As many as 100,000 Manchester United fans will be asked to contribute £2,500 each to the Red Knight fund to buy out the club from the Glazer family, under initial costings drawn up by those leading the audacious project.
The need to raise £250m from grassroots level reflects how challenging it will be for the buyout to succeed, despite the presence of Goldman Sachs chief economist Jim O'Neill and hedge fund owner Paul Marshall among the leading contributors to the likely £1.3bn fund needed to oust the Glazers.
There are understood to have been 40 serious expressions of interest in investment from would-be Red Knights, though initial proposals discussed by O'Neill and the Manchester United Supporters' Trust (Must) are understood to envisage 50 high net-worth individuals, each contributing between £10m and £15m each, raising at least £500m; a further 100 throwing in between £1m and £5m each, raising a further £200m based on their investment being £2m each and – most challenging of all – the £2,500 contribution from fans.
Success in reaching the target would represent the most extraordinary fund-raising effort in world football and the distance to be travelled by O'Neill and football financier Keith Harris – who is helping drive the project but is not a Red Knight – is a huge one. Monday morning's seven-man meeting in London between O'Neill, Marshall, Harris, Must's chief executive Duncan Drago, president Richard Hytner and vice-chairman Oliver Houston – plus another investment banker – was one very small landmark.
It is not even clear – and seemingly unlikely – that the £950m raised from those initial costings would be enough to wrench the club from its widely reviled current custodians. Forbes magazine valued Manchester United at £1.3bn last year and there are no immediate signs that it is flagging as a commercial entity. The club, whose chief executive David Gill said yesterday that it was "disrespectful" to have been asked about a takeover when tackled on it at the European Club Association meeting in Manchester, yesterday issued financial results for the six months up to 31 December which revealed turnover of £144.7m, up almost 20 per cent year on year. This, however, did not disguise the underlying financial problem – £716.5m of debt arising from Malcolm Glazer's 2005 leveraged takeover of United.
With turnover figures like yesterday's there is little doubt that fund-raising alone will not enable the Red Knights to buy out the Glazers. The Americans need to be driven to a position where they are desperate enough to exit Old Trafford to be receptive to the proposals of O'Neill. How to do it is a matter of intense debate.
Harris, the former Football League chairman and executive chairman of Seymour Pierce, is urging fans not to buy their season tickets when they come up for renewal from the end of this month, though Must – which is behind the highly visible green and gold protest campaign – remains unconvinced that this is the answer. There is risk that if a non-renewal protest launches too early, without a critical mass of fans, supporters will give up their seats for no immediate gain, see others take them over and become disenchanted. Harris suggests that the waiting list for United season tickets has already dwindled away to virtually nothing.
The non-renewal dilemma reflects the difficulty the takeover has in marshalling all fans together, with Must also privately fearing that anti-Glazer action may simply drive them into the arms of another private investor whom the Americans would be far more willing to sell to. The alternative strategy for now is to focus on gathering fans to the point where such vast numbers are committed to a buyout that the Glazers will leave.
A moment of truth will arrive when fans are either asked to give up their tickets or invest in shares to buy the club. An attempt by Liverpool fans to raise £500m for a buy-out of Tom Hicks and George Gillett Jnr has not come to fruition after fans were asked to invest £5,000 each.
But the green and gold campaign has underlined what a strong campaigning organisation Must has become and the trust's engagement of US-based online campaign consultancy firm Blue State Digital (BDS), which ran the technology behind the campaign widely credited with helping bring Barack Obama to power in the United States in 2008, illustrates its innovation in raising money and nurturing activist support. BDS is beginning work this week on a target of doubling Must's online membership to 100,000.
The initial Red Knights proposals involve capping individual ownership in the club to perhaps five per cent in the post-Glazer era and limiting voting rights even more. There is no bid for the club on the table and plans are at a very early stage. "It's not the case that we've got a loaded gun and are ready to pull the trigger," one of those present at Monday's meeting said yesterday. "A more accurate way of looking at it would be we've now got a gun on the table; we have to pick it up and find the ammunition to use it."
Number of wealthy individuals who would be expected to invest sums of £10m-£15m each.
What next? How the bid may progress
First Step Persuade the Glazers to sell. The green and gold campaign has sent a loud message of discontent. But fans need to hit the Glazers in the pocket if they are to force them to the negotiating table.
Second Step Get the cash to buy out the Glazers. The Glazers put in £272m in equity when they bought the club in 2005. They will demand a significant increase on this to compensate them for their five-year investment, quite possibly as much as £500m. Also, the Glazers have taken out some ultra-expensive debt of £200m, which is secured on their personal shares. This would also need to be paid off to persuade the Glazers to sell. Under these assumptions, cash in the region of £700m would be needed for the buyout. How to raise it? Supporters would play an important role again. The anti-Glazer Manchester United Supporters Trust hopes to drive membership to around 100,000. In the event of a bid, these members would be asked to contribute. For example, £2,000 from the existing 50,000 members would raise £100m. So realistically, help from wealthy fans would be needed. This is where the Red Knights come in. Around £12m each from 50 such investors would bridge the gap.
Third Step Deal with the debt. The holders of the £500m in bonds the club recently issued would need to be squared. They would either require to be paid off or persuaded to keep their investment in place until the bonds mature. Either way, around £500m in debt would probably have to remain with the club in the immediate future. But the Red Knights say they want to "put the club on a sound financial footing". So a plan would need to be put in place to pay off the debt gradually, rather than merely servicing the interest and continually rolling over the principal sum.
Fourth Step Run the club responsibly. The Red Knights say they would "aim to put the supporters at the heart of everything we do". This would mean running United as a community asset rather than a business in the manner of the Glazers.