How The Glazers Cashed In On Manchester United Stock

The Glazer Family took Manchester United pubic on the New York Stock Exchange on August 10th, 2012. Usually, when companies go public it is to raise large sums of capital to grow a business.

For the Glazers, taking Manchester United public only meant one thing – cashing in.

Manchester United’s Initial Public Offering

Manchester United was listed on the NYSE at $14.00 a share and the offering raised a total of $233M. What did the $233M get used for? Half went towards paying down existing debts and half went straight into the Glazer’s pocket. Manchester United fans had hoped that the proceeds would go towards eliminating the debt, but the Glazer’s preferred to take a $110M payday.

Manchester Uniteds Initial Public Offering Prospectus (Sec.gov)
Manchester Uniteds Initial Public Offering Prospectus (Sec.gov)

If the $110M payout was not enough, in the months leading up to the Public offering the Glazer family loaned themselves £10M from Manchester United football club and paid it off with a dividend distribution right before they went public. During the IPO, the Glazer Family took every action to ensure they lined their pockets over investing in the football club.

Red Football LLC and Secondary Offerings

When Manchester United went public, the majority of shares (83%) were owned entirely by Red Football LLC. Red Football LLC is a subsidiary of a trust established by Malcolm Glazer which was left to his six children when he died. This trust is what gave the Glazer family individual ownership of Manchester United.

The following diagram illustrates Manchester United’s corporate structure immediately following their initial public offering:

Diagram of Manchester United’s corporate structure post IPO in August 2012

During the restructuring for the initial public offering, Red Football LLC was issued 23M of Class A shares worth $322M and 120M Class B shares worth $1.68B. Over the next eight years, Red Football LLC owned and controlled by the Glazers sold almost all Class A shares. None of the proceeds from these secondary offerings went to Manchester United. As a result, the Glazers personally pocketed over $350M from the secondary share sales.

The most recent secondary offering from Red Football LLC was in 2017. They sold 4.3M shares for an estimated $74M.

Share Ownership Chart of Manchester United from the 2019 20-F filing (source Sec.gov)

Red Devil LLC distributed all Class B shares equally amongst each of the six Glazers in August 2017. As a result, the six Glazer children individually own the controlling shares of Manchester United – Joel Glazer, Avram Glazer, Kevin Glazer, Bryan Glazer, Darcie Glazer, and Edward Glazer.

The Glazers and Manchester United Class A & Class B Share Structure

The Glazers issued two different types of stock during the IPO, one for the Glazer family “Class B” and one for everyone else “Class A”.

A description of the share classes of Manchester United from their IPO filing is below:

Share Class Description From Manchester Uniteds Initial Public Offering Prospectus (Sec.gov)

In short, the Class B shares owned by the Glazers ensure that they will always have voting control of Manchester United. Each Class B share carries 10 votes compared to Class A shares which carry 1 vote.

Since the Glazer family own 120M shares of Class B stock combined, they have 1.2B votes (~97% control) compared to the 40M Class A shares outstanding which have 40M votes (3% control). Essentially, the different share classes is a way for the Glazers to cash in, while not giving up any voting control of the club.

One more benefit Class B shares hold over Class A is in a change of control event or takeover. If any Class B shares exist during a takeover then the Glazers automatically hold 67% of the voting power. That means the Glazers could completely cash out their 120M shares except for 1 and they would still have FULL control of any buyout of the club. This share structure gives you an idea of how far the Glazer’s death grip reaches over Manchester United.

The State of Manchester United’s Stock

Manchester United Stock Chart (Ticker: MANU)

Look no further than the current share price to get an idea of how the Glazers run this club. They went public at $14.00 in 2012 and the stock has gone nowhere. They pay a ~1.1% dividend, but again due to the share structure, this dividend mostly benefits the Glazers.

Commercial revenue grew from £90M in FY2012 to £275M in FY2019, but the stock stayed stagnant. If the club wasn’t structured like a Glazer family trust fund, the stock would not be in this position. How can you attract quality investors if you are sucking the club dry?

If the owners invested in the team and the future of this club, the valuation of the stock could be double. It is time for Manchester United to be rid of the Glazers — the club has serviced their debt ($20M+ per year), the club has paid their dividends ($20M-$30M per year), the club has paid their salaries ($10M+ a year), and the Glazers have cashed out via the IPO and Red Football LLC ($400M+) — Enough is Enough!

Us fans need to band together and make our voices heard online and hurt the Glazers where we can. Its a crime we have owners that prioritize paychecks over titles at Manchester United.

Glory, Glory, Man United,

John

Update: Manchester United’s Q4 financials come out in late September. We will be covering the results and updating our financial forecast for the club. Check out our latest financial forecast see the article below.

The Real Reason Manchester United Are Balking At £108M For Jadon Sancho

About the American Red Devils

Our mission at the American Red Devils is to create independent fan content – For Fans, By Fans. Unfortunately, part of that responsibility is to provide a check on the Glazer’s greed. If you would like to support our efforts, download our podcast or check out our online store here.

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