Or the reason why no new stars are required at MU?
Andy Green (an analyst in the City of London) is the Manchester United supporter who first uncovered the extent of the Glazers’ debts. They are £1.1bn in debt – £400m more than previously known – after borrowing extensively against their shopping mall business, he believes to provide equity for their MU bid. It’s like using an overdraft or credit card to pay for the equity portion of yr mortgage.
First Allied is a private business and its accounts are not publicly available. But Mr Green discovered that the Glazers’ shopping mall mortgages had been bundled with other loans as Commercial Mortgage Backed Securities.
Those bundles are publicly traded and therefore require the Glazers to provide detailed information on all the mortgages, which are then publicly available in the US.
Mr Green found mortgages – confirmed by the BBC – on 63 of 64 First Allied shopping centres, totalling £388m ($570m).
Most of those were taken out with Lehman Brothers before the US investment banking giant went bankrupt, triggering the global banking crisis in 2008.
While Lehmans collapsed, the Glazers’ mortgage debt lived on and many of those shopping centres are not generating enough income to keep up with interest payments.
With falling commercial property values, many are also now in negative equity.
Banks have put 28 of the shopping centres on a watch list, meaning they are worried about the loans.
Four shopping centres – one each in Ohio, New Mexico, Texas and Georgia – have already gone bankrupt.
When they bought Manchester United in 2005, the Glazer family borrowed £500m and paid the remaining £272 million in cash.
Mr Green found that the Glazers had remortgaged 25 of their shopping centres in the six months before the takeover.
He believes the family borrowed against their US properties to pay for United: “At the time when they had to present a huge amount of cash over here in the UK they borrowed a huge amount of extra money in the US and publicly they didn’t buy anything else that year.”
A spokesman for the family did not respond to questions about the mortgages taken out by First Allied.
But with properties now worth about £380m ($550m) but mortgages valued at £395m ($570m), the shopping mall company now appears to be worth next to nothing.
That financial picture has analyst Mr Green questioning how the Glazers will service their £1.1bn debt.