Huffpost UK Sport uk
The Blog

Featuring fresh takes and real-time analysis from HuffPost's signature lineup of contributors

Preetam Kaushik Headshot

Man U IPO: The Red Devil's Desperate Attempt to Get Out of the Red

Posted: Updated:

Amidst a season in which investors saw the fiasco that was the Facebook IPO, the recent news of the proposed listing of English football giants Manchester United on the New York Stock Exchange has raised a few eyebrows. The American owned- English club, debt ridden since a takeover by the Glazer family in 2005 is believed to be trying to use the funds raised from the listing to clear at least a part of the crippling debt burden, valued at over 600 million dollars.

It is interesting as to what prompted such a move from the Glazer family, who only in 2010 had put in place a long-term debt handling structure based on bond issues. Now, just two years later, they are scrapping all that in favor of this IPO. The changing dynamics in the English Premier League and United's diminishing future league prospects in the face of cash rich rivals like Manchester City and Chelsea are undoubtedly key reasons.

Man Utd fans are an unhappy lot, especially the local supporters in the UK. The paradox of the "world's most powerful Club" being unable to buy star players because of crippling debt is not lost on them. There is a great deal of bitterness amongst the ranks of supporters over the American takeover and perceived exploitation of the Red Devils. After the buyout of the club in 2005 in a leveraged deal, the Glazers had opted to take the club out of the British stock market and saddled the club with the debt incurred in buying it in the first place.

All this contributed to growing discontent among the fans. Gone are the days when fans had a say and stake in the ownership of clubs in the Premier league. The hallowed working class origins of many of the top clubs, including Manchester United has been swamped by the rise in global popularity of leagues and increasing cash flow into football with rising telecast revenues and sponsorship money. While this has been a global trend, especially since the latter half of the 1990s, the EPL has been bitten by the 'gold bug' more than most other European leagues.

Take the instance of club ownership trends in different leagues. The German Bundesliga has a system in place whereby 50% of the ownership vested with the fans of the club. And the dazzling success of the fully fan owned FC Barcelona in Spain and in Europe has shown that this type of ownership can be practicable. In comparison, the majority of the clubs in UK are private owned, and in the Premier League, a staggering 50% of the clubs are owned by rich foreigners.

Russian tycoon Roman Abramovich truly started this trend of buying out a football club to be a billionaire's plaything with his acquisition of the underachieving Chelsea FC in 2003. The clubs fortunes have since then been on the upswing, with 3 league titles, 4 FA cup triumphs, 2 League Cups and the much coveted European Champions League last season.

Football has always been an unequal and unforgiving environment, especially in club football. Money always played a part in maintaining supremacy. Manchester United knows this especially well, having dominated the EPL with over 19 league triumphs, a record. They have been under pressure from the resurgence of Chelsea and challenges from Arsenal. But the last straw was their loss of the league title to traditional rivals Manchester City, flush with cash from the seemingly unending pockets of the Arab Sheikh who owns the club now.

Historically it was success on the football field which resulted in success on the business front. The more you win, the more support you have and the more money you earn. Gradually, overtime this equation is being reversed. The business side is starting to dominate football. Now it is almost like all one needs is a pile of cash to buy your way to football glory. This surely does not augur well for the future of the 'beautiful game.'

For professional footballers, who have relatively short career spans of 10 to 15 years in the game, more money is always good money. But it is doubtful how "trickle-down economics" actually works in the free market system of football franchises, as those at the top earn obscenely high amounts when compared to the ones at the bottom of the pyramid. The earnings of talismanic players like Cristiano Ronald, Messi and Wayne Rooney are a case in point.

For the fans, it is a mixed bag really. For clubs like Chelsea and Manchester City, takeover by foreigners have brought better days. In the case of traditional powerhouses like Manchester United and Liverpool, both under American ownership incidentally, it has been a bumpy ride. But across the spectrum, fans in the EPL are feeling the pinch from big business eroding their stake in their beloved clubs. On an average, more than 50% of fans across the league want more control of their clubs in their own hands. In the case of underachieving clubs like Manchester and Liverpool, fan discontent is as high as 70%.

It seems clear that the Glazers are waking up to this fact. Their IPO listing is an attempt to clear away at least some of the debt that is weighing the club down. As to how successful this endeavor is going to be, has to be seen from market response to the actual listing. But it is nice to see owners waking up to the needs of the fans, because at the end of the day, the true lifeline of club football is not big business or big money, but the fans of the game.