A cabal of Britain’s leading businessmen met at the offices of Freshfields Bruckhaus Deringer, the law firm, yesterday to plot a way to make the dream of every Manchester United fan come true, by getting rid of Malcolm Glazer, the club’s reviled owner.
Fewer than ten City tycoons attended the first proper meeting of the Red Knights, a group of wealthy United fans who want to free the club from the grasp of the Glazer family, who have loaded the club with more debt than at any time in their history.
The Knights’ plans for a takeover bid are at an embryonic stage and it is not clear that they will ever be able to mount a successful offer. For a start, they have no way of forcing the Glazers to sell up other than to make the Americans an offer they cannot refuse.
One person who attended the meeting yesterday told The Times: “At this point, it’s just a bunch of guys who love the club and are trying to do a good thing by buying it. We really haven’t decided what to do yet. Nor how we can do it.” But for Keith Harris, the Knights’ founder and millionaire chairman of Seymour Pierce, the stockbroking firm, and a lifelong United fan, the meeting was a first solid step towards a Glazer-free future at Old Trafford.
Thousands of United fans, who sported special green-and-gold scarves in honour of Newton Heath, the club which predated United, in protest at the Glazers’ regime at the Carling Cup final last weekend, will be heartened by the developments. It is understood that the Red Knights have already spoken with the Manchester United Supporters’ Trust (MUST), which has indicated that it will support any bid.
It is possible at a later stage that supporters’ groups could even back a takeover offer by boycotting season-ticket sales. “The fans could hit the Glazers where it hurts — in their pockets,” a source close to the fans said, although a source for the Knights admitted there are no plans for such a boycott.
Also at the Freshfields meeting yesterday were Jim O’Neill, the head of global economic research at Goldman Sachs, the American investment bank, and Mark Rawlinson, a partner at Freshfields. Neither has the sort of money necessary to pay the £1 billion-plus asking price likely to be demanded by the Glazers — if the Americans sell.
But the involvement of the two men gives Red Knights credibility. O’Neill is a friend of Sir Alex Ferguson, the club’s manager, and has criticised the Glazer family for their recent £500 million bond issue. He is also a respected City figure — although it is understood that his bank is not involved with the Red Knights — and Rawlinson, meanwhile, has worked on some of the City’s biggest takeover deals.
The Red Knights have managed to keep most of their members’ identities secret until now, but it is understood that Paul Marshall, the chairman of Marshall Wace, the hedge-fund group, is also among the City businessman.
A source close to the group said the draft plan for a takeover bid would be to find around 40 individuals who put up around £20 million each. Then the Knights would borrow several million more to top up the offer, but the plan would be to keep debt to a minimum. Harris is said to be confident he can raise enough money and it is understood the Knights are looking outside Britain to find more rich backers.
The idea, if successful, would be to run the club for the fans rather than as a commercial venture. “They’re doing this for the love of it, not to make money,” another source said. “That’s not the idea at all. They just feel that the club is too important to be left in the hands of the Glazers.”
One person at the Freshfields meeting said that if the Knights are successful, the company would stay in private ownership, not returned to the public markets where it was traded until the Glazers’ buyout. “We’d definitely run it privately,” the source said. “There would be no market for the shares. There’s no point in going back to all that again,” said the source.
A problem is that the Glazers have said repeatedly that they have no interest in selling, and the recent bond refinancing suggests they still expect to own the club in 2017, when the £500 million bond expires. But one of the Knights told The Times: “There is a price at which everyone will sell. It just depends whether we can get to that price. And they don’t exactly look like comfortable owners at the moment.”
The highly secretive Glazers also face a problem in that the bond issue is traded on the New York Stock Exchange, which means they have to give detailed financial information about the club to investors every three months — a change from their policy to date. Meanwhile, the interest on the payment in kind (PIK) loan the Glazers use to finance the club also continues to mount and the debt will reach more than £700 million if the family allow it to reach maturity in 2017.
A source close to the Knights told The Times: “That’s what did it for the fans. They just couldn’t stand the idea that Sir Alex Ferguson wouldn’t have the money to buy new players. And if you look at the bond issue that’s what is going to start to happen.”
The Red Knights have no plans to change the club’s successful management team, while Finsbury, the leading City public relations firm who also advised United in 2005, has been lined up to advise the group.
Harris’s criticism of the Glazers has become increasingly vociferous in recent weeks. “I’m a huge United fan but the Glazers are playing with an icon of football, one of the most respected in the world, and it is in danger,” he said in a recent interview.
United’s first bond issue, launched at the beginning of this month, fell flat with analysts saying it had become one of the market’s worst performers this year. While the club easily managed to raise the £500 million investment the Glazers sought to get the club’s spiralling debts under control, the price of United’s £250 million sterling-denominated bonds tumbled to 93 per cent of their original face value.
“In a benign credit market, Manchester United is one of the worst performing bonds since the beginning of 2009,” said Suki Mann, a credit strategist in London at Société Générale.
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