The Business of Football

Discussion in 'Manchester United Forum' started by B Cantona, Jul 17, 2010.

  1. Jul 17, 2010
    #1

    B Cantona Desperate

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    By Rood in conjunction with Bagsy Not In

    At Old Trafford, 2010 is more likely to be remembered for off the pitch going ons rather than for footballing reasons. The ‘Green and Gold’ campaign was launched and grew rapidly as many fans protested against the Glazer family due to worries over debt levels following a very public refinance deal.The Red Knights arrived with much fanfare and promised much but so far have failed to deliver the fan friendly takeover that supporters have been waiting for.
    Many fans are asking how we ever ended up with this situation of leveraged takeovers, foreign investors and multi-million pound bond issues?

    The story starts way back in the early 1900s when a group of local businessmen saved struggling Newton Heath FC from bankruptcy with an investment of just £500. The club was renamed Manchester United FC and changed status from a member owned club to a limited company.
    Under the chairmanship of brewer JH Davies, the club rose from Second to First Division and became national champions for the first time in 1908 - a couple of years later a site was acquired for a new stadium and Old Trafford was born on the banks of the Bridgewater Canal, a second title soon followed.

    [​IMG]

    After the death of Davies in 1927 the club encountered financial difficulties until being saved by Manchester entrepreneur, James Gibson, in the early 1930s. Gibson’s legacy was the appointment of a young Scottish manager, Matt Busby, just after the war in 1945. Following Gibson’s death, his son Alan inherited the club and became chairman overseeing a period of great success under Busby in the 1950s.

    In the aftermath of the Munich tragedy, a wealthy fan from Salford managed to fulfill his dream of becoming a club director and started buying up as many shares as possible – by 1964 Louis Edwards had taken a controlling interest in the club for an investment which valued the club at around £100,000. Initially, Edwards invested money into the club which resulted in a second wave of success for Busby and United become champions of Europe for the first time. However, Busby resigned a year later and the club’s fortunes took a turn for the worse.

    By the late 70s, the Edwards family business was struggling – Louis bought in his son, Martin, as director and he devised a plan to start making profit from the club. At the time, FA regulations limited the level of dividends that could be taken from all league clubs but Edwards bypassed these rules by way of a rights issue which bought investment into the club by giving all shareholders the right to buy extra shares and thus earn far higher annual dividends.

    While Louis was undoubtedly a United fan, his son Martin was more interested in how much money he could make with the shareholding he inherited upon his father’s death in 1980. First, Edwards Jr banded together with other club chairman and pressured the FA into relaxing laws which stopped club directors from taking salaries. He then began trying to cash in on his shareholding and is thought to have discussed a deal with media millionaire, Robert Maxwell, but they could not agree on a price.

    Edwards was disliked by the fans and was continually looking for a way out of the club, however he does deserve some credit for repeating history and taking a chance on a young Scottish manager who would bring the glory days back to the club. Finally in 1989, Edwards agreed a deal to sell the club for £20m to a consortium led by Michael Knighton who had already identified the huge potential of the Manchester United brand. The deal fell through but the club still implemented many of Knighton’s ideas and two years later floated on the London Stock Exchange with an increased valuation of £45m.

    [​IMG]

    Again FA financial rules had been ignored but the the very real threat of a breakaway of the biggest clubs meant the FA turned a blind eye and in fact welcomed the increased investment into the English game. Football had now officially embraced big business and this would go on to have a huge impact on the English game over the coming years.
    Many fans are thought to have bought shares at the time of initial floatation and they were rewarded as the share price steadily increased due to the formation of a breakaway league and the advent of large TV deals for clubs. The club prospered in the new Premier League with several title wins under the guidance of Alex Ferguson and by 1996, Manchester United were recognised as the richest sports club on the planet.

    In September 1998, Edwards and the board accepted an offer from Rupert Murdoch of BskyB which valued the club at nearly £650m, a huge increase from the original value at floatation just a few years earlier.
    Many fans opposed the sale and a group calling themselves Shareholders United Against Murdoch (aka Shareholders United and now MUST) formed to lobby against the takeover. In the end, the influence of the fan groups was minimal as it was government competition rules which meant the takeover was ruled against the public interest and blocked in 1999.

    Further takeover rumours and continuing success under the brilliant Ferguson, which culminated in an unprecedented ‘Treble’, sent the share price to all time highs and the market value of Manchester United PLC briefly broke the £1 billion barrier in 2000.
    However, the stock market soon took a nosedive and uncertainties over the future of the club following Fergie’s preannounced resignation sent the share price tumbling to only a third of its peak value. Many fans who participated in the original floatation are thought to have sold out during this period – some due to financial necessity while others sold out in protest against Edwards trying to sell out to Sky. Hindsight tells us that this was a bad move on the part of the fans and left the club vulnerable to the advances of business vultures.

    First to take advantage were Irish investors JP McManus and John Magnier, part of the so called ‘Coolmore Mafia’. They began buying cheap shares that had been offloaded by fans, private investors and Edwards himself. They were good friends with Fergie and it was thought that they would soon launch a takeover bid.
    But by 2003 Coolmore and Fergie fell out in a disagreement about a race horse – the bitter and very public dispute between manager and largest shareholder destabilised the club. Around the same time a US investor arrived on the scene and began hovering up all available shares. The issues off the field resulted in a relatively dark period for the club as for the first time since the start of the Premier League; United went 3 years without winning the championship.

    In late 2004, the Glazer family announced their intentions to buy the club but their initial approach was turned down by the board as it was deemed too aggressive. MUST also hoped to block the deal by encouraging fans to buy shares but unfortunately it was a case of too little, too late as nowhere near enough fans purchased shares to make a difference. Despite the boards’ reluctance to accept the takeover offer, the Glazers came back with an improved bid and the club was effectively powerless to stop it once Coolmore agreed to sell their stake to the Americans.
    By June 2005 Glazer had completed a £800m buy out of the club and another period of great success followed for the club with Fergie building yet another great team and the club becoming European and World club champions.

    Fast forward 5 years since the Glazer takeover and we have now had the a very public attempt from the ‘Red Knights’ to put together a deal to buy out the Glazers - but what is the club really worth today?
    The Red Knights themselves say £1 billion is ‘fair value’, Forbes give a £1.2m valuation based on revenues, and it is thought that Glazers are looking for offers upwards of £1.5billion before they even consider listening to any offer - their official line remains that the club is 'not for sale'.
    That means that in the space of just over 20 years, the value of Manchester United has risen from £20 million to over £1 billion, which is an incredible 50 fold increase - and as long as revenues and profits continue to grow, it seems the growth story of Manchester United still has some way to go ...
  2. Jul 17, 2010
    #2

    VoetbalWizard Banned

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    the fans had three opportunities it seems to take socio control of the club...before davies, after davies, and after gibson. Once edwards got it, i think the dream of fan ownership just became too hard to ever come to fruition.

    I wonder why fan ownership was never tried back then.
  3. Jul 17, 2010
    #3

    moses control

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    I have no idea either, yet.
    Lot's of reason, some being the idea of a collective was not as accepted, had lefty associations, and the ability to communicate to lots of people at the same time was very hard and in the hands of the few.
  4. Jul 17, 2010
    #4

    VoetbalWizard Banned

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    yeah i guess its a cultural/anglo-saxon capitalism thing.
  5. Jul 17, 2010
    #5

    kietotheworld Banned

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    That's a bit low IMO.
  6. Jul 17, 2010
    #6

    Rood nostradamus like gloater

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    Before Davies it was actually the original fan owned Newton Heath that went bankrupt - it was private investment that saved the club.

    Floatation in 1991 also gave all fans an opportunity to be shareholders of the club - the value of the club would have made it difficult to get 100% fan ownership, but only about 30% (about £10m to £15m at the time) was needed to make sure the fans had enough votes to block any potential takeover.

    Nowdays you would talking more than £250m just for a 25% stake - that is never going happen.
  7. Jul 17, 2010
    #7

    fredthered I want Peter Kenyon back

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    The fans have NEVER owned United.

    The club has never however, been owned by one person in its entirity, either.
  8. Jul 17, 2010
    #8

    Rood nostradamus like gloater

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    Correct on both counts - however Newton Heath was owned by the club members.
  9. Jul 24, 2010
    #9

    Wibble In Gadus Speramus

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    Brad: Why are you posting other people's blogs from your site? I believe that Niall gave you permission to post blogs and not carte blanche permission to post anything from the RR blog site.

    I know that common decency isn't your thing but you might have asked Niall's permission first.
  10. Jul 24, 2010
    #10

    Rood nostradamus like gloater

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    Wibble: Just to explain, I wrote this piece and planned to post it on both RedCafe and BagsyNotIn - however I do not have the ability to post anything on the blog here so asked Brad to put it on there.

    Also it is not an RR blog site, there are contributors from both RR and here.
  11. Jul 24, 2010
    #11

    Bearded but no genius Full Member

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    If you didn't have the permission to post something on here, Brad isn't the person to ask.

    Niall was extremely kind and generous in allowing Brad to post a link to that blog site when he posted his blogs, in spite of him just doing it anyway without asking first to start with.

    That kindness is being abused.
  12. Jul 25, 2010
    #12

    B Cantona Desperate

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    Good grief

    You wonder why the blog on here has died on its arse somewhat. I've stopped posting them on here because the mod attitude whenever I do it - writing stuff for no monetary gain in my spare time for the betterment of the site - is as if I've pissed on their mothers cornflakes. Was the same whenever I created tournaments and things, your attitudes really do stink at times

    Rood wanted to put something up on here that had also been published elsewhere. The original place of publication was referenced, as is the norm for any article on here, as Niall said it was ok to do. People have posted articles on others behalf on there before, but of course it's a huge issue when I do it. Sigh

    Can't you just read and enjoy the article, and be happy people are doing things to improve the site?
  13. Jul 25, 2010
    #13

    Elizabeth Manageress

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    Theres a bit of interest as to why the newer posters assume you are an authority on here though?TBF if you feel you're getting backs up with everything you do why not just lie low and post insted of getting involved in everything?.
  14. Jul 25, 2010
    #14

    afrocentricity Part of first caf team to complete Destiny raid

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    Cheers for the post Rood/Brad... good stuff...
  15. Jul 25, 2010
    #15

    B Cantona Desperate

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    Newer posters assume that?

    I'm sure you're all very quick to point out I'm not!
  16. Jul 25, 2010
    #16

    jdmufc Roboheart

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    this could have been dealt with via pm and not in the thread as its now quickly getting de-railed from what is a very good article!!




    not that i think there is much to be dealt with, apart from old wounds not fully healed yet.
  17. Jul 25, 2010
    #17

    TheMancRedDevil Banned

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    I don't know what all the controversy is about because it's before my time on here but that's a great article.

    It really is incredible to think that United could have been purchased just 20 years ago for around the same amount that just one half-decent player costs today isn't it?
  18. Jul 26, 2010
    #18

    Wibble In Gadus Speramus

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    I have no problem with you blog post mate. Looks good. I just have a problem with Brad doing what he wants when he wants without having the decency to ask Niall permission. I'm also sure that Niall would be happy to give you blogging permissions based on the article.
  19. Jul 26, 2010
    #19

    Wibble In Gadus Speramus

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    PMs have been used in the past. It doesn't work.
  20. Jul 26, 2010
    #20

    MrBurns Full Member

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    Good article Rood.

    Brad you are a naughty boy.
  21. Jul 26, 2010
    #21

    AgainstAllOdds Banned

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    Brad doesn't answer PM's, because not everyone can see them.
  22. Jul 26, 2010
    #22

    topper Clown

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    :D perceptive
  23. Jul 26, 2010
    #23

    B Cantona Desperate

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    You should point out that you've explicitly stated you won't read or respond to any PM's I send you. A moderator of this site

    And I'm the one with a crying baby avatar...
  24. Jul 28, 2010
    #24

    Wibble In Gadus Speramus

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    I don't even open your PM's any more because I prefer it if you call me a cnut in the open.* Even if I did it would make no difference, apart from wasting even more of my time. You do what you want when you want anyway.

    * I prefer you don't do it at all so I don't have to put up with the crying when you get infracted
  25. Jul 28, 2010
    #25

    AgainstAllOdds Banned

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    Wibble doesn't open PM's, because not everyone can see them.
  26. Jul 28, 2010
    #26

    esmufc14 9 Pages of infractions

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    The first joke wasn't funny.
  27. Jul 28, 2010
    #27

    AgainstAllOdds Banned

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    It's not a joke, it's a statement, on both counts.
  28. Jul 28, 2010
    #28

    Wibble In Gadus Speramus

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    The two aren't mutually exclusive. In my case at least.
  29. Jul 28, 2010
    #29

    Wibble In Gadus Speramus

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    I open or would open PM's from many thousands of members. Just not from one, Brad, because past experience has taught me that it is a huge waste of my valuable time with more than a passing chance of being called a cnut. The later I can live with or deal with if neccesary. The former I can't or rather won't. Or rather I said I wouldn't to stop him wasting my time. And it worked.
  30. Jul 28, 2010
    #30

    jdmufc Roboheart

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    can we put this to bed now??

    it´s childish, and ruining a decent blog.
  31. Jul 28, 2010
    #31

    Sonny Feehan Full Member

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    a couple of years later a site was acquired for a new stadium and Old Trafford was born on the banks of the Bridgewater Canal,

    When did they move the canal or is my memory shot?
  32. Jul 28, 2010
    #32

    B Cantona Desperate

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    You'd think I'd been spamming Wibble's PM box with hate mail...

    entirely untrue, but he has the agenda he wants to push on here, so be it
  33. Jul 28, 2010
    #33

    topper Clown

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    ffs stop whining you don't like it then walk - you don't want to walk then belt up

    In the years I've been with the caff only one other person has been given more chances to stay in the caff than you. Virtually every other poster would have been kicked out by now but you survive. So the Admin/Mods are treating you better than most but you still moan that you're being hard done by

    Grow up grow some cojones and then decide whether you really want to be a member of this forum or not
  34. Jul 28, 2010
    #34

    Boss Melodramatic, attention seeking space-attacker

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    shit.just.got.real.
  35. Jul 28, 2010
    #35

    B Cantona Desperate

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    Topper is my shadow, he has an odd unhealthy fascination with me
  36. Jul 28, 2010
    #36

    bazalini The Baz Man - He made us laugh 2000 - 2012

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    Who was that Topper?
  37. Jul 28, 2010
    #37

    BAMSOLA Has issues!

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    Tommy.
  38. Jul 28, 2010
    #38

    Bearded but no genius Full Member

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    And yet he's absolutely spot on.
  39. Jul 28, 2010
    #39

    B Cantona Desperate

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    Is he balls. What have I done that's so worthy of getting the axe?

    Things like this are stupid and unnneccesary, and the feedback I get is that it never reflects particularly well on you guys and the way you're running your ship. Just appreciate the fact some posters are doing something to try and improve the site, try joining in by commenting on the article and giving your thoughts perhaps?
  40. Jul 28, 2010
    #40

    AgainstAllOdds Banned

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    This is the problem Brad. You think it's your duty to make this site better because you think it isn't.

    Reality is that no one wants your opinion on how things should be run, because they like to do it their own way, that's why in your head there's a conflict.

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