member loginThe only way out
Why the Glazers kept on going even though they couldn't afford it
So if they couldn't afford it and the plan is just pie in the sky, then why did they follow through?
Because they knew that pulling out would guarantee that they and they alone would lose. But by going forward they could actually minimise their own risk -- and leave the club on the hook.
Prior to the takeover, the Glazers continued to buy and buy and buy into the increasingly hot market for United shares. Even as much as a year before Cubic Expression sold out on 12 May 2005 (the act which cemented the takeover), the price of Manchester United plc shares had skyrocketed. The Glazers had paid a huge premium for their stake, and not only did they know it, the market knew it too. After all, even a club of Manchester United's stature doesn't just double in value over a two year period.
The truth is that Manchester United plc was valued at £260m (equivalent to £1 per share) at the time that the Irish stakebuilding started to artificially boost the price on the basis of mounting takeover speculation. The clever Glazers ended up effectively bidding against themselves as they shifted the share price higher and higher before launching their bid at £3 a share.
Indeed the more the Glazers acquired, the more the shares went up. Everyone was figuring the Glazers would launch a bid. So what have happened had they gotten cold feet? Simple. The bubble would have burst. All the run up in the share price would have been unjustifiable. The share price -- and therefore the value of the Glazers' holding -- would have plummeted. At that point, they would have been left holding the bag. And since they had already borrowed significantly to acquire their stake, they stood to lose a LOT of money.
The irony of course is that they actually reduced their exposure by following through. By reaching the 75% level, the Glazers were able to shift the obligation of their financing from their own backs onto the club's books. Yes - they borrowed even more, and saddled the club with the debt to ensure that the bankers went after the CLUB'S assets before they came after them.
And that's the story of how a family of 'avid soccer fans' who 'have nothing but the best planned' for our club managed to score themselves a big catch.
OK. Fair enough, you say. I realise that the Glazers' success would at best be a total longshot, and they more than likely can't do it. But we've always had problems with the management, haven't we? Why can't you just support the club. All you're doing is making the situation worse.
Copyright © 2007 MUST, the independent Manchester United supporters trust. All rights reserved.
We are the official trust for Manchester United FC, but please don't confuse us with the Glazer-owned United. Click here to understand what this means.