The Soccer Sale of the Century

American billionaire Malcolm Glazer's controversial bid for Manchester United

We sent Murdoch packing and gave Magnier and McManus a bloody nose. If Glazer wants a fight, we will give him one."
That was the reaction of Jules Spencer, chairman of the Independent Manchester United Supporters' Association, to the news that the American billionaire Malcolm Glazer is trying to buy Manchester United, very possibly with the co-operation of the club's two largest investors, JP McManus and John Magnier. It remains to be seen whether the fans will triumph. After all, it was the Competition Commission that saw off Rupert Murdoch last time, basically because of his interests in the British cable network, Sky TV. No such objections can be easily raised in relation to Glazer.
Glazer owns 19.1 percent of Manchester United, and Cubic Expression, the investment vehicle of Magnier and McManus, controls 28.9 percent. Thus they have 48 percent in all.
Under Stock Exchange rules, Glazer would, if the deal went through, then be compelled to offer the club's remaining shareholders the same price as he offered Magnier and McManus, if they sold their shares to him.
The whisper around the financial markets is that that price will be 300 pence a share, compared to about 250 pence before the present speculations started, a potentially tempting price.
That would net John Magnier and JP McManus, the Irish horse racing duo behind Cubic, a profit of 70-million pounds on their 29 percent stake. Cubic is thought to be holding out for a price of 310 pence. At that level, Manchester United would be valued at 812 million pounds.
Against all that, Glazer will have the Shareholders United; it runs some of the fans' stake in the club and its holding amounts to 1.9 percent. So not much of a majority there, one might think.
Yet taken altogether, small investors, read individual fans, own 18 percent. The significance of this is not that they could ever outvote a Glazer-McManus-Magnier combine, but that they could be an irritating minority for the American tycoon to deal with if he took the business off the stock market.
The key stake that he must get hold of is 75 percent. Once he has that, he can make any changes he wants to. But if the 18 percent hold firm, he will have very little margin for error, because if another 7.1 percent escapes his clutches, he will be short of that vital 75 percent. And, until he gets 90 percent of the shares he cannot emulate the Russian billionaire Roman Abramovich at Chelsea and compel small shareholders to sell to him.
The chances of the holders of the 18 percent being of much the same mind and willing and able to collude are probably surprisingly high. First, each small shareholding of a hundred shares, say, is not going to make or break the financial health of the holder. Who cares if their 250 pounds worth of shares are now worth 300 pounds? Surely that is not enough to make those individuals sell the soul of their beloved club?
Second, for those investors, owning a share of Manchester United is more an emotional than economic decision, so greed shouldn't motivate them. Third, they themselves have a say in the club.
Fourth, there are plenty of experts to consult and the story is sufficiently important for all the developments and the views of the fans' representatives to be well covered in the British national press. Small shareholders acting in informal concert is viable.
So the question is whether Glazer will proceed with his bid, knowing that this defending wall of small fans-turn-shareholders may, with a little help, prevent him taking the club private. If only Glazer could persuade the fans that Man U is safe in his hands.
The Manchester United board of directors - on the other hand - is likely to insist on a package of measures to protect fans, including a freeze on ticket prices, in return for agreeing to recommend an 800-million pound bid for the club from the American sports tycoon, Malcolm Glazer.
Roy Gardner, the chair of Manchester United, may also demand that Glazer creates a "fans trust" giving supporters a seat on the board of the privately owned company that will take control of the club.
The owner of the Tampa Bay Buccaneers American football club may also be asked to guarantee the rights of Old Trafford season ticket holders.
The primary duty of the Manchester United board is to achieve the maximum price possible for shareholders. But sources close to the club said that because 18 percent of its shares were in fans' hands, it also had an obligation to ensure that they were not disadvantaged by any sale to Glazer.
The sports tycoon caused controversy in Florida by raising ticket prices at the Buccaneers' stadium by 25 percent and moving season ticket holders to different seats in the ground.
It is widely believed that Glazer would undertake to put a "substantial amount of new money" into the club and boost spending on new players. As far as a price freeze was concerned, he "wouldn't rule it in or rule it out" at this stage.
Fans were unimpressed with the pledges from the Glazer camp. Sean Bones, the vice-chairman of the Shareholders United action group, described the plans as "propaganda and soft soap" designed to make a takeover more workable.
While the potential sale of Manchester United was the major talking point in the British media, a devastating report on racism in English soccer was published this week.
According to the report, racism in recruitment at the highest level of the soccer industry is still a major problem, the Commission for Racial Equality in Britain said earlier this week. Despite the large number of black players in top clubs, those who run the game are almost all white, according to a new report from the Commission.
The report found that less than one percent of positions off the field and - in board rooms, management and coaching staff - are held by non-whites, while less than two percent of supporters in the stands are from ethnic minorities.
And 75 percent of clubs have informal recruitment practices, meaning that "if your face fits, you get the job". There are no non-white members of the English FA board or the 92-strong English FA council and only one Premier League club reported having a single non-white board director.
The report also found that while black players predominate at every level of the game, there are hardly any Asian or Chinese players at any level or in any age group. The vast majority of professional soccer league clubs do not give their staff any training in equal opportunities, and in the Premier League only 32 percent of clubs trained their staff.
Trevor Phillips, chair of the Commission for Racial Equality in Britain, said: "Soccer's authorities and clubs are not taking racism seriously. They are clearly not doing enough to promote equal opportunities off the pitch and remove the barriers that prevent ethnic minorities working at all levels of the sport.
"And despite efforts by clubs and organizations, racism still remains a problem on the terraces and prevents black and Asian supporters going along to matches to support their teams."
He added: "It is essential that those in charge of the British and in particular English soccer industry realize that addressing racial equality is a necessity, not an option."

Publication Date: 2004-10-17
Story Location: http://tandemnews.com/viewstory.php?storyid=4517