When Manchester United announced last November that the board of directors were “commencing a process to explore strategic alternatives for the club”, many people believed the end of the Glazers’ 18-year ownership was nigh.
Almost a year later, that process may come to a close with the family still in majority control of the club, only with Sir Jim Ratcliffe’s INEOS holding a minority 25 per cent stake and taking responsibility for sporting decisions.
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That would not represent the immediate clean break from the Glazers many supporters had hoped for, something that was an option via the rival Qatari bid from Sheikh Jassim’s Nine Two Foundation for full ownership.
An INEOS minority stake would be a start though and, as part of talks, Ratcliffe has discussed a mechanism to eventually buy the majority of shares and complete a full takeover. If it is not the end of the Glazers’ ownership, perhaps it is at least the beginning of the end.
Why are many United supporters eager for the Glazer family to sell up? You only need to look at the debt amassed, the interest paid out, the dividends disbursed and the money spent in the transfer market to find the answers to that question.
Debt — £725m ($902m)
United’s most recent set of accounts dated up until the third quarter of 2022-23 put the club’s gross debt at £725m.
That is the highest it has been since 2010 when the Glazers carried out a major restructuring of the club’s finances in order to bring the cost of their borrowing under control, and is up from £636m at the end of the 2021-22 season.
That increase is largely due to United borrowing another £100m last season as a drawdown from their revolving credit facility.
As the majority of United’s debt is denominated in U.S. dollars, fluctuations in the exchange rate also affect how it is reported when converted to British pounds sterling.
The dollar’s strength against the pound means United’s $650m principal debt was worth £521m at the end of March compared to £489m at the same time last year, even though the actual amount of money borrowed was unchanged.
Why don’t the Glazers just pay all this debt off? Well, for starters, the club do not have the money at hand to do so.
United’s net debt — borrowings minus cash reserves — currently stands at £651m, the largest it has ever been under Glazer ownership due to a diminished amount of cash in the bank.
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Before the Covid-19 pandemic hit, United had healthy cash reserves of £308m. That mountain of cash quickly became a molehill, falling to £52m as the club began to grapple with the realities of operating under lockdown and playing behind closed doors.
United were disproportionately affected by the closure of stadiums due to Old Trafford’s size, meaning larger losses of matchday revenue than their Premier League rivals.
The club began to replenish their cash reserves as lockdown eased and fans returned to Old Trafford, but the £74m in the bank at the end of 2022-23’s third quarter was a long way off the pre-Covid cash pile.
Yet even if the Glazers could wipe out the debt, would they? United’s indebtedness has always been a driving factor behind the opposition to their ownership — ever since the 2005 leveraged buyout left the club over £600m in debt after its first year — but the family themselves have never shown much interest in running the club debt-free.
At his first appearance at United’s fans’ forum in 2021 following the collapse of the European Super League project, Joel Glazer said: “We think we have a very comfortable position when it comes to this. We have debt but a lot of other clubs do have debt as well.”
Interest payments — £747m
The Glazers are at ease with the level of debt saddled onto the club because they are also comfortable with how much it costs to service this borrowing through interest payments.
That has not always been the case. During the first few years of their ownership, United were paying eye-watering interest rates of up to 16.25 per cent and annual payments averaged around £46m.
Things have been more manageable in recent years. United’s interest payments have remained at a relatively consistent level since 2016, generally costing around £20m each season.
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However, 2022-23’s third-quarter results reported £25.1m paid out in interest — the most in eight years, with still another quarter to go. When the full-year accounts arrive, United will have paid more in interest last season than in any since the 2014-15 campaign.
When Joel Glazer addressed the matter of interest payments at that fans’ forum in 2021, he was asked whether impending inflation would lead to an interest rate hike that could have an adverse impact on the club.
“We pay a very low interest rate, mostly fixed-interest debt,” he said. “So, if interest rates went up, it would not affect us.”
The key word there being ‘mostly’. Of their $650m principal debt, United pay fixed interest rates on $425m but variable rates on $225m. Variable rates also apply to drawdowns from the revolving credit facility.
The club is able to make use of interest rate swaps — converting variable rates to fixed rates — to manage this risk but there is no hiding the fact that higher rates globally mean higher payments for a business in United’s position.
In total, the club have paid around £747m in interest payments since the 2005 takeover. That amount will keep climbing for as long as United owe money — all because the ownership needed to borrow to buy the club in the first place.
Dividends — £166m
Dividends are another controversial aspect of the Glazers’ ownership.
United began regularly paying out dividends seven years ago and have steadily rewarded shareholders with an average payment of £22m each season — typically with one instalment in January, then another in June.
Including a one-off £10m payment at the turn of the last decade, the club have paid out a total of £166m in dividends since the 2005 takeover.
Anti-Glazer supporters have two problems: firstly, United are the only Premier League club to pay out regular, significant dividends rather than reinvesting this money into the club.
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But more importantly, the vast majority of this money is paid to the Glazer family themselves — given their 69 per cent shareholding in the club, with the other 31 per cent held by multiple other stakeholders.
The Glazers have previously defended their policy of paying out dividends by arguing that their stewardship of United has set an example for others in the football industry to follow.
“I know this is a subject that a lot of people have a lot of different views on, but when we take things and look at things as a whole, we think Manchester United is a very well-run club,” Joel Glazer told supporters in 2021.
“We think clubs throughout football could take a look at us and there’s a lot of good to be seen when it comes to some of these things that are controversial.
“We’re able to spend with the top clubs throughout Europe, whether it’s wages or transfer fees; we’ve been able to keep our ticket prices low, we’ve not increased them in over 10 years; we’re able to pay a dividend but it’s a modest proportion of our £500-600m of revenue — it’s less than three per cent of that.”
United would also point out that paying dividends creates an incentive to run the club profitably and in a financially disciplined manner.
However legitimate and convincing you may or may not feel those arguments to be, it appears they are not being made at Old Trafford anymore.
In November last year, for the first time since 2016, United’s board of directors chose not to approve a dividend payout to shareholders — a decision which was in part down to the significant investment in the playing squad the previous summer.
Transfer spending – £2.1bn
It is not uncommon for fans of United’s rivals to point out that despite the widespread anti-Glazer sentiment among supporters, the club have consistently spent heavily in the transfer market over the course of the past 18 years.
That is a simplistic argument, which overlooks the costs the club incur through the Glazers’ chosen ownership model, but it is undeniable that United have been more than competitive in the transfer market even while losing money elsewhere.
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United’s most recent set of books show a £235m spend on player registrations up until the end of March, compared to £147m at the same point during the previous year.
Manager Erik ten Hag was backed significantly during his first summer transfer window in charge, with Lisandro Martinez, Antony and Casemiro all signed at significant expense.
Meanwhile, the cost of this summer’s major signings — Mason Mount, Andre Onana, Rasmus Hojlund and the loan for Sofyan Amrabat — will be counted in United’s quarterly results over the coming months.
Indeed, if anything, overspending has suddenly become more of an issue than underspending.
In July, United were handed a €300,000 (£257,000, $320,000) fine by European football’s governing body UEFA for a minor financial fair play breach during the 2022-23 season and there are concerns they could breach the Premier League’s own break-even test.
The Glazers have overseen a total outlay of £2.1bn on players since their takeover, of which £1.7bn has come over the past decade — enough to rival the Premier League’s other big spenders Manchester City and Chelsea.
Yet whereas City and Chelsea have won eight Premier League titles between them over the past 10 seasons, United have not been crowned champions once.
That, perhaps more than anything else, calls into question the Glazers’ stewardship of the club.
Whether frittering it away on interest payments, dividends or players who do not justify their price tag, it is not necessarily a question of how much money they have spent over the past 18 years, but how they have chosen to spend it.
GO DEEPER
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(Top photo: Laurence Griffiths/Getty Images)
