TAKEOVER ROUND UP PART 2

Last updated : 10 October 2004 By Editor

THE OBSERVER

Malcolm Glazer faces a last-minute challenge to his expected £800 million bid for Manchester United from Keith Harris, chairman of brokerage Seymour Pierce and a lifelong fan of the Old Trafford club.

Harris hopes to persuade Irish racing barons John Magnier and JP McManus to sell their crucial 29 per cent stake in United to him, but he still needs financial backing. That could come from HSBC, where Harris once headed investment banking. If successful, Harris could block Glazer's bid by joining forces with supporters - who own about 17 per cent of United.

Harris, a former chairman of the Football League, believes that he commands both the respect of the Irish pair and the support of fans, many of whom bitterly oppose a Glazer takeover.

'Magnier and McManus are value investors. Despite rumours, they've shown no inclination just to sell out to the highest bidder,' a supporter of Harris's plan said last night.

The news comes as Glazer's efforts to acquire United gather momentum. It was reported this weekend that he is close to striking a £3-a-share deal to acquire the Irish stake.


DENNIS CAMPBELL IN THE OBSERVER

Ten years ago English football was a different game. Fans could pay at the gate, grounds were often only two-thirds full, average attendance was 26,000 and not every Premiership stadium was all-seat. Sky Sports showed 40 live matches per season, and only on Sunday afternoons and Monday nights.

Fast-forward a decade. You must buy your ticket in advance, the average crowd is over 35,000, and across the season's 380 Premier League games, grounds are 95 per cent full. This season Sky will screen 138 fixtures live and there are three different kick-off times on Saturdays alone. The top players earn £80,000 to £100,000 a week: that would have been several months wages to most Premier League footballers in 1994.

It is in this context of dramatic change in football, lifestyle and technology that Malcolm Glazer's bid to buy Manchester United makes sense, especially given the similarly dizzying upheaval still to come in those areas. When the takeover approach was confirmed last week, most business analysts were sceptical. How, they asked, could the 76-year-old American hope to make a serious profit on an investment of about £800m? Nobody seemed to know.

The answer lies in what football and telecommunications might be like in 2014. If the changes over the next 10 years are as significant as they have been since 1994, Glazer's move might make him a fortune. The booming popularity of broadband internet - which lets fans watch TV-quality pictures on a personal computer, and allows every club to act as its own TV station - is the key.

Privately, many United insiders are sceptical about Glazer's chances of making even bigger profits. 'How do you sweat what is probably football's dampest asset?' asked one. 'How would you do that except in the ways United are already doing it?' Understandably, the sceptics point to United's status as the world's most profitable football club. Their annual profits may have dropped from £39.35m to £27.91m last year because of their relatively poor performance in both the Premiership and Champions League, but that £27.91m is still far more than any English or top European club made.

It is no coincidence, however, that both Glazer and the Cubic Expression duo of John Magnier and JP McManus - the Irish investors who own 29 per cent of United, and whose stake Glazer wants to buy, to add to his own 19 per cent holding - see Old Trafford as a superb commercial asset that, in City parlance, is significantly under-exploited. Inevitably, perhaps, for characters who are businessmen first and lovers of sport second, the trio believe that United are in effect a slot-machine that in different hands could and should deliver bigger jackpots.

There are plenty of ways in which United under the Glazer family's control could quickly start making even more money. Jacking up ticket prices, while unpopular, would scarcely affect United's drawing power: they were the only Premier League club to record 25 sell-outs from 25 home games last season. More of Old Trafford's 67,900 seats could be sold to corporate visitors willing to pay £100 or more a time, or many of the extra 7,700 new places that will be installed as part of Old Trafford's planned expansion could become 'executive' seats.

Selling the stadium naming rights, as Arsenal have just done for their new home, would be easily the biggest money-spinner of that sort in football history. If the airline is prepared to pay £40m-£60m over 15 years to have the Gunners' new home called The Emirates Stadium, how much would Nike or Coca-Cola stump up to have Old Trafford renamed? Gambling would also provide a lucrative new revenue stream. Some football finance analysts believe United could use their worldwide popularity and their manutd.com website to become, in effect, an online global bookie. Their existing arrangement to have Ladbrokes as their 'official gaming partner' has only skimmed the surface of the huge potential there. United's best opportunity to make huge profits, though, is to get control of their own broadcasting rights and then use the ongoing revolution in broadband internet access to fully exploit the club's global popularity by persuading fans to pay to watch Wayne Rooney, Ruud van Nistelrooy and the rest live on a United website.


THE INDEPENDENT

JP McManus and John Magnier, the Irish racehorse owners, are to reject Malcolm Glazer's 300p per share offer for their 29.9 per cent stake in Manchester United.

The offer was made over the phone on Friday. The US tycoon, who is understood to have lined up finance from bankers JP Morgan, has said he is willing to make a £780m all-cash offer for the Premiership football club. "He wants 100 per cent control and he wants to take it private," said a source close to the deal.

But the signs from Ireland are that the offer is not high enough. "They see themselves as long-term value investors in Manchester United," said a well-placed source. He added that Mr McManus and Mr Magnier would not sell out "cheaply" and indicated that 300p was too low a price, even though it would reap them a £70m profit on their investment in Man Utd.

It is understood that Mr McManus and Mr Magnier are looking for at least 320p a share.


ANOTHER PIECE IN THE INDIE

Manchester United fans are waiting anxiously to learn whether Malcolm Glazer intends to launch a takeover bid for the Old Trafford club. Confirmation that a representative of the American tycoon made contact with a representative of the major United shareholders, John Magnier and J P McManus, sparked supporters' fears that an official effort to buy the club was imminent.

Iit is thought the Irish racehorse owners will turn down a Glazer bid of £3 a share for their 29.9 per cent stake in the club. The US tycoon is said to be prepared to make a £750m all-cash offer but wants 100 per cent control. That offer is not deemed high enough by the Irish.

Glazer's intentions may well attract the attention of the Takeover Panel, who placed the club in an Offer Period for the second time this year, following the Stock Exchange announcement on Monday that United chief executive, David Gill, had received a "preliminary approach". If the panel deem too much information has been released into the public domain, they have the power to order Glazer to decide on a bid, a move that would preclude him from launching a takeover for another six months should he decide against.

The "Manchester Education Committee", responsible for demonstrations last week, are planning a concerted campaign, and Gill can brace himself for an uncomfortable afternoon at the club's annual general meeting on 12 November.


THE SCOTSMAN

Where Fergie stands on all this is uncertain, but you can probably hazard a guess. Six years ago, he was opposed to BSkyB’s attempt to take over the club and lent tacit support to the fans’ resistance. Half a decade on, one imagines he’ll still be on the side of the supporters who want no one individual to own the club.

Groups like the Manchester Education Committee have vowed a campaign of resistance to the buyout and that will intensify until Glazer and every other potential bidder backs down. Companies and individuals seen to be working with Glazer will be directly targeted. United director Maurice Watkins, some of whose shares were purchased by Glazer after he put them on the open market, had his property vandalised last week.

The Glazer bid is therefore likely to be a long and controversial matter, and this affair has only just begun.


THE SUNDAY MIRROR

Malcolm Glazer will come under intense scrutiny from the FA and FA Premier League if he launches a successful bid to take control of Manchester United.

It emerged last night that Glazer, who owns American football team Tampa Bay Buccaneers and has a 19 per cent stake in United, will be expected to prove he is a "fit and proper person" to run a football club.

The test was implemented in the summer to protect clubs from falling into the hands of dubious individuals. Existing owners and directors of all 20 Premiership clubs have already undertaken the test.

A Premier League source said: "Prospective new owners and directors of clubs have to prove they are fit and proper people to run a club. The appointment of new directors and owners is scrutinised by us and the FA."

United have been warned that Glazer is serious in his bid despite suggestions from inside Old Trafford that the American is another Michael Knighton.

The billionaire's sons, Joel and Avi, are behind a £700million takeover plot to transform United into "a truly global club".

But Sunday Mirror Sport understands United chief executive David Gill and major shareholders John Magnier and JP McManus are concerned about Glazer's motives and his ability to finance the deal.

And that could play into the hands of former Football League chairman Keith Harris, who dreams of becoming chairman of the club he has supported since boyhood.

Some observers feel Glazer will suffer the same fate as Knighton, the football-mad millionaire who saw a £20m deal to buy United back in 1987 collapse spectacularly when he failed to come up with the cash.

Last night, a source close to the US camp insisted Glazer is committed to the deal and dismissed claims that he may be trying to bring other potential buyers out into the open before selling his own holding at a price that has been artificially inflated by the takeover talk.

The source said: "There is no question that the Glazers are totally serious about buying Man United. They are in negotiations with the investment bank JP Morgan about financing the deal. They believe the club as a plc is being distracted by the needs of shareholders and roadshows for investors and institutions. The club IS the fans."

But Glazer's business practices have not been received well by Magnier and McManus, the racehorse billionaires who own a near-30 per cent stake in United through their holding company Cubic Expression.

The Irish pair were furious when Glazer announced his intention to launch a takeover bid without first informing them.

And when Glazer's team contacted Cubic Expression for the first time on Friday, we understand the Irish responded by demanding to see the colour of the American's money before agreeing to a meeting.

Ironically, the Glazer tactics could have pushed the Irish closer to fanatical United supporter Harris, who was at one time employed by the club as a financial adviser.

Harris has developed close ties to the Coolmore duo and we can confirm he is currently formulating a proposal that he hopes will win the backing of Magnier and McManus without launching a full-scale bid.

Glazer also faces continuing opposition from fans. The militant Manchester Education Committee disrupted a United reserve-team game on Thursday night and cars belonging to club director Maurice Watkins - who recently sold a tranch of shares to Glazer - were daubed with paint.

It is likely that United fans will target the games of the Tampa Bay Buccaneers. A group have flown to Florida to discover how any protests can be co-ordinated.