Glazer ownership of Manchester United
is an English football club based in Old Trafford, Greater Manchester. The club was formed as Newton Heath LYR Football Club, the works team of the Lancashire and Yorkshire Railway depot in Newton Heath, in 1878. The club split from the railway company in 1892 and remained under private ownership for almost 100 years, changing its name to Manchester United after being saved from bankruptcy in 1902. The club was the subject of takeover bids from media tycoon Robert Maxwell in 1984 and property trader Michael Knighton in 1989, before going public in 1991; they received another takeover bid from Rupert Murdoch's BSkyB corporation in 1998 before Malcolm Glazer's stake was announced in September 2003.
By the end of 2003, Glazer had increased his shareholding from 3.17% to around 15%, which he almost doubled in the year up to October 2004. His acquisition of John Magnier and J. P. McManus's 28.7% stake in May 2005 pushed his own up to around 57%, well over the 30% threshold that would force him to launch a takeover bid. A few days later, he took control of 75% of the club's shares, allowing him to delist the company from the London Stock Exchange, and within a month, the Glazers took 98% ownership of the club via their Red Football parent company, forcing a squeeze-out of the remaining 2%. The final purchase price of the club totalled almost £800 million.
Most of the capital used by Glazer to purchase Manchester United came in the form of loans, the majority of which were secured against the club's assets, incurring interest payments of over £60 million per annum. The remainder came in the form of PIK loans, which were later sold to hedge funds. Manchester United was not liable for the PIKs, which were held by Red Football Joint Venture and were secured on that company's shares in Red Football. The interest on the PIKs rolled up at 14.25% per annum. Despite this, the Glazers did not pay down any of the PIK loans in the first five years they owned the club. In January 2010, the club carried out a successful £500 million bond issue, and by March 2010, the PIKs stood at around £207 million. The PIKs were eventually paid off in November 2010 by unspecified means. In August 2012, as part of further refinancing, the Glazers sold a number of shares in Manchester United in an initial public offering on the New York Stock Exchange.
Some Manchester United fans opposed Glazer's takeover of the club, particularly once they realised the level of debt that the club would have to take on after having been debt-free for so many years. Due to this fans took to the streets to protest against the Glazers. Disgruntled fans launched the football club F.C. United of Manchester in 2005, which entered the North West Counties Football League and played in the sixth tier National League North from 2015 to 2019. Since 2005, the Manchester United Supporters' Trust have worked on ways of returning ownership of the club to supporters, including a failed attempt in 2010 to purchase the club in a billion-pound takeover bid alongside a group of wealthy Manchester United fans dubbed the "Red Knights". Other organizations such as the Independent Manchester United Supporters' Association and The 1958 have made additional attempts to varying success.
Background
Manchester United was formed as Newton Heath LYR F.C. in 1878 by the workers in the Carriage and Wagon Works of the Lancashire and Yorkshire Railway's Newton Heath depot. In 1901, the club was in over £2,500 of debt and facing a winding-up order; however, they were saved by local brewer John Henry Davies, who changed their name to Manchester United in 1902. After Davies' death in 1927, the club fell into financial difficulties once again, but James W. Gibson stepped in as a new financial benefactor in 1931. Gibson himself died in 1951, but while his widow, Violet, inherited the ownership of the club, its control passed to director and former player Harold Hardman.Meanwhile, a local businessman named Louis Edwards began accruing shares in Manchester United and was eventually made chairman on Hardman's death in 1965. His son, Martin Edwards, purchased a percentage of shares from Alan Gibson – son of former owner James Gibson – and became the majority shareholder and chairman when Louis Edwards died in 1980. During Martin Edwards' time as chairman, Manchester United was the subject of several takeover bids; the first came from media tycoon Robert Maxwell, who bid £10 million in February 1984, but the sale fell through before any serious talks could take place. In 1989, property magnate Michael Knighton was on the verge of completing a £20 million takeover, but his financial backers pulled out at the last minute and he had to be content with merely a seat on the board.
Manchester United was floated on the stock market in 1991, and they received yet another takeover bid in 1998, this time from Rupert Murdoch's BSkyB. The Manchester United board accepted a £623 million offer, but the takeover was blocked by the Monopolies and Mergers Commission at the final hurdle in April 1999. A few years later, a power struggle emerged between the club's manager, Sir Alex Ferguson, and his horse-racing partners, John Magnier and J. P. McManus, who had gradually become the largest shareholders via their company, Cubic Expression. In a dispute that stemmed from contested ownership of the horse Rock of Gibraltar, Magnier and McManus attempted to have Ferguson removed from his position as manager, and the board responded by approaching investors to attempt to reduce the Irishmen's influence.
Meanwhile, Avram Glazer – the son of Malcolm Glazer – was looking into investment in European football. The Glazer family already owned several businesses in the United States and had purchased the Tampa Bay Buccaneers National Football League franchise in 1995. They convinced the local government to fund a new stadium for the Buccaneers in 1998 and the franchise won its first Super Bowl in January 2003.
Acquisition of shares and gaining control
Following the Manchester United board's search for new investors, the Glazers purchased their first tranche of Manchester United shares on 2 March 2003, spending around £9 million on a 2.9% stake, which they purchased through a holding company called Red Football. On 26 September 2003, it was reported that they had increased their share to 3.17%, taking their shareholding above the 3% threshold that required them to inform the club's management. There had already been considerable speculation about the possibility of a takeover of the club, either by the Glazers or by one of several other interested parties. By 20 October, they had increased their shareholding to 8.93%, and on 29 November, it was reported that they owned around 15% of the club and had met David Gill, its chief executive, to discuss their intentions.On 12 February 2004, the Glazers increased their stake in the club to 16.31% and the following day's Financial Times reported that they had instructed Commerzbank to explore a takeover bid. The club's share price increased by 5% that day, valuing the club at a total of £741 million. The Glazers increased their shareholding to over 19% the following June, although they were still not the largest shareholders. Their shareholding continued to increase, nearing 30% by October 2004. Upon reaching 30%, they would have to launch a formal takeover bid. In February 2005, over 400 Manchester United fans held a protest at Old Trafford against a potential Glazer takeover.
On 12 May 2005, Red Football announced that it had reached an agreement with shareholders J. P. McManus and John Magnier to purchase Cubic Expression's 28.7% stake in the club, which gave the Glazers a controlling stake with just under 57% of the club's shares. They then managed to secure the stake of the third-largest stakeholder, Scottish mining entrepreneur Harry Dobson, taking their share total to 62% of the club. By 13 May, the Glazers had bought a further 12.8% stake, taking their total ownership to 74.81%, just shy of the 75% threshold that would allow them to end the club's public limited company status and delist it from the London Stock Exchange. On 16 May, the Glazers took their shareholding in Manchester United to 75.7%, and a month later, on 22 June, they removed the club's shares from the stock exchange for the first time in 14 years.
The Glazers' shareholding increased gradually to 76.2% by 23 May, when they made their final offer of 300 pence per share, with a deadline of 3 p.m. on 13 June. On 26 May, the Manchester United board wrote to the remaining shareholders indicating their intention to sell their own shares and advising the others to follow suit; in the same letter, chairman Sir Roy Gardner and non-executive directors Ian Much and Jim O'Neill offered their resignations. On 7 June, Avram Glazer and his brothers Joel and Bryan were appointed to the Manchester United board as non-executive directors. Despite the board's encouragement, the Glazers' share in the club had only reached 97.3% by 14 June, short of the 97.6% threshold required for a compulsory buyout of all remaining shareholders, prompting them to extend the deadline on their offer to purchase the remaining shares until 27 June. A statement released on 28 June said that Red Football's shareholding had reached 98%, prompting a squeeze-out of the remaining shareholders. The final valuation of the club was almost £790 million.
Aftermath
On 29 June 2005, on their first visit to Old Trafford after the takeover was completed, Joel, Bryan and Avram Glazer were met with protests by around 300 Manchester United fans who opposed the club's new ownership. Around 100 members of Greater Manchester Police were called to the stadium in an attempt to quell any violence, but there were reports of missiles being thrown at the police vans and chants of "die, Glazer, die"; two people were arrested. The vice-chairman of Shareholders United, Sean Bones, declared that "the Glazer family are the enemies of Manchester United". Club director and former player Bobby Charlton issued a public apology to the Glazers for the reception they received. In further response to the takeover, a group of Manchester United supporters created a new club called F.C. United of Manchester. This so-called "phoenix club" was accepted into the North West Counties Football League second division, six promotions away from The Football League, and secured promotion in each of its first three seasons, twice as league champions.After the takeover, Manchester United continued to thrive, with the 2005–06 season seeing Old Trafford's capacity being expanded and a lucrative new shirt sponsorship deal signed in April 2006 with American company AIG. Increased revenue from TV rights to each competition the club participates in, as well as its various sponsorship deals, also boosted the club's profitability. This came despite fears among many supporters that the debt incurred in buying the club could lead to insolvency.
Contrary to the fears of many fans, the Glazers took action to ensure that Gill and veteran manager Sir Alex Ferguson remained at Manchester United, citing the duo's success with the club. In 2006, Malcolm Glazer's other two sons, Kevin and Edward, and his daughter, Darcie, were appointed to the Manchester United board as non-executive directors.