United Board Rebuffs Glazer - 31/10/2004

Manchester United's board has rebuffed Malcolm Glazer and ended discussions with him about his share offer. Chief executive David Gill said that the decision has been made because Mr Glazer's offer was 'overly leveraged' and would leave the club with too much debt. It is understoiod that Glazer would saddle the debt-free club with loans of between £300m and £400m. Taking the 7 per cent annual interest rate Arsenal will incur to finance the Emirates Stadium, United's repayments alone could amount to £28m a year against the background of a projected fall of £14m in media revenues this season. Although the Glazer family advisers deny this, an easy way of getting access to cash to finance the bid would be to sell Old Trafford and lease it back. United fans were pleased with the board's move as many of them had feared that some United directors wanted to sell out to Glazer. 'We put legitimate pressure on them and now the United family is united again' commented Nick Towle, chairman of Supporters' United. People close to the Glazer camp said the United board had abdicated its fiduciary duties by rejecting the proposal. Glazer now has to decide whether he has the appetite and financial firepower to launch a hostile bid, knowing it would be against the wishes of both the management and his future customers. In an editorial that epitomised the different logics of big business and the football community, the Financial Times tore into the United board's decision. The pink paper commented, 'The directors are interpreting their obligations to "the company" rather broadly, taking account of future investors, employees and creditors. Such appeals arouse the suspicion that they have lost sight of their prime goal of creating value for existing owners. If high leverage were a good reason for turning down a bid, far fewer deals would get done.'