How the Glazer family have milked debt-ridden United for millions
Lurking in the full, heart-sinking detail of the Glazer family's proposal to borrow £500m, a partial replacement for the £700m debts their takeover has loaded on to Manchester United, is a page documenting the millions United have paid out to the family members themselves. None of the Glazers appear to have taken a salary out of the club since that May 2005 takeover, which United fans bitterly opposed and which has since cost the club more than £325m in interest.
In those three and half years, ticket prices have almost doubled at Old Trafford, where previously they were restrained to cater for the regulars at the Lou Macari Fish Bar, as well as the prawn sandwich consumers.
The MU Finance plc prospectus, launched in the City yesterday, sets out the fortune the Glazer family have reaped from the club they borrowed £540m to buy. From 1 July 2006, in five separate payments, a round total of £10m was paid in "management and administration fees" to companies affiliated to the Glazers. Under the new bond issue, the family is entitled to be paid up to £6m by United in management and administration fees.
On 30 June last year, United entered into a consultancy agreement with SLP Partners, "a company related to certain of our ultimate shareholders", to pay up to £2.9m. On top of that, on 19 December 2008, each of Malcolm Glazer's five sons and one daughter, all of whom are directors of Red Football Limited, each personally borrowed about £1.66m from the club, a total of £10m.
Added together, the management fees, consultancy agreement maximum and the £10m the six family members actually borrowed from United make a total of £22.9m paid to the family and their affiliated companies in three and a half years.
No explanation was offered yesterday for these fees, or for why the Glazer family felt the need to borrow £10m from Manchester United. The Glazer family's official spokesman, who is responsible for discussing United's financial affairs, declined to comment.
Duncan Drasdo, chairman of the Manchester United Supporters Trust, was more forthright. "Now we know that as well as their takeover imposing a huge debt on the club, and the massive interest payments United have to service each year out of the club's ticket and other income, the Glazer family have paid themselves many millions of pounds personally," he said. "The tide is turning at Old Trafford as fans see how much the takeover has cost, the increased ticket prices and the failure to invest in the team despite £81m received from selling Cristiano Ronaldo. We do not want the Glazers to refinance the massive debts they have brought to the club — we want them to go."
The accounts released yesterday were for just one company, Red Football Limited, in the thicket the Glazers have built around the Old Trafford crock of gold. The figures showed the net interest for the year to 30 June 2009, on the £514.5m debts loaded on to that company, was £42m. That, then, soaked up more than half the galactic fee Real Madrid are scheduled to pay for Ronaldo. Another United company records the £175m also owed to hedge funds, at 14.25% interest — a charge in 2008-09 of £25m.
Sir Alex Ferguson said last week that the Ronaldo money is available to him, and he had "absolutely no issue at all with the club's finances". Yet the £81m took United from a thumping, multimillion-pound loss it would have recorded, into the £26m profit being highlighted to the City yesterday.
It is, quite simply, impossible to sustain the argument, to intelligent supporters stumping up their hard-earned cash for tickets at ever-increasing prices, that the £700m borrowings the Glazers have imposed, and £67m of interest payable last year, is having no impact.
City sources were saying yesterday that United's sheer size, income and dedicated following makes the bond issue an attractive enough offer – despite the "high degree of risk", including a possible fall in success, decline in crowds and uncertainty over who will replace Ferguson.
The fees to be earned by the bankers and professionals who have made this all possible is £15m. By the end of it, the Glazer family may be able to replace £500m they have borrowed with a different £500m borrowed on slightly less terror-inducing terms. But Manchester United, formerly the proud, rich, football behemoth of the Premier League, will still be laden with the extraordinary debts of a takeover which nobody wanted, except for seven members of a family in Florida, and their very well-paid advisers.
