This summer Sir Alex Ferguson has returned to his austere Glaswegian roots, unwilling to spend the piles of cash he apparently has at his disposal. At least that’s the view of Manchester United’s managing director, David Gill, and the Glazer family, who have once again reiterated that the manager has money to burn. Quite how much Ferguson is not spending is anybody’s guess but if the Glazer’s official spokesperson on the Asia tour, Tehsin Nayani, is to be believed, then £60 million is the correct figure. But does anybody believe him?
Three matches into the Asia tour and fans now have a better idea how the team is shaping up ahead of the coming season. This includes significant weaknesses in wide areas and central midfield. Many fans expected those deficiencies to be addressed but Fergie has instead gambled on the potential of Antonio Velencia and Gabriel Obertan, and fitness of Michael Owen, while the big money has been spent by Real Madrid and Manchester City.
But fans should not worry about United slipping behind domestic and continental rivals according to the club’s management.
“We should not undersell our key assets. We have the history and heritage of Manchester United and 76,000 people in the stadium every week. I still think we are a major attraction,” said Gill this week.
“We’re not at the whim of someone pulling out and losing interest. That’s because we’re operating for the medium and long-term. United has been around since 1878 and our job is to make sure it’s still around for many more years in a sensible fashion. That’s by generating our own income.”
And that income was substantial according to the best estimates. United’s revenue is close to £300 million with profits wiped out by debt service interest payments of £81 million on £667 million of debt.
Nayani’s calculation was based on annual interest payments of £43.5 million, operating profits of £80 million and additional transfer profits of £25 million. A calculation that reveals a significant proportion of United’s interest payments were rolled back into the overall debt. The same was true of the £30 million paid for Dimitar Berbatov this time last year. It means that by the time United’s next accounts are published the club will owe more than £700 million to the banks.
Despite this Ferguson is free to spend the £80 million that was generated from the sale of Cristiano Ronaldo to Real Madrid this summer - less that used for Valencia and Obertan – according to Nayani.
But Gill is emphatic that United is not prepared to pay the same astronomic weekly wages as City and Madrid. Ronaldo will pick up more than £200,000 per week at Madrid and Tevez £150,000 at City – far more than either was earning at Old Trafford.
“It’s highly unlikely we’d want to go to those levels,” said Gill. “We don’t think it’s necessary because we’re looking to the medium and long-term. We knew what we’d do if Ronaldo went, we were going to get Antonio Valencia and the situation with Carlos Tevez needed sorting.
“Tevez didn’t want to stay so we made a substantial bid for Benzema but he decided he wanted to go to Madrid. Then we moved for Michael Owen.
“We also bought young players in Gabriel Obertan from Marseille and Mame Biram Diouf from Molde. We’re not in the market for 27, 28 or 29-year-olds for loads of money. It doesn’t make sense.”
It’s a policy that is unlikely to change in the current economic environment. While the manager has cash to spend this summer, he is likely to have less next year as the debt continues to bite. Good value or not, Fergie would do well to spend now. Nayani’s maths suggest that without player sales United will continue to increase its debt, or be forced to substantially cut the transfer budget.
The club’s management will point to the new £20 million per season shirt sponsorship deal with Aon that comes into play from summer 2010. The club has also substantially increased the total number of sponsors, which will show another large increase in revenues when the accounts are published next March. The current $12 million Asian tour is just part of that process.
For the moment, Ferguson has a £60 million sized hole burning through his back pocket.