Football Dynasty Manchester United Directs Money Through Cayman Island Tax Haven

flikr / Paolo Camera

Manchester United, the world renowned English football club, is facing hard times financially. Although the club’s world class reputation speaks for itself (19 championships and a home to scores of star footballers), the club still depends heavily on cash flow. In 2005, the Glazer family (also owners of the Tampa Bay Buccaneers) bought out Manchester United from the London Stock Exchange for $1.47 billion, successfully taking on full ownership of the club (despite vehement public opposition.) Now, 7 years later, Man U is facing a massive debt crisis, according to the Associated Press.

United has been looking to raise funds to help reduce debt from the 2005 takeover that was 423 million pounds ($663 million) as of March 31, much of it with interest rates of 8 3/8 and 8 3/4 percent. A $1 billion offering on the Singapore stock market was pursued last year, but the plans were halted due to volatile global markets.

The team, European champions in 1968, 1999 and 2008, has been valued at $2.24 billion by Forbes magazine, ranking it as soccer’s most valuable club for the eighth year in a row.

The Red Devils were on track to their 20th league title this year, taking an eight-point lead in the final weeks of the season. But crosstown rival Manchester City, which became soccer’s biggest spender following its purchase by Sheikh Mansour bin Zayed bin Sultan Al Nahyan of the United Arab Emirates, won the title on goal difference on the final day of the season.

In response to these problems, the Glazers are making some creative ownership decisions. Firstly, they have decided to make an initial public offering (IPO) to the New York Stock Exchange, making shares of the club open to U.S. investors. The intended outcome would generate $100 million to alleviate some of the debt. If the SEC grants them permission to sell its shares on the NYSE, Manchester United would be officially owned by Manchester United Ltd., a holding company that is based in the Cayman Islands. For those who keep up with the current global headlines, a mention of the Cayman Islands triggers one idea: tax havens.

In addition to mishandling the club’s finances, the Glazers have another thing to rouse shame and disappointment—they are patronizing a system that enables tax dodging. By redirecting Man U’s profits through the Cayman Islands, the team will likely pay significantly less tax, resulting in less tax revenues for England and a smaller tax bill for the club. By handling their debt this way, the Glazers are being irresponsible and socially subversive. Tax avoidance deprives the government of revenues necessary to function correctly. It’s just bad business.

Supporters of Manchester United have a lot to be disappointed about regarding the Glazer ownership of the club. The family has launched the club into debt (jeopardizing its future), deprived the city of Manchester (and all of England) of necessary tax revenues, and tarnished the integrity of the club name by participating in sketchy financial practices. In comparison to the spectacular legacy of Man U, it is disheartening to have revealed the vapid reality that the club is, at the end of the day, a business meant to earn money for a few individuals. Their use of tax havens is the epitome of this realization. Stories of tax evasion and the use of offshore jurisdictions litter the headlines today, but to have a world legacy such as Man U become the face of such atrocities is saddening. It symbolizes the fractured integrity of our global financial system.