“Football should be built on community, not built on mutiny”.

Nasser al-Khelaifi – President of Paris St Germain

Protecting football from mutiny

Fifteen years ago I spoke at an NAPF conference in Manchester , the morning after being smashed in the mush by a Manchester United fan at a JP Morgan function in the Manchester Arts Gallery.

It turned out that JP Morgan Fund Managers, unaware of the risk, had gone ahead with a function on the very day that the Glazer brothers had announced their takeover of Manchester United with a leveraged buy-out that took the club off the Stock Exchange and saddled it with £790m of debt (provided by JP Morgan).

Looking back, it was a foolhardy thing for the bank to have done and when we got back into the hall the following day, it was to find that the entire JP Morgan stand had been dismantled and removed overnight. It took a little longer for my teeth and fat lip to recover – indeed my teeth never have!

The cost of the financing of the buy-out is now estimated to be more than £1bn, which is rather more significant to Manchester United. On top of that the Glazers have been ripping dividends out of the club. In return, the Glazers can point to how they have set up enormous marketing revenues for the club by setting up regional deals around the world that made Manchester United a super-brand way before others followed suit.

But that’s marketing. Old Trafford is a rusting hulk of a ground that already looks obsolete, relative to Tottenham and  Arsenal’s stadia .

Manchester City has forged ahead with state of the art training facilities and the use of a relatively new stadium. Liverpool and Everton have plans for new grounds – Manchester United hasn’t.

Things are no better on the pitch. It has been 10 years since United had an iconic player to match Best, Charlton and Cantona. Christian Ronaldo’s departure has not seen a replacement and since Ferguson left, United have appeared a little ordinary.

This is not proving good for business. This year’s Deloitte money ratings show Manchester United are far off their previously held title “the richest club in the world”.

They are having a good season this year but that is relative, they will win nothing and have only secured a place at next table’s Champion’s league for their efforts.

Which brings me on to the aborted superleague, which United appear to have been instrumental (along with Real Madrid) in creating. That Joel Glazer saw it important enough an issue with the fans to publicly apologize does not appear to have appeased anyone and yesterday’s protest showed that no-one inside Manchester is on the Glazer’s side. Certainly the Sky pundits left with nothing to commentate on , were not condemning the fans for protesting and questioning whether the calling off of the match against Liverpool reflected on the excesses of the fans or of the Glazers.

I was left wondering whether the bloke who punched me in the mush was at the ground yesterday, I bet he was. I never pressed charges and I hope that the Manchester police will behave with the dignity they did back in 2005 when I explained why.

Violence is not acceptable, nor is it necessary but it is understandable and avoidable.  As Gary Neville said on Sky last night, this will not be the end of it.

Building football on community

The privatization on Manchester United in 2005 was not for the fans and its social impact has been to distance them from their club. Many wear the yellow and green colors of Newton Heath, to signify their links to the clubs roots and cock a snook at the Americans who they see as caring  nothing for football or of the club’s heritage.

As for JP Morgan, they seem to be detested in Manchester as News International have been in Liverpool. While Murdoch’s treatment of the Hillsborough disaster was distasteful, JP Morgan’s support for the Glazers is an ongoing outrage. JP Morgan appear to be the financiers of the super league and it remains to be seen just what the financial consequences of the unbinding of the binding agreements will be. I suspect that they will leave clubs with heavy legal and banking bills.

While JP Morgan were able to cut and run from the 2005 NAPF exhibition hall, they aren’t in that position today. It would appear that they have made great sums over the years from the bonds Manchester United issued in 2005 and here they are again , looking to cash in on football’s success with little understanding of the negative consequences of their actions.

JP Morgan are of course keen to promote their ESG credentials , both in banking and in asset management. There is nothing fundamentally wrong with issuing debt but that debt has a social as well as an economic purpose in the world of ESG and the societal impact of the super league is universally considered a disaster.

Whether the counterfactual, Manchester United remaining a PLC, would have proved a better option than the LBO is of course a matter of speculation. Manchester United fans point to the fact that for the Glazers to have taken a public stake in the quoted entity, they would have to have taken the debt on themselves and have been answerable for their management decisions to a wider group of shareholders.

This would certainly have limited their capacity to take money out of the club and made them, and not the club, responsible for the servicing of the debt. In hindsight, the concentration of power among private owners does not seem to be serving the clubs or football well and the big win for the protestors has not yet been achieved. Though the superleague is for the moment dead, it could be revived or proposals equally unpalatable to fans emerge in the future.

The Government’s intervention in scuppering the super league will similarly stand for little, if its fundamental review of football club financing does not lead to an improvement in the ES and G of ownership.

It does not make sense to globalize support if the consequence is that fans have to travel thousands of miles to follow their teams. Indeed the concept of the travelling fan is a problem, unless it can be a more environmentally sustainable basis.

And scrutiny of the decision making of club owners must improve. The secrecy with which the negotiations of the superleague were conducted is exactly the opposite of the transparency required by modern day governance.

On all counts, the debt that JP Morgan have and propose to issue is counter to ESG principles and can properly opposed by those who campaign for better standards.

Those who have dealings with JP Morgan, need to question how deep that bank’s ESG principles go.