Manchester Protests - Thoughts?

[Sam_Brown]

A week until the next game so thought this would be a good discussion to keep the board active.

Just been reading up on the Glazers and I didn't realise they effectively bought the club by essentially taking out a loan and saddling the club with the debt. I guess not a million miles away from our times under Gaydamak.

I certainly don't agree with some of the more violent actions yesterday but on the other hand when the owners don't listen to the fans and have essentially gone rogue what other recourse is there apart from non-violent direct action?

[New Forester]

They should have found a way to protest that didn’t lead to the postponement. The match should have been awarded to Liverpool.

Several hundred fans got inside the ground. Over 1,000 outside so less than 1,500? Only a small minority but a huge impact.

[Pompey Penguin]

Just spitballing here, but maybe this is the only form of protest left for fans of the biggest businesses. Clubs (and Sky and betting companies) say it's all about the fans, but in reality none of them care. What are fans to do? Refuse to renew a season ticket? There is a queue waiting to take their place. Refuse to buy a shirt? There are millions around the world that will. Maybe we have really got to the stage where all fans can do is disrupt games, block access to the ground for players and officials, whatever to prevent the games being played. Stop the game until the owners can't fund it any more, although I suspect the government would take action and the police get as aggressive as necessary to protect the owners' investment.

[Sam_Brown]

Just spitballing here, but maybe this is the only form of protest left for fans of the biggest businesses.

I agree. Can't help but feel we really are at a defining moment for football in this country. It's not just about the SL but parasite owners as a whole and the disconnect between the business side and the fan side.

I can't think of many times in history big changes were forced through by people protesting peacefully. On the flip side it's hard to condone people protesting violently. I think there is a fine line between direct action protesting and hooliganism. I imagine for most that line will depend on if you agree with the protestors or not. I don't condone the violence but I understand why it has happened in this case and agree with the underlying frustrations of the fans.

I suspect the government would take action and the police get as aggressive as necessary to protect the owners' investment.

Wasn't that that the primary reason for them originally in many places?

[Locky_McLockface]

Just been reading up on the Glazers and I didn't realise they effectively bought the club by essentially taking out a loan and saddling the club with the debt. I guess not a million miles away from our times under Gaydamak.

They used a Leveraged Buy-Out, rather like taking out a mortgage, but it's the club that is liable for the debt, not the Glazers themselves nor any of their other companies.

With Gaydamak, he needed to subsidise the club (as does Mansour, Abramovich et al) and did so by loaning the club the money. All the while he was prepared to do so, it wasn't a problem. When it became a problem was when he (or in fact Arkadi) needed the money back.

[Sam_Brown]

Just been reading up on the Glazers and I didn't realise they effectively bought the club by essentially taking out a loan and saddling the club with the debt. I guess not a million miles away from our times under Gaydamak.

They used a Leveraged Buy-Out, rather like taking out a mortgage, but it's the club that is liable for the debt, not the Glazers themselves nor any of their other companies.

With Gaydamak, he needed to subsidise the club (as does Mansour, Abramovich et al) and did so by loaning the club the money. All the while he was prepared to do so, it wasn't a problem. When it became a problem was when he (or in fact Arkadi) needed the money back.

Thanks for the info. The whole administration situation seems like a bad dream now but always there at the back of my mind when people are talking about the Eisners needing to pump more money into the club.

The Glazer situation does make you wonder how much more active Utd would be in the transfer windows if they didn't have to maintain the debts.

[Pompey Penguin]

They used a Leveraged Buy-Out, rather like taking out a mortgage, but it's the club that is liable for the debt, not the Glazers themselves nor any of their other companies.

As Locky suggests, this is not a problem in principle. If you buy Man. Utd. for £800M, but take out a loan on the club of £500M to allow yourself to do so, then this is part of the club's debts, and you have an asset that is worth £300M, and this will be reflected in the price when you try and sell it. Of course, you hope to increase the value during your ownership, whether by good management, media deals, sponsorship, etc.

As I understand it (admittedly mostly from the fans say so), the problem with Man. Utd. is that the Glazers have extracted tens of millions of pounds from the club every year for various salaries, fees, dividends and consultancy, whilst at the same time neglecting to invest in the infrastructure and (to an extent) the football side of the club. So they have recovered (and more) the money they personally put into the purchase and still have an asset they could sell. Even though that asset has depreciated in comparison to other PL clubs, such is the world of football and its skewed income from TV rights, etc., that the absolute value of the asset has increased. It is in the interests of the Glazers to remain owners all the time that they can extract more money from the club than the asset value goes down, and this is not likely to happen in the near future (unless the fans burn the ground down, or the government imposes some major governance and tax laws, or a similar catastrophic impact). Basically, the old rule that once you have money, it will self-generate more money, and you will have to do nothing at all for your wealth (apart from complain about taxes and bribe the ruling powers).

[Sam_Brown]

They used a Leveraged Buy-Out, rather like taking out a mortgage, but it's the club that is liable for the debt, not the Glazers themselves nor any of their other companies.

As Locky suggests, this is not a problem in principle. If you buy Man. Utd. for £800M, but take out a loan on the club of £500M to allow yourself to do so, then this is part of the club's debts, and you have an asset that is worth £300M, and this will be reflected in the price when you try and sell it. Of course, you hope to increase the value during your ownership, whether by good management, media deals, sponsorship, etc.

As I understand it (admittedly mostly from the fans say so), the problem with Man. Utd. is that the Glazers have extracted tens of millions of pounds from the club every year for various salaries, fees, dividends and consultancy, whilst at the same time neglecting to invest in the infrastructure and (to an extent) the football side of the club. So they have recovered (and more) the money they personally put into the purchase and still have an asset they could sell. Even though that asset has depreciated in comparison to other PL clubs, such is the world of football and its skewed income from TV rights, etc., that the absolute value of the asset has increased. It is in the interests of the Glazers to remain owners all the time that they can extract more money from the club than the asset value goes down, and this is not likely to happen in the near future (unless the fans burn the ground down, or the government imposes some major governance and tax laws, or a similar catastrophic impact). Basically, the old rule that once you have money, it will self-generate more money, and you will have to do nothing at all for your wealth (apart from complain about taxes and bribe the ruling powers).

Great post. Thanks. Sounds like you're almost describing asset stripping a company? Is that a fair comparison?

[Mr Dee]

Peaceful protest achieves nothing. If it did it wouldn't be legal.

[Pompey Penguin]

Great post. Thanks. Sounds like you're almost describing asset stripping a company? Is that a fair comparison?

Not really. In asset stripping you buy a business where some of the individual components are worth more than the total amount you had to pay for the business. You then sell the parts that have some value (totally more than you paid), until you are left with the parts that have negative value. At which point you declare the business bankrupt, wrap it up and walk away. Of course, whilst trying to hide the fact that this is what you are doing!

Football clubs are difficult because their major assets are either worth little in relation to the overall value of the business (property), are rapidly depreciating assets (players) or soft assets and hard to realise (media contracts).

[Sam_Brown]

Great post. Thanks. Sounds like you're almost describing asset stripping a company? Is that a fair comparison?

Not really. In asset stripping you buy a business where some of the individual components are worth more than the total amount you had to pay for the business. You then sell the parts that have some value (totally more than you paid), until you are left with the parts that have negative value. At which point you declare the business bankrupt, wrap it up and walk away. Of course, whilst trying to hide the fact that this is what you are doing!

Football clubs are difficult because their major assets are either worth little in relation to the overall value of the business (property), are rapidly depreciating assets (players) or soft assets and hard to realise (media contracts).

[Locky_McLockface]

Great post. Thanks. Sounds like you're almost describing asset stripping a company? Is that a fair comparison?

Not really. In asset stripping you buy a business where some of the individual components are worth more than the total amount you had to pay for the business. You then sell the parts that have some value (totally more than you paid), until you are left with the parts that have negative value. At which point you declare the business bankrupt, wrap it up and walk away. Of course, whilst trying to hide the fact that this is what you are doing!

Football clubs are difficult because their major assets are either worth little in relation to the overall value of the business (property), are rapidly depreciating assets (players) or soft assets and hard to realise (media contracts).

Not that this little detail stopped a certain Hong Kong-based Nepalese businessman from trying....

[Pompey Penguin]

Great post. Thanks. Sounds like you're almost describing asset stripping a company? Is that a fair comparison?

Not really. In asset stripping you buy a business where some of the individual components are worth more than the total amount you had to pay for the business. You then sell the parts that have some value (totally more than you paid), until you are left with the parts that have negative value. At which point you declare the business bankrupt, wrap it up and walk away. Of course, whilst trying to hide the fact that this is what you are doing!

Football clubs are difficult because their major assets are either worth little in relation to the overall value of the business (property), are rapidly depreciating assets (players) or soft assets and hard to realise (media contracts).

Not that this little detail stopped a certain Hong Kong-based Nepalese businessman from trying....

Good point Locky. I was thinking about Man. Utd. (etc.), but as you go further down the leagues, a club's ground becomes a bigger proportion of their assets, especially if it is in a city where property prices are high. Hence all the property developers getting involved a while back.