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Soccer club shareholders urged to take Glazer's offer

The Manchester United board says it will sell its shares to the Bucs owner and encourages others to do the same.

By LOUIS HAU
Published May 27, 2005

After months of stiff resistance to Malcolm Glazer's attempts to acquire Manchester United, the board of the English soccer club raised the white flag Thursday.

In what amounts to a final capitulation to the Tampa Bay Buccaneers owner, Manchester chairman Sir Roy Gardner said the board plans to sell Glazer its shares in the team and recommended other shareholders do the same.

Gardner said nonexecutive directors, including himself, are expected to resign their posts soon. Gardner also revealed the board had failed to secure from Glazer legally binding protections for the team regarding future debt levels, player investments and other concerns.

In a letter to shareholders responding to Glazer's formal offer Monday to buy all remaining Man U stock, Gardner noted the Bucs owner's investment vehicle Red Football Ltd. owns 76.2 percent of the team, giving him the ability to follow through on his plans to delist its shares from the London Stock Exchange.

Gardner, who also is chief executive of the British energy company Centrica PLC, said once Man U returns to being privately held, minority shareholders may not enjoy the same level of protection afforded them as when the team was a public company. Gardner also reminded shareholders of Red Football's previous warning that those who don't accept the buyout offer are unlikely to receive the same dividend payments, if any, they had received in the past.

"In light of these risks," he said, "the Board has now unanimously concluded that, unless Manchester United Shareholders have strong non-financial reasons for wishing to stay invested in the Company, they should accept the Offer, as the Board intends to do with its own beneficial holdings."

The board holds 1.9-million Man U shares, or about a 0.72 percent stake. Red Football is offering to buy all remaining shares for 3 pounds ($5.50) each, valuing the takeover of the team at about $1.44-billion. The offer is open until June 13.

Whether Man U shareholders will heed the board's advice remains to be seen. Shareholders United, a fan organization opposed to Glazer, last week said it plans to continue buying shares for as long as it can. The group is hoping to ensure Glazer opponents have a large enough stake to mount a legal challenge to his plans to take the team private.

At the same time, Shareholders United is trying to establish a "Phoenix Fund" that it hopes will help finance the purchase of the team back from Glazer in the future. The group is encouraging fans selling their Man U shares to donate the proceeds to the fund.

The Man U board considered Glazer's offer fairly priced, but didn't support it initially because the acquisition was structured with more debt than it considered prudent for the team's financial health.

Gardner disclosed in his letter that these financial concerns prompted the board to seek from Red Football "a range of legally binding protections for the football club, its fans and any minority shareholders, including in relation to future levels of net debt, new player investment and transfers, team selection, Old Trafford (stadium), ticket prices and certain minority protections."

No such protections were secured. Gardner said the team's executive directors plan to meet with Red Football "regarding the management and ongoing operation of the football club and will in any event seek to ensure that transitional arrangements are managed in the best interests of the football club."

In his letter, Gardner explained the management philosophy that the board had pursued since Man U became a publicly traded company in 1991. The explanation sounded like an implicit critique of the direction it thinks Glazer is steering the team.

"The financial performance of a football club is closely correlated to playing performance," Gardner said. "When a football club is under financial pressure, some of the key assets which it can sell are its players . . . and, at a time of poor performance (on the field), such sales are likely to make playing performance worse."

As a result, Gardner concluded, "Too much (debt) could therefore drive a downward spiral in both team and financial performance."

Louis Hau can be reached at 813 226-3404 or hau@sptimes.com

[Last modified May 27, 2005, 00:39:13]