Greg Dyke on Broadcasting

Glazer is not on the ball if he relies on television to finance Man Utd
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The Independent Online

So, Malcolm Glazer, the American businessman and multi-millionaire, has finally come clean and told the Board of Manchester United how much he is prepared to pay for the club and the details of his bid. Having had his accountants and lawyers crawling all over the numbers supplied by the club for the past couple of months, he's obviously decided that he can pay £3 a share (valuing the club at £800m) and still make money. But that has inevitably meant him taking an upbeat view on how much money United is going to get from television in the years ahead and I'm surprised he's so optimistic.

So, Malcolm Glazer, the American businessman and multi-millionaire, has finally come clean and told the Board of Manchester United how much he is prepared to pay for the club and the details of his bid. Having had his accountants and lawyers crawling all over the numbers supplied by the club for the past couple of months, he's obviously decided that he can pay £3 a share (valuing the club at £800m) and still make money. But that has inevitably meant him taking an upbeat view on how much money United is going to get from television in the years ahead and I'm surprised he's so optimistic.

Now, I should declare an interest. I am a United fan and a former United director, who was bitterly opposed to the last attempted takeover of United by Rupert Murdoch's BSkyB in 1998 and who has even more doubts about the Glazer bid.

Glazer, who has already bought nearly 30 per cent of United on the open market, wants to buy the club by borrowing an enormous amount of money. The current United board and an active group of fans who are also shareholders are, to say the least, very suspicious about this.

Even if he's only borrowing £300m to finance his bid - and there are suggestions that it might be considerably more than that - their fear is that if the club has a bad run on the pitch, the finances of the club won't be able to afford the interest cost on that amount, let alone repay the loan. This is exactly what happened to Leeds United, who borrowed far less than Glazer is planning to borrow and then couldn't pay the banks. Instead, they sold the club's best players and were relegated.

Television income is clearly important in Glazer's calculations. During the past decade or so, television, in the shape of BSkyB, has largely financed the incredible growth of football in Britain and particularly the growth in players' wages. But a close look at the recently published United accounts show its media income, which is mostly generated by television, was down by £9m for the first half of the financial year. This led to the club's half-year profits being halved.

This might well be the first true sign that the television bubble has burst for football and that television income in the future might not be the wonderful cash cow for the top Premiership clubs that it once was. United received £8m less from the Premiership, largely because so many more games are now being televised, with the Premiership receiving the same amount of money from Sky. As a result, the money is being spread around more clubs and the likes of United have suffered as a result. In the next year, negotiations begin on the next Premiership contract and this time the European Commission are insisting that Sky cannot buy all four Premiership games televised each week. This could further reduce the amount paid for the football rights as Sky has, to date, paid extra to get exclusivity. Why would they pay that when they will have to share the rights in the future?

But for United, the problem with television income isn't only that the Premiership isn't paying them so much, it's that it's got the same difficulty with the European Champions League. United's television income from the European tournament was also well down on last year, partly because they were knocked out of the competition early on, but also because broadcasters are paying less for the rights.

Now, things could get worse. Television ratings for Champions League football are struggling right across Europe, and have been declining steadily over recent years in Britain. This could well mean broadcasters paying less for the rights when the contracts come up for renewal. Last time around, the BBC bid for the UK rights and failed - they were sold to ITV and Sky. The BBC spent its money buying the FA Cup and the English internationals instead. So the next time around, it's unlikely they will be bidding, which means there will be less competition.

So what's all this to do with Glazer? Well, if his bid for United is overwhelmingly based on borrowed money, as everyone believes it is, his chances of being able to pay the interest will depend on the income United receives from television, and this could be reduced further in the future. Of course, Glazer might have some clever plan to double the television money United receives, but it's difficult to see how he could do this.

Football's a funny old business

The interesting thing about football is that even the most serious of business people lose all logic when they get involved. I was explaining the dangers of the Glazer bid at a CBI dinner in Manchester last week. With a room evenly divided between United and City fans, there was jubilation amongst the City fans when I said Man U could become the next Leeds United.

When my speech was reported, I got an e-mail from Howard Davies, the director of the London School of Economics, hoping that Man U did go the same way as Leeds. Now, Howard is a serious bloke whose done some serious jobs, but when it comes to football, he's a Man City fanatic and hates United with an irrational passion.

My favourite story of the rivalry in Manchester came from television producer Colin Shindler, another City fanatic, who wrote the book Manchester United Ruined My Life. In the book, he explains how as a young boy, he was crying because City had lost again. His mother walked in and tried to sympathise. She told him: "Why don't you support United like your brother and then you can be happy."

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