence over the asking price”.
Kishner says on United: “Based on what Chelsea went for, and based on what you’re hearing on this side of the ocean, I could easily see it establishing a record for a franchise.”
United’s market capitalisation, the total of all shares multiplied by the stock price, stands at £2.7billion. Shares have risen from $13.03 to $20.05 in the weeks since the sale was announced, indicating faith that the club are worth a higher value.
But if investors thought the Glazers would get that £7billion, it’s felt the share price would have risen by more to reflect that belief, because it would represent profit once a takeover happens. The shares have fallen slightly from $22.73 in the last week, too.
Nation states are the obvious candidates to come forward with such huge offers, but multiple experts have cast doubt on this being the right time for many of them to do so.
The Athletic has outlined the case for Saudi Arabia, while members of Qatar’s Supreme Committee have privately reflected Premier League clubs are now too expensive and that most of their value has been extracted already. This echoes a strong sense from people in the financial world that while countries in the Arabian Gulf region are incredibly wealthy, they do not want to be exploited on these kinds of deals by Westerners.
And that is before we consider the potential conflict with Qatar’s ownership of serial French champions Paris Saint-Germain.
Dubai has twice been given financial bailouts from United Arab Emirates neighbour Abu Dhabi since the 2008 financial collapse, and is also focused on investing in tourism. Sheikh Mohammed bin Rashid Al Maktoum, the ruler of Dubai, is reportedly a Liverpool fan anyway.
Bahrain has a different sporting focus, having pumped lots of money into Formula 1 motor racing.
Kristian Ulrichsen, a fellow for the Middle East at the Baker Institute think tank and an author, says: “Bahrain don’t have much oil and the Bahrain economy is struggling. They could take over a smaller team, but I don’t see them having the resources to take over Liverpool or Manchester United. They have taken over the second team in Paris, for example. Kuwait and Oman haven’t shown any interest. Kuwait has the resources but doesn’t seem to have the interest. Oman might have interest, but has a lack of resources.”
It is also worth considering how anticipated government regulation may impact football club owners in the future. A white paper is expected on the issue soon. Current opposition party Labour has committed to bringing forward legislation if they win power. Tightening rules on who can buy into the Premier League is speculated as another reason why Joel Glazer has put United up for sale now.
Of course, the statement also says that minority investment is a possibility. But people have questioned who would hand over large sums of money but allow the Glazers to maintain control of United, especially when under their leadership the financial picture has become so fraught and their name is toxic among the fanbase.
Imagine the potential rise in United’s revenues when supporters are not boycotting merchandise or sponsors.
But Kishner thinks American investors will be interested in getting a foot in the door at United, if that’s what it comes down to.
He expects the same individuals who went for Chelsea to look at the Manchester side. A consortium led by Stephen Pagliuca, part-owner of the NBA’s Boston Celtics and Serie A’s Atalanta, and another group made up of Sir Martin Broughton, the former Liverpool and British Airways chairman, plus billionaire Crystal Palace shareholders Dave Blitzer and Josh Harris made bids for Chelsea.
Kishner says: “The idea of selling minority stakes in these iconic clubs is not unheard of — it’s done all the time in the US. Some of the most prestigious clubs have done it successfully. Sometimes, people will take a minority interest as a path to gaining control. It’s a very viable way of raising capital.”
Whether supporters will be included in any proposal remains to be seen.
It would be a shrewd move for bidders to have dialogue with influential groups, but there is no guarantee that will happen.
There is also no assurance the Fan Share Scheme, which Joel has been negotiating with MUST for several months, will now come to fruition. Those talks to try to establish meaningful supporter ownership are on hold.
This is a moment of opportunity for United fans desperate to see the backs of the Glazers, but also a moment of jeopardy.
(Other contributors: Adam Crafton, Matt Slater, Dan Sheldon and Omar Garrick)
(Graphic: Sam Richardson)
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