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Old 3rd January 2010, 18:52   #1
Duncan Drasdo
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Default Glazers chasing £600m bond issue - MUST response

MUST response to a report in the Sunday Times today that the Glazers are exploring a bond issue to address the threat of the increasing debt on the club.

Two questions spring to mind - firstly why are they interested in doing this?
Clearly for the Glazers they hope to reduce the interest rate on the current debt to reduce their repayments and no doubt the existing lenders (JP Morgan etc) would be delighted to shift the risk onto another lender. But why would any potential bond investor be prepared to take on this risk if the return is going to be less than the current lenders receive and now in an environment where the risk is clearly much higher than the time (pre-credit crunch) at which these loans were first negotiated? Sounds a great deal for the Glazers and their current lenders but what's in it for the bond investors? How can they get better security than the current lenders?

The second question is why now?
Is the financial situation for the Glazers as bad as recent speculation has suggested? Despite the extra income from TV and the huge ticket price rises they have been clawing back expenditure both at Manchester United (job cuts and more than 100m of transfer funds so far unspent this season) as well as at the Tampa Bay Buccaneers where fan discontent is starting to mirror that at Old Trafford. Is the situation much worse than we thought?

Furthermore numerous reports have highlighted a huge drop in demand for corporate matchday hospitality with facilities unsold or at reduced prices and this is also showing in the drop in demand for ordinary match tickets too. Even Premier League games are going on general sale and any season ticket holder will tell you how much harder it is to resell an unwanted ticket this season as the previously seemingly bottomless excess demand has evaporated. Of course these effects are yet to show in the financial figures and perhaps it is therefore seen as an opportune time to shift the debt onto other lenders before the true impact shows through?

However, whether they do manage to shift the debt onto other lenders the situation for United fans and our club will be little changed - weighed down by the millstone of the Glazers debt and with the supporters having to foot the bill through ever increasing ticket prices and reduced expenditure on players.

The Glazers have taken us from being a club that were the richest in the sporting world to now the most indebted. In the four years before the Glazers' takeover the Manchester United invested over £80 million in the form of players like Rooney and Ronaldo. In the four years since the Glazer takeover the turnover has doubled but, despite protestations to the contrary, independently published figures suggest the net transfer spend is now negative. We have to be thankful for the magnificent job the manager and his squad have done. Where would we be now without the success Sir Alex has managed to maintain on the pitch?

This is surely the time for the Glazers to exit and make way for a new investor interested in working with the supporters to build a stronger football club and business together. In the best interests of the club MUST is keen to explore that possibility with all interested parties.

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Duncan Drasdo
CEO, MUST - the Manchester United supporters' trust www.joinmust.org
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