This blog is primarily about the financial affairs of Manchester United Football Club and the Red Football group of companies of which it the key part.
Manchester United was taken over in 2005 by the Glazer family of Tampa, Florida. The transaction was a "leveraged buyout" of Manchester United plc (which was at the time quoted on the London Stock Exchange). "Leveraged buyout" means that United was acquired largely with debt, debt secured primarily on the football club itself.
The takeover was hugely controversial at the time it happened and was opposed not only by supporters but by the management of Manchester United plc itself.
Since 2005, the worse fears of supporters and commentators who opposed the takeover have been proved correct. Ticket prices have risen very significantly, pricing many traditional supporters out, transfer budgets have been reduced to levels way below what a club of United's size and profitability should be able to afford, the new owners have failed to communicate properly with supporters and finally, in January 2010 it became clear without any doubt (following the announcement of a £500m bond issue) that the Glazer family are using the club as their personal piggy bank.
Too often, discussion and information on football finance is poor and ill informed. With a few honourable exceptions, too many sports journalists don't understand finance and too many business journalists don't care about football. This blog aims to help correct the information gap by providing information and commentary on what is going on at United.
I am a Manchester United season ticket holder as well as being a fund manager in the City of London with 15 years experience of investment analysis. This means I am over reliant on Virgin Trains but also that I have been amazingly privileged to see my team achieve things in the last twenty years that most football fans can only dream of.
If you hadn't guessed I am opposed to the current ownership and financial structure it brings. I believe that the disclosure made in the 2017 Senior Notes (I'll call them "bonds" for ease) prospectus shows beyond any doubt that the claim that the Red Football Joint Venture Ltd Payment in Kind securities ("PIKs") are the Glazer family's problem and have no impact on Red Football Ltd and its football club subsidiary is totally false. You can read about what the prospectus shows here, and I'd say it was a good place to start if you are new to the subject.
The bond debt is designed to free surplus cash and capital from the club to be funnelled to Red Football Joint Venture Ltd to pay the PIKs.
A final point, I am often accused of not understanding what a leveraged buyout is and how it works. The opposite is true, I know exactly what they are and how they work (I've even invested in some - in normal commercial sectors). What I am trying to do is explain it to people who don't know. Because being legal and "normal business practice" should not be the only test of what we allow to happen to organisations in which people of all backgrounds invest such emotional energy and which are social and communal entities and not just businesses.