Goldman (GS) Scores another Own Goal

Author: Sean Riskowitz on March 8, 2010

It never rains but it pours. Just ask Goldman Sachs (GS).
The once revered Wall Street institution, founded way back in 1869, has found itself the subject of severe public anger and remonstration. So bad are things for the once-storied investment bank that Rolling Stone described the firm as “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”
When things are just not going your way, they are just not going your way. Bad news is piling up for the firm and its negative perception is starting to spread way past the realms of finance and into the lives of ordinary people. The Greek debt crisis comes to mind. Then there were countless other bad incidents. Now the firm has managed to draw the attention of the sporting world.
Manchester United, one of the wealthiest soccer clubs in the world and the biggest soccer brand on the planet (and former home of David Beckham), is apparently on the verge of breaking off its relationship with the bank. This is according to an article in The Financial Times.
Word is that the American owners of the team, the Glazer family, are furious with the firm after the bank’s chief economist and long-time Man United supporter Jim O'Neill criticized of the club's debt situation.
According to the report, O’Neill said, “There's too much leverage going on with Man United. It's not a good thing. I'm not a buyer of the bond. I value my long-term support for Man United better than anything else.”
The Glazer family bought United for $1.47 billion in 2005. The comments come after the club issued a £500 million bond, on which Goldman is one of the syndicates. Goldman has courted controversy before by selling mortgage securities to various institutions and then betting that those mortgage securities would fall in value.
The situation so outraged Joel Glazer, son of Malcom Glazer who led the bid for the club, and called Goldman's chairman and chief executive Lloyd Blankfein in the wake of the comments. It is my opinion that Blankfein didn’t take the call as he was busy up to his arms in Mousakka.
O'Neill is a member of a consortium of investors going by the name of the Red Knights, which recently unveiled plans to buy Manchester United for over a similar price Glazer paid this week. The Red Knights wear the team’s original green and yellow kit as a protest against the current regime.

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