Picture the scene. The chief executive and finance director of Manchester United – men who could claim to hold two of the best jobs in English football – catch a flight to the US. Malcolm Glazer, thebuccaneer from Tampa Bay who has built a 10% stake in Man Utd in silence, has finally agreed to talk to them.
This is their opportunity to discover whether Glazer’s intentions are hostile. The man with Florida’s highest waistband eventually gives them his answer; the stake is “an investment opportunity”. Old Trafford’s dynamic duo take the first plane home and scratch their heads: What did he mean?
Yesterday they got their answer: Glazer will do whatever he wants, because yesterday the City gossip was that he has spent pounds 31.5m on another 4.5% slug of the Premiership champions.
For the Man Utd executives, this must be deeply depressing. They are directors of a public company, but they are irrelevant to the bigger game being played by Glazer and the Irishmen John Magnier and JP McManus, who have 23% between them. Quite simply, if one party agrees to sell to the other, Man Utd is as good as sold.
Another possibility is that a third party will emerge and try to make a knock-out offer – a Russian billionaire is the usual tip.
Either way, the final whistle seems to be approaching. Glazer’s shares yesterday came from Lansdowne Partners; a hedge fund was one of the last of the natural sellers. There are a few more chunky blocks that could be mopped up – like mining entrepreneur Harry Dobson’s 6.5% – but after that it will be time for the main course. It may take months, but it is unlikely to take years: some very big egos, as well as wallets, are at work. The Man Utd executives may even feel relieved when the moment arrives. Right now, the pretence that life is normal just looks silly.
US dolour
Make no mistake, yesterday’s fall is not the end of the dollar’s woes. Just two days after the US reported its fastest growth in nearly two decades, traders sent the dollar to a fresh all-time low against the euro and a five-year low against sterling. Had the Japanese authorities not been buying dollars, the greenback would have been setting new records against the yen as well.
The market has got the dollar firmly in its sights now and there is only one economic number traders care about, and it’s not US growth. The figure they are fixating on is America’s whopping 5% current account deficit. That gap is only likely to grow as the US economy picks up speed and sucks in more imports.
On paper there is no reason for the rest of the world to fund this deficit: with interest rates at their lowest since the early sixties, the yield isn’t attractive. But the Asian countries who own half of America’s outstanding government debt aren’t looking for high returns, they are pursuing a strategy of keeping their own currencies competitive.
That leaves Europe and the UK taking the main brunt of the dollar’s fall. If Wall Street should start to feel the fallout from the dollar’s decline, the consequences could be very nasty indeed for the global economy.
Pit prop
The government’s decision to grant pounds 52m aid to encourage investment at 12 pits is the latest crumb of comfort for the coal industry, which still provides more than a third of Britain’s electricity, and has been kept alive – just – by a succession of support programmes such as the new coal investment aid scheme used yesterday.
This EU-approved scheme provides up to 30% of the development costs of new projects. Ministers said it would safeguard 4,000 miners’ jobs – and create 300 more – in an industry now employing only 10,000, compared with 750,000 upon nationalisation in 1947.
The scheme is due to release up to pounds 175m in investment but the thirst for aid was such that 14 applications, involving pounds 476m of projects, requested pounds 131m aid. UK Coal, the country’s main producer, asked for pounds 78m but got pounds 36m for its eight surviving pits and warned that it might not be enough. It wants to open 100m tonnes of new reserves at a cost of pounds 270m over six years.
Threatened by new controls on sulphur emissions, the indigenous industry still matters to some in New Labour, but its survival, even with limited state aid, is not secure – and, with question marks over renewables and nuclear, that goes for the nation’s energy supplies, too.
A new seam
The pounds 52m of government aid to a dozen pits contrasts sharply with the proposed pounds 65m investment on the site of one old pit – Manton – announced yesterday by retail chain B&Q. It was a legal victory against the NUM by two Manton miners which spelled the long demise of the 1984-85 miners’ strike and changed the nature of British industrial relations.
Although a quarter of UK manufacturing capacity had been swept away by the early 1980s, it was the defeat of the miners’ union which eased the fundamental restructuring of the UK from a manufacturing economy to one powered by services.
How fitting, that what was once a pit should now be part of a store chain.
