Debt loaded onto the business became the moral centre of this vote, not merely a question of corporate finance. In this self-selected online ballot, four in five voters chose Yes, with the floor’s most-respected case objecting to “loading a business or sports club with debt” while owners extract the upside.
The winning side’s argument ran from football clubs to wider business practice. One of its strongest voices cited Portsmouth, Wigan and Arcadia; another said leveraged ownership “can work sometimes but usually ends up with business being broken up and bits sold off”, with Manchester United and the Glazers offered as the obvious warning.
The opposing case was scarcely a case for leveraged buyouts at all. The lone No voice said, “we should not be bowing down to the lord's of leverage”, then described the returns as “a personal enrichment scheme, not a business one”; around it, Yes voters supplied the bluntest slogans — “Debt, debt everywhere”, football “ruined”, and businesses left overcharging customers until they go bust. The two sides therefore talked past each other: one side argued for prohibition, while the only dissenting contribution echoed much of its suspicion.
There was one qualification amid the condemnation. A Yes voter conceded that leverage can be “a usefull tactic to support large scale institutions from going under”, but said it encourages bad practice and pointed to bailouts for banks and construction as evidence of an uneven system of risk. That makes this less a narrow football verdict than a broad objection to private gain being separated from public or collective liability.
The room did not debate whether leverage could be clever; it debated who is left holding the bill when cleverness fails.
7 Opinions
Leveraged buy outs destroy businesses. Once interest has to be paid and assets are stripped businesses bought out by unscrupulous investors are going through the motions until they go bust, overcharging customers in the meantime.
It has ruined football Clubs. There's no argument for it beyond wanting to spend more money on players and their agents.
Think man unt and glazers was such a buy out. Can work sometimes but usually ends up with business being broken up and bits sold off.
Debt, debt everywhere. Slavery by debt.
But we should not be bowing down to the lord's of leverage. Their returns are not as sold and it is a personal enrichment scheme, not a business one.
I am not opposed to sensible, proportionate acquisition debt; I am opposed to loading a business or sports club with debt that effectively transfers the risk to employees, creditors, supporters and taxpayers while allowing owners to extract the upside. The collapse of clubs such as Portsmouth and Wigan illustrates the danger in sport, while Philip Green’s treatment of Arcadia demonstrated how value can be extracted from a business while its long-term resilience is weakened.
It is a usefull tactic to support large scale institutions from going under but i feel it encourages bad business practices. However, banks get bailed, construction gets bailed there unlimited money when it suits the tresuary so why should institutions be any different.