Debt Trouble Here and Abroad Affecting Glazer Family's Football Teams

The scene: July 2005, Sir Matt Busby Way in Old Trafford, Salford. It is not a match-day, but the atmosphere outside the ground is raucous, awash with swathes of Manchester United fans. Then a strange figure is hoisted into the air.

Looking closer, it is an effigy of American business tycoon Malcolm Glazer, crudely fashioned of sack-cloth, and a pinned with a printed photo of the billionaire’s face. The figure is promptly set ablaze, to many cheers and chanting.

“Glazers out!” the mob yells.

There is a strong police presence, both on horseback, and riot van. A small black vehicle is whisked off into the night. Inside are Joel, Avram and Bryan, the three sons of Glazer, and the newest directors of Manchester United football club.

Since that time, Manchester United has gone on to win three consecutive league titles, and one European Cup in a hugely successful period for the world’s biggest football club. United’s performance has certainly not suffered under the Glazers, if anything, they have flourished.

A few thousand miles across the Atlantic, the Glazer’s other football interest of the American variety hasn't enjoyed the same accomplishments. It's been over seven years since their Tampa Bay Buccaneers have won a Super Bowl.

The Glazer family brought the Bucs out of NFL despondency in 1995, and spent whatever was necessary to build a championship team. It was a painstaking process, involving several heart-aching defeats before their ultimate triumph in January 2003 over the Oakland Raiders.

Since reaching that pinnacle of the American sporting world, the Bucs’ fortunes have somewhat changed. Tasting defeat in the first rounds of the 2005 and 2007 playoffs, there have been sackings, a purge of fan favourites, and a serious decline in spending.

Such moves have led to much grumbling from fans, and most notably, season ticket holders. Raymond James Stadium in Tampa Bay, Fla., home of the Buccaneers, is rarely full. The feeling from Floridians is that the Glazers either lack the money to compete, or simply no longer care about their team. Second-year general manager Mark Dominik has moved to calm such speculation.

“There’s been no wavering in [the Glazers] desire to have a championship football team," Dominik said. "I’ve heard all the speculation about their soccer interests, but people need to understand their business with Manchester United is a completely different entity from the Buccaneers."

Presuming the Glazers do indeed lack the money to compete, in the fans' eyes at least, “Man U” appears to be the problem. It would appear that Manchester United’s well-publicised debts are over-stretching the family financially, forcing the owners to tighten their wallets. Wind the clock back a few years, when “spending whatever necessary” was the Glazers’ business model.

The Buccaneers were a perennial playoff contender by 1999, and a touchdown away from the Super Bowl, but that wasn’t enough for the Glazers. They spent millions to get wide receiver Keyshawn Johnson, quarterback Brad Johnson, and defensive end Simeon Rice.

They gave Oakland Raiders owner Al Davis $8 million to acquire Jon Gruden as head coach, and then spent even more money on wide receiver Keenan McCardell and running back Michael Pittman.

Spending money on the right players (and other factors) led to a Lombardi Trophy in 2002, but it also put the team in salary cap trouble. Cap-wizard and former GM Bruce Allen eventually sorted that mess, but the general complaint from fans is that the Bucs are just not spending money like they did. No team has had more room under the salary cap the past two off-seasons.

NFL.com analyst Jason La Canfora reported last year that the Bucs spent a lesser amount in player salaries and bonuses than any team in the NFL in the past five seasons.

So the Glazer family are not spending money the way they once did. After a three-win season in 2009, the team is obviously not winning as much, either. It is an easy parallel for fans to draw evidence, and thus, conclusions from.

Billionaire NFL owner Jerry Jones and his Dallas Cowboys were last year’s highest spenders at $566.89 million. The Bucs, meanwhile, spent around $117 million less—an overall spending difference of $449 million.

High spending does not necessarily equal victories, as Roman Calderon and Real Madrid, and Dan Snyder and the Washington Redskins, can testify based on their disappointing seasons.

However, in the Bucs’ case, in the wake of a 3-13 season, the team has some serious areas to upgrade. Dominik has already announced that the Bucs won’t overspend in free agency, and that their ethos lies in building through the draft.

Free agency’s biggest names, such as defensive end Julius Peppers, linebacker Karlos Dansby, and cornerback Dunta Robinson, have been left for other clubs to acquire, despite Tampa entering the 2009 free agency phase with $60 million in cap room, more than any other team in the NFL.

The lack of activity can suggest toward the nature of the team’s financial condition. Taking the idea further, as many fans and pundits have, what does this suggest about the Glazers’ dedication to the Bucs’ on-field success?

The notoriously secretive Glazer family are rare in their public addresses, and in the absence of any frankness or forthright speaking from ownership, fans, analysts, and perhaps even coaching, can only jump to conclusions.

For illustration, La Canfora’s report covers the Glazers’ £790m ($1.47bn) takeover of Manchester United Football Club. The Buccaneers were in the top half of the NFL in player salaries every season from 2000 to '04. Since buying Manchester United in July 2005, they have been in the bottom half.

Taking those facts into account, it is perfectly feasible that the Glazer family’s enormous debt from the Manchester United purchase has stopped them from spending whatever necessary to reach the Super Bowl.

The franchise is spending about $11 million less than the average NFL team. With a large contingent of Bucs’ fans unhappy with the Glazers’ on-field product, supporters are beginning to vote with their pockets, leading to empty seats on NFL game days.

Such a sight has not been seen during the Glazers’ reign, as empty seats hark back to the “Yuckaneers” of the 1980s. So the theory is that the Glazers have stopped spending money. The question is: are Manchester United’s debts affecting the Bucs spending?

In its 2009 financial results, Manchester United revealed that it was only the £80m sale of Ronaldo, and other transfer dealings, that lifted the club out of the red last season. The English champions made a pre-tax profit of £48.2m, but also highlighted the overall amount owed by the club and its owners broke the £700m barrier for the first time since Malcolm Glazer acquired the club in 2005.

Despite increased revenues, the club’s high interest payments meant that without the £80.7m realised in transfer profits in the year to June 2009, the club would have made a loss of £32.5m.

In the January 2010, Manchester United successfully raised £504m through a bond issue, made up of Payment-In-Kind notes. Of the £67m of interest payable last year, United will face an annual interest bill of £45 million on the bonds, similar to the £41.2 million paid in the last financial year, but unlike the debt at present secured against the club, the bonds do not mature until 2017.

United chief executive David Gill has rejected criticism of the debt loaded onto the club. United has debt of £716.5 million ($1.1 billion), but Gill said a £500 million bond offering in January meant the team can comfortably support that level of debt.

“They [the Glazers] are long-term owners and they’re not sellers,” he said. “That’s not to say that people like the Red Knights won’t come and think that they can put a plan to them. But unless the owners want to sell, which they’ve given no indication to me at all that that is the case, then they can’t buy the asset. It’s not for sale.”

In total, the management fees and the £10m the six family members actually borrowed from United, make a total of £22.9m paid to the family and their affiliated companies in three and a half years. Six of Malcolm Glazer’s children were each given loans worth £1.67m from the parent company.

So the Glazers have showed that they are masters of moving the debts around, and delaying them for as long as possible. Despite this, the family are happy to take money from within the club for their own personal ventures, an odd move when their British team is suffocating with debt, and their American team appears to have little money to spend to improve.

United’s American owners face a two-pronged attack over their control of the club with the Manchester United Supporters’ Trust (MUST), running a vocal and noticeable campaign to bring about a change of ownership. The “Green and Gold” campaign has seen supporters don the insignia of Newton Heath—renamed Manchester United in 1902—with ample green and gold scarves; in evidence at this year’s Carling Cup final.

The movement is gathering momentum with the news that the debt-ridden Red Devils of Manchester have been targeted for financial rescue by the “Red Knights” of London. A consortium of financiers has met to discuss a billion-pound takeover of Manchester United. The group includes Goldman Sachs economist Jim O’Neill, lawyer Mark Rawlinson, and financier United supporter Keith Harris. MUST’s chief executive Duncan Drasdo confirmed the group had been in attendance at the “Red Knight” meeting, and had been involved in discussions with the group “for some time”.

“This development is hugely welcome as there is a genuine desire to see a change of ownership at Manchester United,” Drasdo said. “Initially the Red Knight Group has effectively set a challenge to Manchester United supporters to demonstrate they wish to see an alternative ownership proposal developed. In the first instance supporters are being asked to do this simply by joining the free online membership of the Supporters Trust, and swelling its ranks to an initial target of at least 100,000.

“It is also essential for a majority of two key groups, the Old Trafford Season Ticket holders and those with Executive facilities, to show their appetite for participation by joining the Must online campaign. The Glazers are businessmen who view United as a business venture. Every business is up for sale at the right price.”

Across the Atlantic, the general feeling is perhaps less anti-Glazer, but changes need to happen.

“The day the Glazers bought Manchester United, the Bucs started to go downhill,” said Bucs fan Mike Logue from nearby St. Petersburg, whose opinion reflects a sizable element of supporters’ sentiment. “Thirty million (dollars) under the salary cap? C’mon Glazers, get off your wallets, and bring in some players.”

United and Buccaneer chairman Joel Glazer recently gave this statement:

“Our commitment to the Tampa Bay Buccaneers hasn’t changed since the day we had the privilege of becoming owners in the National Football League.

“The Tampa Bay Buccaneers are a very healthy franchise. It just so happens that we’re in other businesses that are high profile. People are always looking for reasons why we’re 3-13 or spending the way we’re spending. The reason we are where we are is because you have to go back five or six years. We lost draft picks and then we’ve drafted poorly during that time.

“Where we are today, we don’t believe free agency is the answer to building long-term success. There is a place and time for free agency, but that can’t be the foundation. Bringing in 29- or 30-year old players at this stage won’t allow a young person to grow and develop, and that person won’t be here in a few years to be part of the solution. That, along with the rule changes in free agency, makes this free agency class not a very deep pool. People always look for simple answers, but with the Tampa Bay Buccaneers it runs a little deeper, and you have to look at some history to understand where we’re at today.”

Drasdo, however, remains unrepentant.

“The tide is turning at Old Trafford as fans see how much the takeover has cost, the increased ticket prices and the failure to invest in the team despite £81m received from selling Cristiano Ronaldo. We do not want the Glazers to refinance the massive debts they have brought to the club—we want them to go.”

Sources and References:

Pewter Report : Interviews with Joel Glazer, Mark Dominik
[e-mail] (editor-in-chief).
The Guardian : Figures from Deloitte on club’s refinancing
The Telegraph : David Gill quotes
BBC Sport : Duncan Drasdo quotes