Foreign ownership of Premiership football teams has been a highly controversial issue over the past number of years. While Chelsea and Manchester City have owners who buy and sell players as though they are playing a real life game of Championship Manager, clubs like United and Liverpool have got owners who are in the game purely to make a profit. There has been much debate in relation to the Glazers and Fergie has come out fighting their corner on numerous occasions.
While I would not necessarily take Sir Alex’s comments in relation to the owners at face value, I feel we are blessed to have him to steer the ship through these choppy waters. The scenarios at United and Liverpool are extremely similar however when you look at the way Fergie has approached the situation and compare that to Rafa Benitez’s approach, it shows where the real power lies.
Both United and Liverpool have huge amounts of debt to service with the interest repayments alone. It is clear that this has affected both clubs in the transfer market since the downturn in the economy. Benitez threw his toys out of the pram and took the approach of turning the fans against the owners. This resulted in a farcical situation that turned Liverpoool Football Club into a laughing stock and affected performances on the pitch resulting in the team dropping out of the Champions League places and Benitez getting his marching orders. Roy Hodgson is now in place and there are no issues between manager and boardroom. This has led to a degree of optimism around Anfield that certainly was not present this time last year.
In the pre-Glazer era United had grown into a global brand and only Real Madrid could compete in relation to annual revenues. Whether the team won or lost the league improvements were made and expected year on year. Fans were used to a Ferdinand, Veron or Van Nistlerooy signing most seasons. The Glazers arrived in 2005 and while many fans were not happy (FC United of Manchester was established in protest) the Glazers pledge that they would make funds available to the manager seemed to lead to a high number accepting the situation.
United have been saddled with over £700 million of debt due to the Glazer take over of the club with annual interest payments alone of a reported £25 million. Season ticket prices increased 42% in the first three years of the Glazer reign. When the worldwide recession hit in late 2007 the tide really began to turn in terms of support for the anti-Glazer movement. Summer 2007, just a couple of months before the recession, signalled what was the end of United’s big spending. In that transfer window, Fergie bought Owen Hargreaves, Nani, Anderson and signed Carlos Tevez on a two year loan. While some of this was funded by the departures of Tim Howard, Guiseppe Rossi, Alan Smith and Gabriel Heinze it was still a sizeable investmet by the Glazers.
Since 2008 the Glazers clearly do not have the cash to compete with the big boys in the transfer market. When you factor in that Man City have now become outrageously rich and the transfer policy adopted by Real Madrid in 2009 it puts United as a second class citizen when it comes to competing in the transfer market. Evidence of this is seen in Benzema and Ozil both being tempted to Madrid ahead of United in the past two years.
There is also the Cristiano Ronaldo transfer proceeds which Fergie has not come close to spending. While he claims there is no value in the transfer market, this can no longer be considered to be the case considering the value last season at Real Madrid with Sneijder leaving for £13million and this year at Manchester City with Stephen Ireland valued at £8million in his transfer to Villa, Shay Given available at a relatively cheap price and Ozil arguably the best value buy in a couple of years at £12 million. While Fergie has signed three young players this summer it is thought that the figures paid for Smalling and Hernandez are staggered and dependent on the players achievements. With Ben Foster and Zoran Tosic leaving the club, his net spend is no more than £10million.
It was announced in the last couple of days that have been hit with a rise in their annual debt repayments after the club exceeded a limit on their overall borrowings. It has been predicted that the annual interest repayment will go up £13million to £38million. As part of a £504m bond refinancing earlier this year, the Glazers have an option to take £95m out of the club’s cash reserves. According to the most recent set of accounts published by United they have £95.9m of cash available.
When you look at the bare facts, since 2005 supporting United has become more expensive. Season Ticket prices have rocketed and the cost of merchandise has risen steadily yet the club is now saddled with huge debts and struggling to compete financially. While most fans would not mind falling behind City and Madrid in the spending stakes it is the fact that the club is hemorrhaging millions each year in the form of interest to bank loans and “administrators fees” to the Glazer family which is hard to stomach.
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Well amazing that nobody was complaining when the three titles in a row were flying in. There have been big signings under the Glazers as well don’t forget….Carrick, Hargreves etc. We also won a European Cup and could have easily won another. I’m not standing up for them because they are basically raping us but the fans were not giving out when we were winning stuff. As for getting them out of the club that is just not going to happen. They are business men and they know they have a great asset on their hands. Liverpool have been hoaring themselves out for a year trying to find a buyer but the Glazers are not stupid and with the Red Knights bidding well over a billion they would be already making a huge profit. They’ll try and sit tight for another 3-5 years and then sell it for a couple of billion. We ain’t getting rid of them any time soon!
The winning of trophies definitely masked how much trouble the Glazerswere putting us in. However, now that we are not winning trophies as much and not competting with the big boys in the transfer market, the frailties have been exposed. We are in debt and don’t seem to have any significant money to spend despitean 80m sale of a player. Whatever way you look at it, they have put us in a bad position.
The sooner they go, the better. But I have to agree with Niall, I don’t see it happening any time soon.
The other thing to add is that if Rooney had stayed fit or we had another striker and Rafael had not been sent off against Bayern we could easily have won our fourth straight title (Never done before) and made out 3rd straight champs leagues final. There is a fine line between success and failure!
Fantastic as ever. I’m no expert in the finances, but my input into United’s financial situation is the following: it doesn’t look good. The Glazers have little choice but to increase prices for merchandise and season tickets and many other PL clubs have followed suit.
Well I have just shelled out 50 Euros on a new United jersey. That should pay for some of the debts! Hard to take that you know that money is going in to their pockets and not in to the team
Great article! Looking forward to more posts from the author.
Excellent in depth analysis from the author Ray. Hopefully Ray will become a regular contributor to GGMU and enlighten us with more in depth analysis of current hot topics affecting Man Utd both on and off the pitch.