Just how desperate are the Glazers?


Malcolm Glazer

Talk in New York of ‘directionalised buying’

First of all last year, the Glazer family tried Hong Kong and Singapore, neither of whom was dumb enough to bite at a deal where the shares had no power, and the company was buried under a dung-heap of Delaware debt.

So then they get to New York, and every respectable firm, almost all the unrespectable ones, and 100% of the crooked ones, say “You are guys aren’t for real, right?”

And eventually they get to Jefferies – which has to find some way to pay the salary bill as the most generous employer on Wall Street bar none – and decide they want twenty (count them) crisp Dollar bills per neutered share.

At this juncture, a hype campaign swings into action, and the next thing you know, apparently quite bright hacks are saying hey, there seems to be good demand out there.

But then in classic, bumbling, half-arsed Glazer fashion, reality intervenes – and the opening ‘range’ target gets slashed to a very narrow range, $14.

There’s an opening leap to 14 bucks 20, followed by a fairly immediate return to earth at….$14. And then the post-hype starts: United are now the highest valued football club in the world…higher even than Real Madrid! Wayne Rooney is playing for the most expensive club on the planet! Surely Van Persie will now come to Old Trafford! My Dad knew Matt Busby!

Take a step back and recall the ‘value’ of RBS the day after Freddie Badloss bought ABNAmro. On that day, The Slog said ‘this deal is more of a comment on the inadequacy of Goodwin’s reproductive gland than any kind of commercial sense’.

Take another step back and look at the debt of Real Madrid, and the success of Barcelona.

Madrid’s lillywhites have no, nul, zero debt. In spite of their massive spending, the club is not only profitable, but is making large profits year after year: 2007 €44 million, 2008 €51 million, 2009 €25 million and 2010 €31 million. That works out to over €150 million of profit in just four seasons. Real Madrid is the richest club in the world…and certainly the least indebted institution in Iberia right now.

Barcelona has dominated European and world soccer for the last half-decade. Why? Because at the right time it invested hugely in the best and most exciting players in the world. Thus, despite failing to bring any silverware home last season, Barça’s revenues hit a record €494.9 million ($602 million) in the 2011/12 season. They are, without question, the best team in the world at the moment.

So here we have United under the Glazers: not the best team in the world, or even the richest team in the world, but merely the richest football asset in the world….and the most indebted – thanks entirely to them.

Right up until the last gong of the bell, the Glazer family hired somebody to charge up the price immediately ater launch. But the sale charts show a gradually decreasing interest during the day. Research shop Morningstar estimated that at an $18 price, United would be selling for 110 times projected 2013 earnings. Even at $14, the shares are a Carpet-bagging in reverse.

Does the Glazer-owned, Gill-run club have the growth to sustain that sort of lofty valuation? No, it doesn’t  – no way. MUFC’s revenue is growing by about 11% a year, but if you use the company’s pro-forma figures for so-called EBITDA — taking out the effect of taxes, depreciation and interest — the company’s profits have actually declined every year since 2009. Morningstar estimates that the shares are worth about $10.

By the time this fiasco is over – and the Reds continue to unerinvest in the only real asset, player talent – as I posted two weeks ago, the Mun Utd IPO is going to make Facebook look like success at the speed of Light.

I wonder – has anyone else considered this? – is the Glazer family’s plan inspired by Max Bialystock? Have they secretly garnered 50,000 sub-prime folks with their eyes too close together in Delaware, and told them that United players are to appear in a production called Springtime for Mancini? And like, sorry guys – it bombed. At $1000 a punter, they’d trouser fifty million bucks – and no paperwork to disturb the IRS as they go about their business of blackmailing deserving bankers. It works for me. And listen: in Delaware, anything goes. This conspiracy theory could run and run. Sorry, I meant close after the first night.

Also at The Slog today: Exclusive: the final word on why Germany will leave the eurozone come what may