By Paul Kelso 8:40PM GMT 02 Feb 2011From the Telegraph Online.
Delaware is rated the most secretive financial location in the world, and the change means that it will be even harder for supporters and media to establish the implications of the club’s corporate structure.
The most pressing issue concerning Manchester United’s highly-mobilised fanbase is how the Glazers managed to clear £249.1 million of payment-in-kind (PIK) loans that had been incurring interest at more than 16 per cent before it was abruptly paid off in November last year.
Delaware’s secrecy rules mean that the directors, officers and shareholders of the new company are unknown, as is the source of the money used to repay the PIKs.
The PIKs were controversial because they were secured against the Glazer family’s shares in United’s holding company, meaning that ultimately the club could have been passed to the hedge-fund lenders in the event of default.
The Glazers have declined to say how they paid off the PIK loans, and whether any debt incurred to do so is still secured against the family’s shareholding in the club or related entities.
Financial analyst Andrew Green, who blogs on football finances as Andersred, said the move suggested the Glazers were trying to obscure the source.
“It is almost as if the Glazers are trying to keep information about the PIK repayment secret,” he wrote. “Naturally we can’t ask the Glazers anything about this as they won’t talk to the fans and their employees in M16 don’t appear to know. In my view that is not how the biggest football club in the world should be managed.”
US-based sources have suggested that the Glazers have taken a new loan at a cheaper rate to clear the PIKs rather than turning to third-party investors or using personal cash. It is unclear what security they have offered against the loans, and with United apparently their most valuable asset there remain concerns that the club revenues could still be required to service the loans.
According to UK regulatory filings lodged with Companies House the new Delaware company, Red Football LLC, now owns 100 per cent of the shares in the club’s UK parent company Red Football Shareholder Limited (RFSL).
RFSL was the vehicle by which the PIKs were paid off, but is now hidden behind the new structure in Delaware.
Last November two new shares in RFSL were issued at a combined value of £249m. RFSL then bought two shares in its subsidiary Red Football Joint Venture, which owned the PIKs, and the money was used to pay off the loans.
Manchester United and the Glazer family declined to comment on the changes, but a spokesman said the Glazers remain the ultimate owners of the club.
I don't have a dreamy idealised view of the past. I don't look back at the way football was being run prior to PLCs and Russian, Arab and American corporate raiders sailed in with their skull and cross bone flags flying. I remember United being owned by the Edwards family, City having old Mr Alexander in charge. But they, and the footballing authorities of the day, ensured that football clubs were sports clubs, first and foremost. They genuinely loved the clubs and, although not perfect, knew they needed the local communities behind them if the club was to progress.
I recently spoke to a multi-millionaire who owns one of our bigger clubs. He hates football and only attended two games at his club last season. He left both at half-time, bored. Can he really have the interests of that club at heart?
Did the Arab prince who owns Manchester City wake up every Sunday or Thursday of his life desperately wanting to know how City had got on the night before against Stockport County or Gillingham? I couldn't resist that one. Did the Glazers go to their American football club's games with little radios glued to their ears listening to United's games on the BBC World Service praying that one day they would own the club?
The Premier League, Premiership or whatever it's branded as today is a mirage. 'Customers' are paying an arm and leg to watch mediocre football because, let's be honest, take away the hype and the product is not brilliant. Witness the empty seats in the last round of the FA Cup. Manchester City, the world's richest football club could only muster 27,000 fans in the FA Cup against Leicester. Witness the empty seats at last night's games. A friend of mine was amazed that she could buy a ticket at Anfield for Liverpool playing at nearby Blackburn. Not only were they on open sale but over 1000 weren't even sold.
Last week I heard the depised David Gill, CEO of Manchester United, refer to United as "the biggest franchise in the world". So there we are, in the eyes of the people who run United, up there with KFC and McDonalds. It made me sick.
Since 2005 I haven't stepped foot in a professional football ground. Like thousands of others I now follow FC United. Yes I sometimes get pissed off with certain elements of FC United, mostly the politics, but that's what happens when a group of idealists get together. I know others who left United in 2005 when the Glazers arrived but are now following their own local non league clubs. And I doubt that any of us would ever go back to the professional game.
To me the ones who still pay to watch top flight football are mugs, but I still can't bring myself to call them traitors because I know and understand why many thousands of genuine fans just can't walk away from their clubs. Likewise I think the genuine fans understand why we have walked away from top flight football.
The ones who call us traitors and turncoats are invariably the plastic fans who jumped on the football bandwagon when Sky and the PLCs bought English football's soul. But don't worry, they'll be away from football when the hype fades and another sport becomes the cool thing to become a customer of.
Just read the article above by Paul Kelso again. Then give it a bit of thought.
You might also like to read The Beautiful Game? by David Conn. He might be a City fan who writes for The Guardian, but if you have any interest in football his book is a must.