Football

#GlazersOut – Analysis of Manchester United’s Fall from Grace

Image Source: weallfollowunited.com

[Author- Sarthak Sharma, student of Law at Jindal Global Law School]


Introduction

Manchester United is a football club based in Manchester, England, which competes in the top division of English football. They were nicknamed “Red Devils” due to their intensity of play and the dominance they asserted on English football, which is reflected in the fact that the club has won the most trophies (66), in English footballing history, under the tutelage of legendary managers like Sir Matt Busby, who was in-charge from 1945 to 1969 and Sir Alex Ferguson, who managed the club from 1986 to 2013. The turning point in the club’s long history came in 2013, when Sir Alex left the club along with the CEO David Gill, and ever since, the club has endured a torrid period devoid of major trophies. Fans, ex-players and critics, all of them have expressed their concerns regarding the current management and owners of the club- the Glazers family. Being majority stakeholders of the club, they have been under constant pressure due to the tough period endured by the club, as promptly noted by Mihir Bose in his 2005 book “Manchester Disunited: Trouble and Takeover at the World’s Richest Football Club”. Thus, after the departure of long-time manager Sir Alex Ferguson, Manchester United F.C. has gradually lost its identity as a dominant football club. This article analyses the argument that a change in ownership, management, and a complete overhaul of personalities will create a ripple effect, and will bring back the club’s “glory days”.

Issues Post 2013

The club has been one of the most dominant in English football, but this dominance has declined as they have failed to get their hands on the English Premier League Champion’s title for the last 8 years. Having won the trophy a record 20 times, it had been a common site for Manchester United fans to see the ‘Red Devils’ lift the Premier League title at their Old Trafford stadium almost every year. The club had never finished below 3rd place since 1991, and won the league title 13 times during this period. But the very year (2014) Sir Alex left his post as the manager, they stooped to a 7th place finish in the league. No league title has been won in the last 8 years now, and the club has also failed to enter the UEFA Champion’s League regularly. The closest they came to winning the title, was in 2017, but a gap of 19 points still persisted between the first and second places; it was not even a competition. The most recent title charge of the club also ended in second place, with city rivals Manchester City FC clinching the title yet again. Unsuccessful seasons year after year are only making the supporters increasingly impatient and worried about the future of the club.  

Under manager Sir Alex Ferguson, 38 trophies were racked up and the club became the most decorated in Britain’s history, but the club has started to lose its reputation of dominance due lack of other major trophies being won. It has suffered a dry period without major trophies in the recent 7 years, and has won only 4 major trophies. To put this into context, in 6 years prior to 2013, Man United won 12 trophies, including the league 4 times. Currently as of May 2021, the club is on a trophy-less streak of 5 years, as the last major honour came in 2016, under the Portuguese manager Jose Mourinho. The domestic and European dominance for which the club was renowned for, is no longer evident, as the continuous failure to win trophies clearly expresses.  

Post 2013, Manchester United has failed to catch-up with the success enjoyed by their rival clubs. Manchester United has 2 major rivalries in the top flight of English football: against Manchester City F.C and Liverpool F.C. Historically, the club has enjoyed an upper hand against the two teams in terms of trophies won and points racked up. But since the past 8 years, they have lost that advantage and are slowly being eclipsed by the two teams. Manchester City have won a record 13 trophies (as compared to United’s 4) and Liverpool F.C have collected more points than Manchester united, in that period. This contrast of success is making Manchester United the least relevant club amongst the 3, in terms of dominance asserted and trophies won.

The rubrics negating the ‘Top-six’ clubs of the English League have left Man United striving for a place against previously weaker clubs. The English Premier League has had a traditional ‘top 6’ group of teams which are the strongest of the lot and are the usual Champion’s League contenders. It historically comprises of Arsenal F.C, Tottenham Hotspurs F.C, Chelsea F.C, Manchester City F.C, Liverpool F.C and Manchester United F.C. The remaining 14 clubs are regarded as the ‘Mid-Table Clubs’ and the ‘Bottom Half’, depending upon their performances and league finishes. The league has witnessed the emergence of more competent clubs like Leicester City F.C, Wolves F.C, Everton F.C and Sheffield United F.C who, based upon their performances have challenged this norm of the ‘Top 6’. On the contrary, this emergence of more competent clubs is a threat to United’s dominant stature, as it might be eclipsed by the other clubs’ success: the most recent example being Leicester City FC becoming FA Cup winners in the 2021 season, after beating United in the quarter-final of the competition.

The Glazers’ Ownership

American business tycoon Malcom Glazer, the father of current owners of Manchester United Avram and Joel had initially begun accumulating shares of the club in 2003, after his sons advised him. The family completed the overtake by acquiring the majority stakes of the club through an intermediary investment company (Red Football Ltd.) in 2005, through the means of a £550m leveraged buyout. The process of this overtake is the reason behind Manchester United’s current debt of around £526 million, which shall be discussed subsequently.

To begin with, the takeover by Malcolm Glazer was financed through, as referred to as the ‘leveraged buyout plan’ previously. In short, they did not spend their own money to acquire the club, a fact which riled up the fans’ disapproval and anger towards the new owners as soon as the takeover completed. As the deal involved acquiring funds against (future) assets, which happened to be the club’s own assets, drawing mandatory interest payments amounting to an estimate over £60 million every financial year. Since the takeover, it has been universally reported that the club as a whole has incurred miscellaneous costs like interest payments and other kinds of fees, over £1 billion. In terms of gaugeable interest and dividend payments, Man Utd have the most expenditure, out of all Premier League clubs.  

The club listed some of its shares (around 10%) in the New York Stock Exchange (NYSE) in 2012, with an objective of raising around 100 million USD. The two-fold division of these shares had a dichotomy motivated by power retention, with the Class-A shares being sold to the public (who would not be eligible for regular dividend payment) and the other Class-B remainders being held by the Glazers (sole recipients of the dividends and reserving voting rights). Thus, the listing was a façade which led to Manchester United becoming the only club who pays their owners dividends, and the Glazer family holding supreme control over the club’s functioning.  

United’s current ownership structure comprises of the late Malcom Glazer’s children, with Joel and Avram Glazer acting as Co-Chairmen, Ed Woodward being the Executive Vice-Chairman, and the rest of the Glazer siblings being the Non-Executive Directors. As mentioned above, this dividend payment and interest expenditure has pushed the club into severe debt, with the fans or Class-A shareholder’s being practically helpless. The fans have retaliated by launching an anti-Glazers movement, demanding sale of the club or alternatively, the application of the German model- 50+1 ownership rule. This rule necessitates vesting of the majority voting rights and final decision-making powers with the fan-members of the clubs, with the commercial interest holders only having rights of suggestive nature. The British government, as of May 2021 has been exploring ways of introducing this model in the English football pyramid, which could be good news for fans in general. As far as Manchester United is concerned, most fans still prefer the club getting new owners instead of incorporating the 50+1 rule with the current ownership, although the latter seems like a more practical and realistic proposal.

Is #GlazersOut the only way forward?

The suggestion that a complete overhaul of personalities, management and ownership is the only solution to success can be countered with another argument, that a change at helm of the team can also lead to success. There are numerous examples of this happening- a manager comes in, revamps the whole squad and wins trophies – such is the case of German Manager of Liverpool F.C, Jürgen Klopp. He was appointed in 2015, when the club finished 6th and was trophy-less in 4 years. Klopp revolutionised the football they played, leading them to their first European final in his first year in-charge, and the Champion’s League final in his second. Although he lost both, the first trophy came in 2018 when he finally won them their 6th European Cup Title in 14 years. The rebuttal to this argument is simple, that the tale of success is fruitful, but lengthy. Also, results aren’t always guaranteed to come in. A smarter solution is a complete change of ownership and management. The tale of the French club Paris Saint Germain F.C is a perfect example to explain this point. The club was formed in 1970 and was not a dominant force in its domestic league or European competitions. It was purchased by The State of Qatar via Qatar Sports Investments, the shareholding organisations, in 2011, and they won their first league title in 19 years in 2012. The difference of time taken to succeed is evident and the more viable option is clear: a change of ownership guarantees success.     

Another claim against a change of ownership at Manchester United which is often made is that the Glazers have brought success off the field and economic profits to the club. Even though they might have failed to win many trophies on field, the off-field success has been impressive. Revenues have been consistently rising and Manchester United remains to be one of the most financially strong teams in the world, as noted by Sean Hamil in his journal paper. The credit largely goes to sponsorship deals and merchandise sales of the club. According to the Financial Times, Manchester United’s commercial income has gone from £117.6m in 2012 to £276.1m in 2018, almost doubled and this only goes on to show the competency of the current owners. Additionally, according to the Swiss Rumble, MUFC has a net-spent of roughly £1.0 Billion on players (purchases £1.4 B, £0.4 B sales), but the point to be noted here is that they have spent almost the same amount (£704 Million) on interest payments. Furthermore, only £185m has been spent on the infrastructure (Old Trafford stadium and Carrington training complex), with the stadium still receiving complaints of water leakages and rodent infestation.

Manchester United’s commercial acumen post the Glazer takeover has been impressive, but rival clubs have often outperformed them in these metrics too. Manchester City and Liverpool’s revenue growth (+£417M and +£370M respectively) has been more than United’s (+£336M), whilst Chelsea FC, Tottenham FC, MCFC, and Liverpool FC have all recorded better exponential increase in broadcasting income. United as a club are virtually being run on its own revenue, with the owners providing no investments from their own end, rather taking money out annually instead.

A simpler refutation of the aforementioned argument can be that on field success still eludes the Glazers and the club. Whatever the financial gains might be, the success of the club would still be measured through the trophies won and points collected, which is clearly lacking. Even the expenditure by the owners has been questionable, overpaying for player transfers, missing out on transfer targets, inadequate investments in the club infrastructure, and more. As Hamil points out, that the true stature of Manchester United F.C has always been based off its on-field dominance and accolades, the fans cherish the club as a football club, not a commercial asset.

Conclusion

In conclusion, all of the evidences and arguments only point to one viable solution to the miseries faced by Manchester United, a change in ownership. The application of the 50+1 rule could be a welcome change, but it would not extricate the club from its debt and the Glazer’s trap of extracting dividend from the club’s revenue. Numerous success models are available across the footballing world and success is not only guaranteed, it is certain that the quality of players brought in and the football played would be much better. The fans and critics can only be satisfied through winning trophies, and the Glazers family evidently seems to be inept at doing so. Ensuring that a competitive and capable playing squad is maintained, essential to ensure success on the pitch, and retaining a conservative wages-to-turnover ratio is crucial to a successful club. Renowned sports consultant Deloitte recommends a ratio figure of at least 60% is a disciplined approach to the wages-to-turnover ratio so that profit can be retained whilst guaranteeing expenditure on players’ wages and transfer fees, and even though the Glazers maintain a decent turnover, the expenditure upon world-class player acquisitions and appropriate wage bills are still a far cry. A strong recommendation would obviously be Middle Eastern Investors, who have a successful history in bringing success to clubs through their ventures, recent examples being Manchester City F.C and French Champions Paris Saint Germain F.C. As David Conn of the Guardian notes, The Glazers’ takeover of 2005 has since cost United an estimated amount of almost 1 billion £ in the form of interests, costs, dividends and other fees, but on the contrary, the Middle Eastern owners have spent nearly 1.3 billion £ on the club facilities and player transfers, as part of their strategy of building and maintaining a competent squad capable of challenging for major trophies. This example itself explains the effects well-wishing investors have upon taking over clubs, and Manchester United still being one of the biggest clubs in the world has plenty of potential to attract interested investors, as economic profit is virtually guaranteed. The fans of the club can only hope that potentially better investors can come their way and take the club out of its current misery.


*For any query, feedback or discussion, the Author can be contacted at [19jgls-sarthak.s@jgu.edu.in]

PREFERRED CITATION: Sarthak Sharma, #GlazersOut – Analysis of Manchester United’s Fall from Grace, SLPRR, <https://sportslawandpolicyreviewreporter.com/?p=1492> May 23, 2021.

*NOTE- The opinions and views expressed in this article are that of the Author(s) and not of SLPRR- the expressed opinions do not, in any way whatsoever, reflect the views of any third party, including any institution/organization that the Author(s) is/are currently associated to or was/were associated to in the past. Furthermore, the expressions are solely for informational and educational purposes, and must not be deemed to constitute any kind of advice. The hyperlinks in this blog might take you to webpages operated by third parties- SLPRR does not guarantee or endorse the accuracy or reliability of any information, data, opinions, advice, statements, etc. on these webpages.

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