The announcement today that Manchester United FC inked a kit deal with Adidas valued in a total sum of $1.3 billion over 10 years could pave the way for the Red Devils to dominate the English Premier League in years to come and perhaps, more importantly for fans, pave the way for an ownership exit by the Glazer family. After acquiring full ownership of the Old Trafford club in 2005 using £660 million of loaned hedge fund money, the Glazer family has always suffered the slings and arrows of Manchester’s legions of fans. Every time the team sells a player or misses out on a transfer target, Red Devils’ fans suspect that the Glazer debt is at fault and at times could be on the mark with their ire.
With the massive Adidas deal in hand, following up on a large Chevrolet sponsorship, the time may never be better for a graceful Manchester United exit by the Glazers. The recent passing of Malcom Glazer did not really impact the day-to-day workings of the club, as he had already passed the torch to his sons Avram and Joel some time ago. The Glazers initiated a public offering for an approximately 10 percent stake in club ownership in 2012 and also refinanced the team debt in 2013. The annual debt service is reported to be in the £10 million range now. Unfortunately, the benefit of the refinancing was dwarfed by the loss of Champions League play, which is estimated to leave a £30 million hole in the budget until the Red Devils qualify again.
Forbes estimated the teams’ worth in May to exceed $2.8 billion (£1.8 billion). With the giant Adidas deal in hand, the team is likely worth more than $3 billion now. Perhaps evidence that something is in the works in terms of a sale, United has been active on the transfer market primarily through rumor instead of having a slew of actual signings as anticipated. The reason for a lack of transfer activity could be new Manager Louis van Gaal’s preoccupation with his Netherland’s FIFA World Cup duties, but most figured that he would give his target wish list to Ed Woodward anyway. The Old Trafford club has signed Luke Shaw and Ander Herrera so far, but has not dipped very far into its rumored £150 to £220 transfer window budget. Often, club indecisiveness over transactions occurs just prior to a change in ownership.
Manchester United has certainly not hinted that ownership change is in the air. Neither has the Glazer family. Corporate backroom dealing generally is kept quiet until the ink is dry. If the Glazer family is looking for a good time to exit, the deal between United and Adidas will allow them to maximize the value of the club. Even without a Glazer family exit, Red Devils fans look forward to the sure hand of Louis van Gaal guiding the team forward. He will have a clear plan to dominate the Premier League and re-enter European play,and the Adidas deal should give him more options at upcoming transfer windows whether or not the Glazers decide the time is right for a Manchester exit.
Commentary by William Costolo