Is a new era beginning for Manchester United? Not exactly: amid all the noise about “restructuring” at the club following Jim Ratcliffe’s 25% share purchase – all the talk about job cuts and austerity, team turnover, comings and goings in the manager’s room, meetings between Ratcliffe and Erik Ten Hag, a fresh energy both on and off the field; It was easy to forget that commercial control of the club was firmly in the hands of the Glazer family. Manchester United’s corporate structure divides ownership into Class A and Class B shares. The actual control of the club belongs to the owners of Group B shares, which are worth 10 times the voting rights of Group A shares. Ratcliffe spent around $1.6 billion on a quarter of the club’s Class A and B shares. But critically, Class B shares convert to Class A shares after they are sold. Once the deal is approved, the entire Class B holding, voting rights and control of the board of directors will belong to the Glazer family. If this is the beginning of the Glazers’ exit from their investment in Manchester United, it is a curiously inactive departure.
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There is a kind of genius in this move; a kind of dirty financial wizardry akin to the creation of credit default swaps. The Glazers’ 18-year ownership of Manchester United has been a disaster for Manchester United, which has evolved over the last decade from a powerhouse in English football to a mid-table club pinning its Europa League hopes of qualification on a late-career revival. From Jonny Evans. But it has been extremely good business for the Glazers, who have repeatedly exploited their ownership to enrich themselves while running their operations at a persistent loss and burdening the club with crippling levels of debt. Dividend payments since the Glazers’ takeover in 2005 have totaled £166 million; most of it went to the Glazers. Nothing about Ratcliffe’s investment in the club will disrupt that cash flow or the corporate structure that supports it: as stated in the club’s 2023 annual report, “our board of directors has full discretion over the declaration and payment of dividends and holders of our Class B ordinary shares [ie the Glazers] may affect our dividend policy.”
Ratcliffe will pour another $300 million into the club to help clean up the mess the Glazers left on the pitch. The Glazers blazed a trail in bringing serious corporate money into European football from the US. Now it seems they are innovating again, pioneering a kind of no-exit that gives them all the spoils of ownership with no accountability. They “sold” the club and shifted responsibility for football operations to Ratcliffe without losing what was most important to them: the revenue Manchester United generated for the Glazer family and the power they had to continue to give it to themselves. Overall it was an extremely good deal for the Glazers.
Traders are often judged in the same way as forwards: on the quality of their finishing. The return on an investment (judged relative to its price at acquisition) represents the universal measure of performance. In recent years, the influx of US capital that followed the Glazers’ takeover of Manchester United (Kroenkes at Arsenal, Fenway Sports Group at Liverpool) has become a veritable torrent: if Miami-based 777 Partners’ takeover of Everton goes through, Premier Half of the teams in the league will be under American control. Institutional money from the US has spread to all the major leagues in Europe: PSG’s new minority owner, for example, is New York-based private equity firm Arctos Partners.
What exactly does American money want from European football? At the dawn of the US takeover of the Premier League, many assumed that Americans were interested in English clubs for one of two purposes: as vanity projects or as financial investments that yield returns. Glamor as an investment motivation appears to have faded: Few American club owners attend games or involve themselves in on-field drama; Nearly all of the operational and football-related responsibilities are being handed over to seasoned professionals, and even someone like Todd Boehly initially seemed that way. Eager to “get in” and manage Chelsea as if they were his own personal fantasy football team, Trump withdrew from the public eye. But these investments do not appear to represent capital seeking returns. The first American buyers have stayed at these clubs for much longer than the usual five-to-10-year life cycle of an institutional investment fund: Kroenkes has owned Arsenal since 2007, FSG has owned Liverpool since 2010, and the Glazers have owned Liverpool since 2010. He has been staying at Liverpool since. They are approaching their third decade in Manchester. Everything about the recent behavior of these historic investors (giving up minority shares rather than exiting entirely) suggests that they intend to retain control of their clubs indefinitely.
What’s interesting about the Glazers’ involvement with Manchester United is that it now appears to be an investment without any meaningful exit horizon – though this is more indicative of the league’s general direction of corporate travel than a departure from it. Patience is the motto of the long-term investor, but the Glazer family’s investment in Manchester United is more parasitic than patient. The club rarely makes a profit: it created a pre-tax loss of £33 million in 2023 and £150 million in 2022. But what the club produces is revenue and most of that, some of it, can always be withdrawn. Off to Glazers. Manchester United appear to be interested in the Glazers primarily in terms of the cash it generates, rather than the returns a full sale could deliver.
Economic geographer Brett Christophers argues that economies in the developed world are now have instead of making or building things. Christophers wrote that today’s economic life is dominated by the rentier, an economic actor who receives payment (rent) “purely by virtue of controlling something of value.” Rentier capitalism is property-based rather than entrepreneurial and is based on the extraction rather than the creation of value. Football clubs are perhaps the perfect asset for the rent-seeking capitalist. In other rent-based markets, such as housing and utilities, competition for services requires a certain turnover rate of different investments: Consumers have the freedom to move their business elsewhere (for example, tenants can move house), which creates pressure. asset owners to maximize revenue and exit the investment before the customer base becomes unviable.
Football clubs are very different creatures; Although on-field competition is the soul of professional sport, fandom is so instinctive, irrational and unwavering that it gives each club monopoly-like security against commercial competition. Every football club is a rare and essentially unique entity, completely impervious to copying. If I am, say, a disgruntled supporter of Everton and want to take my support of the club elsewhere, I have nowhere to go: there is no rival provider of Everton Football Club services to whom I can offer my patronage. There is only one actor in the market that ensures the interest and loyalty of Everton fans: Everton FC. (Manchester United may be an exception to this rule, but FC United of Manchester, founded by fans in 2005 in response to the Glazers’ takeover and currently playing in the seventh tier of English football, has little to no competition with Manchester United: to qualify for a Manchester Today As a United fan you still inevitably have to follow and care about what’s going on at Manchester United Football Club.) Fans are completely captive customers: inherently loyal, tolerant of failure and stuck by the structural logic of fandom. This makes owning a football club, especially one with a large following, an extremely attractive investment proposition: even if you are faced with chronic underperformance on the pitch, the business’s customer base (or at least a significant part of it) will remain intact.
Under the Glazers, Manchester United has become a model business for the new age of rent-seeking capitalism: neither abject humiliation on the pitch nor ritual failures in player recruitment can do anything to bring down a commercial property with a huge fan base and huge revenue streams. Why would the Glazers give up this excellent asset? They have already made it clear that they do not want to do this: the most telling moment in the entire year-long saga regarding the club’s off-sale “discount” was when the Glazers rejected all offers from Sheikh Jassim bin Hamad al-Than. Cash offer to buy the club outright. The club has shown itself to be a reliable cash cow even at a time when on-field matters have descended into farce and the Glazers have turned in on themselves: they can sit on the asset and keep squeezing it as much as they want.
If their experience is any indication – and I believe it is, because they were the first to set foot in England and most of the other billionaire American owners in the Premier League come from the same world of corporate finance to which the Glazers belong – the real purpose of US investment in European football is to support clubs not to improve, but to extract rents with minimal effort to maintain indefinite control. This means maximizing revenue while reducing operational costs and avoiding any capital expenditure as much as possible.
The coming years promise to feature more, not less, Glazers style in the Premier League. The Glazer model may not be good for the club, but it makes perfect sense for the club owner. Ticket prices will be increased, new broadcast and sales agreements will be made, and off-season tours will be planned and carried out even more ambitiously. Fans will be met and their ideas listened to, but rarely considered, and new methods of fan engagement will be devised, preferably by adding paid “membership” tiers; The stadiums will be preserved but expanded only piecemeal. (Only a fool would attempt to build a new structure from scratch: far better to add a new seating tier on top of what already exists.) Club reveals will focus on new digital tokens that fans can buy to get closer to players and “own” them. Instead of management fees and dividends paid by the owners to themselves, it is an insignificant part of the club that is not owned by them, and these will be secretly written into the financial reports.
The smartest owners, like the Glazers, will find a handy idiot to do all their dirty work — signing the right players and losing the wrong players, hiring and firing managers, cutting jobs that need to be cut — while still making money. spoils of property. However, in no case will a full sale be seriously considered. The ultimate goal of ownership in global football today is to remain an owner. The exit these investors are looking for is not an exit at all, but a kind of commitment-free lifetime right.