£1.5bn or you can say good Knight! Glazers to stand firm over United sale

03 March 2010 10:12
The Red Knights planning a takeover of Manchester United will try to tempt the Glazers with a staggering offer despite claims from the owners that the club is not for sale.

One expert said that it could take a 'ridiculous' bid of up to £1.5billion to persuade the Americans to walk away from Old Trafford.

But a source close to the group of investors last night insisted the financial big hitters led by Goldman Sachs economist Jim O'Neill will not be put off easily, claiming that wealthy football fans from around the world are already pledging their support.

Sickened: The 'Green and Gold campaign' against the Glazer family's ownership was in evidence during the Carling Cup final at Wembley on Sunday 

The insider said the Red Knights have been deluged with interest from 'high net worth' individuals, adding: 'Lots of people have come out of the woodwork.

Fans are joining the website but other wealthy people have pledged support through Jim. It's very early days but this is a credible bid.'

A consortium put together in Thailand but funded by Chinese business interests could also lend their weight to the group, it has been rumoured.

The Red Knights confirmed yesterday they met in London on Monday, although plans to formulate a bid are believed to be some way off.

The Glazers have so far ruled out any deal, but the aim is to put together an offer the Americans cannot refuse.

The group, which includes influential figures Keith Harris, Mark Rawlinson, Paul Marshall and Manchester United Supporters' Trust president Richard Hytner, also hope that fans' support for their proposals and the green and gold campaign will persuade the Glazers to leave the club they have saddled with debts of £716m.

As well as taking on that debt, the Red Knights would have to give the owners a healthy profit on the £272m they put towards the £810m it cost them to buy United in 2005.  

Unity: Red Knights are urging fans to join the Manchester United Supporters Trust

According to Wyn Grant, professor of football economics at Warwick University, it could take £500m more than the £1bn the group were planning to raise.

'The fundamental problem for the Red Knights is that the club is not for sale,' said Grant. 'The valuation that the Glazers themselves have put on the club is £1.2bn. A price of £1bn would give them a return of about 25pc over five years, which they are unlikely to find acceptable.

'A vocal boycott by supporters is not going to fundamentally dentManchester United's business model. Unless someone made a ridiculousoffer of £1.5bn there is no guarantee that the Glazers would sell.'

A second route for the Red Knights would be to buy up the £500mbonds issued recently by the Glazers to delay their debt burden.

Bonds come with no voting rights but there are examples wherebondholders have exerted control at companies faced with financialcrises.

In a company failure, bondholders come before equity owners in recovering funds.

One advantage of the bond issue for the Glazers is that debts due tostart maturing in three years' time will now not do so until 2017 whenthe world markets are expected to have picked up, buying the Americansvaluable time.

The signs are already encouraging after the latest figures releasedyesterday show that United's turnover and profits were up for the sixmonths to December.

Turnover rose 19 per cent to £144.7m from £121.7m for the equivalent period in 2008.

The club's debt dropped from £538.1m to £507.5m and there wereincreases recorded in matchday revenues, TV money particularly fromthe Champions League and commercial revenue. 

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Source: Daily_Mail