Glazer Ownership

Manchester United Football Club is an English football club based in Old Trafford, Greater Manchester. The club was formed as Newton Heath L&YR F.C., the works team of the Lancashire and Yorkshire Railway depot in Newton Heath, in 1878. The club split from the railway company in 1892 and remained under private ownership for almost 100 years, changing its name to Manchester United after a brush with bankruptcy in 1902.

The club went public in 1990 and was the subject of takeover bids from property trader Michael Knighton and Rupert Murdoch's BSkyB corporation before Malcolm Glazer's stake was announced in September 2003. By the end of the year, Glazer had increased his shareholding from 3.17% to around 15%, which he almost doubled in the year up to October 2004. His acquisition of John Magnier and J. P. McManus' 28.7% stake in May 2005 pushed his own up to around 57%, well over the 30% threshold that would force him to launch a takeover bid. A few days later, he took control of 75% of the club's shares, allowing him to delist from the stock exchange, and within a month, Glazer took 98% ownership of the club via his Red Football vehicle, forcing a compulsory buy-out of the remaining 2%. The total purchase of the club totalled almost £800 million.

However, the majority of the cash used by Glazer to purchase Manchester United came in the form of loans, much of which were secured against the club's assets, incurring interest payments of over £60 million per annum. The remainder came in the form of PIK loans, which were later sold to hedge funds. Manchester United is not liable for the PIKs. The PIKs are held by Red Football Joint Venture Ltd and are secured on that company’s shares in Red Football Ltd (and thus the club). If they are not repaid by 2017, the Glazers will almost certainly lose all their shares in Red Football Ltd (and the club) to hedge funds. The interest on these loans rolls up at 14.25% per annum. Despite this, the Glazers have not paid down any of the PIK loans in the 5 years they have owned the club. In January 2010, the club carried out a successful £500 million bond issue. As of March 2010 the PIKs stand at around £207 million. The club also has a gross debt of £520 million with £45 million in annual interest payments.

Manchester United fans opposed Glazer's takeover of the club, particularly once they realised the level of debt that the club would have to take on after having been debt-free for so many years. Since 2005, the Manchester United Supporters' Trust has been working on a way of returning ownership of the club to supporters; in 2010, they met with a group of wealthy Manchester United fans – dubbed the "Red Knights" – to discuss a billion-pound takeover bid.