£1Billion Buyout? That Makes No Sense
OK, I presume you all heard by now that according to the News of the World, a group of billionaires have prepared a plan to buy Manchester United for £1BILLION. The tabloid reports that the consortium, based in Bangkok, consist of six mega-rich Far East businessmen who are ready to put money on the table to buy out the Glazers.
That would mean the disappearance of the crippling and worrying debt and would increase our potency in the transfer market. Any fan's dream, surely? Well, the reality looks somewhat different to me.
First: we do not know whether the Glazers are prepared to sell. They would make some neat profit on their initial investment though and as they're struggling to refinance their PIK (Payment In Kind) debts they might be ready to listen to such a tempting offer.
So let's assume they would sell. The bigger question is that why would anyone want to buy the club right now? Because let's face it: you can't squeeze much more cash out of United at the moment, with an insane TV deal, a record sponsorship deal and very high ticket prices. We are struggling to sell out the stadium for Carling Cup and some Champions League games and there's a problem with the sale of corporate tickets as well, thanks to the economic crisis.
I'm no expert at economics but those who are predicted that the TV money will decrease and we really can't charge more for tickets. So any new investors coming in must face the fact that they are unlikely to make profits on their investment in the foreseeable future as the level of investment required is massive. Only if the businessmen in question are ardent United fans with no interest in making even more money this takeover has a realistic chance of going through. And very few businessmen are like that...
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