The Ronaldo Money



Look behind the headlines – you know, the spin-driven articles pronouncing yet another quarter of glorious revenue growth – and Manchester United’s Q2/H1 financial statement once again paints a gaudy picture of the Glazer family’s ownership. It is a picture of a still heavily indebted club spending its profits buying back debt at an inflated prices, while struggling to compete in an increasingly hostile market.

United’s is a story of unfettered waste – millions lost on financing costs, interest and debt repayments; money that could otherwise have been spent in the transfer market, or on reducing ticket prices. It is an account of a club sprinting to stand still; an institution squeezing every last dime out of the market simply to keep the wolves at bay.

The good, the only news United releases and far too many media outlets lap up without question, is that revenues continue to rise – up to £175 million for the past six months, from £156.5 million a year ago – driven largely by increasing in media and commercial income, including the new training kit deal with DHL.

Elsewhere the picture is far from rosy. Operating costs rose to £110 million for the six months, from £96.9 million, as the club struggles to keep wages under control despite multiple summer departures. Wages increased by 17.3 per cent year-on-year, to £38 million during the final quarter of 2011.

Then there is the huge reduction in available cash, down from £150.6 million to £50.9 million, after a net £47 million spend on transfers last summer and further bond buy back.

Indeed, United has now spent more than £90 million on buying back bond debt since launching the £500 million notes in January 2010. That’s the infamous ‘Ronaldo Money’ and more. Season ticket sales this summer will bolster Old Trafford’s coffers, but history says that income may well be used to buy back bonds on the market.

The absurdity of the Glazers’ financial engineering is only truly understood when viewed in the full context of the Glazer family’s time in charge. Bought with debt, the family first loaded millions on to the clubs accounts, only to swap bank debt for – significantly more expensive – bonds in 2010. Now the family is embarking on a campaign to reduce bond debt, buying them back at a premium over the issue price using cash in the club’s bank account.

“Manchester United revenues continue to grow strongly although costs are increasing just as quickly so pretty much negating that growth,” said the Manchester United Supporters’ Trust.

“However the key figures of interest to supporters show the Glazers have now spent every penny of the money received from the sale of Ronaldo, and more. That’s now £92.8 million spent on buying back their own bond debt that they loaded onto our club. So statements at the time that all of the Ronaldo money would be made available for reinvestment were clearly just spin.

“Since the sale of Ronaldo net transfers have totalled just £90 million while they have taken out of the club £225 million to cover their debt payments and interest. What could the club have done with that extra £225m? Cheaper tickets for loyal fans, investing massively in the squad and stadium, developing and retaining the best youth players, competing on an equal basis with the very best teams in Europe. This is the true cost to Manchester United of the Glazers ownership.”

Yet, anger among the United fan base has waned, with too many happy to bury their collective heads in the sand and deny that any of the fundamentals underpinning United are in ill health. After all, Sir Alex Ferguson continues to work miracles even with his hands firmly tied behind his back. Almost inconceivably, United is still in the Premier League title race despite Manchester City’s vast sovereign wealth.

There is no talk about the ‘Ronaldo Money’ now of course – not with it having been spent largely on debt buy-back. Meanwhile, the new signings offer varying degrees of Sir Alex’ favourite quality: value.

But fans should be angry about the close to £500 million squandered by the Glazer regime since 2005, let alone the two hundred million since Cristiano Ronaldo was sold to Real Madrid in summer 2009.

Indeed, buried inside Old Trafford’s second quarter report, under the headline “Further development of the playing squad,” is the telling line: “New contract signed with Ryan Giggs and Paul Scholes re-joins the playing staff.” Much as those two legends remain a joy to watch, how Sir Alex must look with envious eyes at the midfield riches across town.

Yet, there is little sense in which United is still competing, as MUST might put it, on a equal basis with the continent’s finest. Financial Fair Play is yet to fully bite, but few expect the Reds to play at the top of the market come the summer. Indeed, word on the street suggests quite the opposite, especially with the Glazers’ long mooted IPO on permanent hiatus.

Moreover, with United out of the Champions League, and knocked out early in both FA and Carling Cups, headline revenue growth is likely to stall. Football remains a lumpy business no matter the club’s urgent efforts to drive income away from the staple of playing matches and selling television rights. United may lose, or rather, not profit, to the tune of £3 million per round in prize money alone from competing in the Europa League. Extra games are unlikely to make up the shortfall.

There is little cushion now either, with the stockpile of cash gained from Ronaldo’s sale and AON’s pre-payment on a four year shirt sponsorship deal, back to historical levels. This alone may indicate Ferguson’s priorities in the coming summer – a break in which ‘value’ is unlikely to be seen and Ronaldo may well star at Euro 2012.

Share Button

Comments

  1. I don’t mean to sound dismissive, as this is all incredibly worrying, but what should we do? Sit it out and hope that once the debt is paid off (if ever) then the Glazers will invest? Hope that they sell the club soon? What if they sell it to another charlatan? Or should we be proactive, and consequently what should that entail? Boycotting games/merchandise? Protesting is all well and good, but without real, tangible (negative) monetary outcomes for the Glazers (and the club unfortunately) will they have any effect? As long as the club continues to make money, then I fear the Glazers will continue to sit pretty. Very interested to hear your thoughts.

    • Drew – fans need to keep raising the issue. Pressure has told before. The Glazers didn’t use dividends to pay off the PIKS – they had to find another source of finance for that. Pressure did that. Then there was the price freeze last season. Fans can also keep it in the public eye so the Dept of CMS may legislate change in football governance. In the end ownership will be decided by the market – the Glazers will either sell when they feel they’ve maximised value, or when the markets look more buoyant they’ll IPO. It’s all about their profit. In the meantime fan pressure does count.

  2. where’s your source for “educe bond debt, buying them back at a premium over the issue price using cash in the club’s bank account.”

    Most other articles are saying the complete opposite that they are buying the debt at a far lower price and also avoiding the 8% coupon interest.

    Feel free to correct me though

    • Stephen – They’re wrong. There’s a premium being paid on the bond launch price, although the club will of course avoid paying interest by buying bonds. Bonds rise and fall in price. Source for there being a premium – it’s in the accounts! So pretty black and white. If anybody tells you otherwise they haven’t got it right.

      It’s not that buying bonds now is the wrong strategy, per se, but it makes absolutely no sense whatsoever to have swapped bank debt at around 5% for bond debt at 8%. Unless of course the Glazers wanted to pay down the PIKs using dividends (that the bonds allow) but got spooked by Green & Gold into finding US finance for the PIK debt….

      Morally I find it repugnant.

  3. footballfan says:

    To me the most worrying aspect of UTD’s financial situation is that the Glazer could sell the club to another family of carpet baggers who load up the club with debt.
    And really what have the FA done to prevent this happening?
    Nothing.
    There should be rules in place that say a buyer of a football club should borrow no more than 10% of the purchase price. The Galzers would find it very difficult to make the outlandish profit they hope to make.

    Secondly there should be rules in place that says all PL clubs should be owned by English people.

    If that was to happen just watch the value of clubs fall. Glazers would be lucky to get their £800 million back.

  4. Personally I don’t think the debt would have anything to do with the ticket prices as long as the demand is high. Even if the Glazers were as rich as the Arabs next street, why would they reduce ticket prices and lose profits?

  5. Alfonso Bedoya Alfonso Bedoya says:

    “Since the sale of Ronaldo net transfers have totalled just £90 million while they have taken out of the club £225 million to cover their debt payments and interest. What could the club have done with that extra £225m? Cheaper tickets for loyal fans, investing massively in the squad and stadium, developing and retaining the best youth players, competing on an equal basis with the very best teams in Europe.”

    Bought the north side properties on Railway Road, just below OT, and increased the size of the stadium to 90/100 thousand… given it to charity… spent it on booze, whores and fireworks for all the “Rant” regulars… anything but watch the Glazers play with it, as if it was a surprise 20 quid, they discovered while doing the fuckin laundry.

  6. seriously what is wrong with you all. the way you lot are reacting is as if the glazers have ruined utd. since they took over we have won more trophies and bought expensive players – berba, de gea etc.

    sure we are in debt, but it hasnt crippled the club in a major way.

    financially 3rd ranked club in the world, behind real and barca

    todays report showed an increase in revenue and decrease on overall debt.

    just lighten up, if glazers sell our best players or the naming rights to old trafford then get the pitch forks out.

    • stan – it’s almost as if it comes out of the mouth of David Gill himself. I don’t see why fans should “lighten up” about £500m being wasted, which is what has happened over six years. Before the debt kicks in the club is the most profitable in the world. Afterwards the club spends far more on the costs associated with debt than it does on new players. Oh and just so we’re accurate – half year results actually showed an increase in debt. Helps if you get it right, before believing the spin.

    • What is wrong with you? Does it not bother you that the cost of supporting United has increased dramatically… just to service the Glazers business interests?

      £500 million and counting, taken away from the club, just to pay bills that we didn’t have, until the Glazers took over.

      Regardless of Uniteds on field success… that is a HUGE amount of money that was literally WASTED!

      • Sad thing is Alf along with thousands of others it doesn’t bother them! As long as United are in with a shout then a blind eye is turned.

        Whether you like it or not, most of those that were bothered did one and set up FC United. Sure there were plenty that still cared at OT but I fear they have been overwhelmed by superior numbers who couldn’t give a toss in their AON shirts and G&G scarfs!

        • petescully says:

          Been reading many tales about Man United Debt.lots of spin from vested interest. and being a Scot i got no axe to grind with the Reds, if i did support Man United I would be Sticking my Head Deep into the Sand,your in a bubble down there
          Bubbles Burst Manchester United Debt is Beyond Control
          What if Sky is broken up? Your the Rangers of the South
          PS your on the right track Hear plenty of good posts on this site.From Real Fans
          Rangers of the south?=Debt Controlled by more Debt
          Suits at the Trough, Sponsorship deals can be broken

    • petescully says:

      STAN, Glasgow Rangers 9 in a row
      what your saying rings a bell.
      There Borrowing Money to pay Themselves More
      Repay the Borrow. Borrow Some More
      Whats the Board Room Chant
      Were Forever Blowing Bubbles

  7. Fair comments but your article omits emerging talent like cleverly and pogba etc who I would rather see flourish in the team , then buy some other players for big money. United have plenty of young talent coming through , the need to spend like city is not necessary.
    I would rather the glazers then sheiks, because when they leave , city will soon be ihr conference. Whilst uniteds, thanks to sir Alex , and commercial success will get increasingly stringer.

  8. FletchTHEMAN says:

    Dearly love to know how much previous owners took out of the club and averaged for inflation and valuation of the club how this stacks up to the Glazers. It is a bit daft saying the Glazers couldn’t make some profit and the profit seems largely to be going into paying the debt. Even though the terms of ownership allow significantly more to be taken out, this does not seem to be happening. I agree there are real problems with this model and it seems completely daft to me. But saying the Glazers have taken out 225M over 3 years on a club valued over 1Billion means little to me. If you told me that no other owner has ever taken that type of percentage (under 10% a year as a rough estimate) then I will have more to go on. I just would love to see a comparison if there is one to be had. Is Henry not expecting 10% return from Liverpool? Just saying….

    • makes sense and yet think its the overhanging debt which raises more concern than just the pounds taken out of the club … that means high revenue is required just to stave off financial meltdown. if just taking money out … if club makes less then less for them to take out. just my thought.

  9. 19 and Counting says:

    So I guess we’ll have to make do with our current squad and transfer targets like Hazard and Gotze will go to rival clubs. Maybe Giggsy and Scholes can play on ’til they’re 50!

    Hopefully the Glazers will sell the club and move on before we’re in deep, deep shyte.

  10. 19 and Counting says:

    Everything is sh*ts and giggles at the moment because we are still only 2 points behind City. But let’s see where we end up at the end of the season and next year with virtually the same squad and no money to spend on quality players, especially in central MF where we have needed strengthening for some time now. Fletcher may never be the same player, Anderson has had his time, and Giggs and Scholes (although amazing servants) are approaching 40. Surely this ‘patch up’ mentality cannot work forever?

    Perhaps a return to the green and gold, no?

  11. Sorry if I repeat what others have already said but what are fans to do about the situation?
    Supporters can protest as much as they like BUT if the Glazers won’t sell, then what?
    Other people with considerable financial clout have made attempts to buy the club and the Glazers have resolutely refused to sell!
    I imagine it would take an oil sheik to offer something in the region of £3 Billion (2x the value of the club) to even make the Glazers think about selling and the answer could still be no.
    So what then?
    As frustrating as it is for United fans to see vital funds disappearing to banks, institutions or bondholders there is no way the Glazers can be made to sell the club!
    Fans can protest until they are blue in the face but only IF and WHEN the Glazers decide to sell will they do so.
    I am as annoyed as the next man in seeing United stagnating as a club when it is clearly obvious that new quality players are either needed now or will be during the forthcoming season as the continued renewal of contracts for Giggs and Scholes was never on anyone’s agenda by choice and as we have seen, has been forced upon the club by a supposedly lack of financial clout to compete with the likes of City, Barce, Real and now PSG and Malaga.
    Fans can only sit and wait and hope that in time, sooner rather than later of course, the Glazers lose interest in Man. Utd and sell up.
    There would certainly be no lack of takers as the club is successful in winning trophies and leagues on a regular basis and that appeals to anyone interested in sport or of business.
    So to conclude, patience is the key. Difficult I know to just sit back and await events but there is little else anyone can do, maybe except shooting the Glazers and I don’t for one minute suggest should anyone do that!

  12. with financial planning like this, little wonder that the Yanks have fucked themselves in the US
    we can only dream of what we would have become with the additional 225 million pounds invested in the club instead of paying back debt of 1 form or another – suffice to say, i doubt giggs and scholes would still be playing for us.

  13. The amount of cash utterly spurgled up the wall on this damned takeover – and it is the club’s and therefore the supporter’s cash – is mindboggling. We could not only be the best team in the league, it could be by a significantly long way. Instead we have to “make do and mend” with what we have – as the third richest team in the *WORLD*.

    Utterly ridiculous.

    The only way to really sting the club is to refuse to buy anything – no merchandise, no tickets, no memberships, no anything. Starve them out.

    The thing I fear, though, is that the health of the club would be irrepairably damaged in that situation, left mid-table also-rans and no chance of champions league football without massive investment from a sugar daddy.

    Awful situation.

  14. People who actually believe that United had a 150m£ transferbudget in the pocket are stupid. You are not playing FM now lads. Even if we had 150m£ in our transferkitty, I doubt that Ferguson would ever spend half of it. To be fair to the Glazers, they were extremely unlucky with their loans. Who could know that companies and elected people in the US government were cooking their books?
    Just look at Iceland and you will see how difficult this is. It wasnt just one financial institution that suffered from this, neither in USA or at Iceland – or in the rest of the world for that matter.

    We are, however you look at it, lucky that we have owners that dont interfere with the clubs daily routines.
    You rather have an Abramovich looking over your shoulder?
    You rather the owners buy players that nobody wants?
    You really think 100m£ of new players would make us better?

    Not that I like the Glazers at all (even thou it seems like it), but they have made good business with all their teams in sports (not only for themselves, but they have won with every team/franchise they have invested in). And I am sure they will with United too.
    Actually, we have been doing quite well – we just havent beaten a certain Catalan club enough times.

    I rather believe what Ferguson says (about investments in the club or in players) than what smocks are blogging about. In 2009 a lot of you thought the club was going bankrupt – how stupid is that?
    IF the club and Glazers hadnt had a way to get out of the financial mess, then we would have had new owners. Then this club would be on the market for another player.
    I am not so sure that would be so good for Manchester United Football Club. There would have been no guarantees that any new owner would put more into the club. Just look at Ecclestone and those at QPR – they put nothing into the club if you look at their overall wealth.

    The grass is not always greener on the other side…

    • Essi – I’d rather have owners who don’t waste £500m on debt repayments, interest and loans to themselves. I’d like owners who don’t throw away millions on debt swaps and the associated fees. I’d like owners who communicate with the fans and who’s agenda is the same as the fans’. I’d like owners who don’t increase ticket prices by more than 50% while the quality of the team declines. I’d like owners don’t repeatedly spin that all is well, fooling fans like you into believing the nonsense that you’ve just repeated is true. United doesn’t need a sugar daddy, but the club doesn’t need leaches sucking the life out of it either.

      • 19 and Counting says:

        Having said that Ed, if Fergie can get us title no.20 this season with this current squad, you have to say that it could be his greatets achievement to date.

  15. Dinkinflicker says:

    The only way in which sufficient numbers will revolt and campaign against the Glazer regime is if/when our league form suffers.

    There was a brief Green & Gold campaign within OT a couple of years ago, but that only really coincided with a spell where our league performances were poor and we trailed chelsea in the league. It was almost as if some fans were driven to protest at games through sheer boredom. As our form and performances picked up, the profile of the campaign waned.

    If we found ourselves going through a similar spell as Liverpool have over the last couple of years, people might start to vote with their feet/wallet in greater numbers.

    The sad fact is that whilst we’re winning and challenging for the title, not enough people care – they’re blinded by short term results and can’t think about the bigger picture.

    If we’d had a lesser manager than Fergie in charge over the last few years, we’d be in a clusterfuck of a situation.

  16. Personally I dont know why we are complaining. The fact is that the Glazers bought the club leagally and everything that they are doing is what any normal business person would have done. If one belives in the free market then practices like this are happening in every sphere of business everyday. If someone doesnt like the product they dont have to buy i.e. boycott. The day united was listed on the stock exchange it opened the door to being purchased by outsiders and sadly our success over the 90′s just made the club more attractive. Also I think we forget that out of all clubs in PL we benefited the most by getting listed because it allowed us to buy players which we previously could not afford.

    I think most fans would prefer that the club be bought by a sugar daddy like roman or sheikh mansoor but personally I would hate it. I believe in the club and what it stands for. Youth players at mancity or chelsea are never even given sniff of a chance while we keep producing or buying youth to see it develope into finished product.

    We have to give credit to the glazers for increasing revenue YoY and also trust SAF when he says he has money to spend if he needs it. Even today we have a core of players that will be in our team 5 years from today bet u cant say same for mancity or chelsea. My biggest fear is that the Glazers under pressure sell the club to someone like Hicks who screws the club totally over.

    My advice is lets support the club to the full and hope that SAF lasts for many years to come because we will see much darker days when he retires.

    • Freyan – you conclude your post by saying your “real fear is selling to someone like Hicks….”, well your real fear has come true. The Glazers have placed United under more debt (both gross and ratio of EBITDA), wasted more on interest, created bigger annual repayments and restricted Ferguson’s spending far more than Hicks and Gillet did at Liverpool. United has benefited from Ferguson’s genius, and stronger cash generation.

      I love when apologists like you bang on about “supporting the club” as if debating the issue is some how contradictory to that. It’s an effort at muting those who point out the disgraceful way the Glazers have run this club. I’ve been to hundreds of games at home, away and in Europe over the past 25 years. I’d say that’s support enough. How about you?

    • I would love to see someone buy the club and then say “I’m not taking any money out or putting money in. The club has to run itself”.

  17. Violent Banana says:

    I’m throughly depressed. What I don’t understand is how financial fair play will affect our sitation. Is it a ray of light on the horizon when it comes to transfers?

    • Violent Banana – FFP basically locks in the status quo. So it’s good for United. FFP says nothing about debt, so as long as United meets its debt obligations within revenue UEFA doesn’t care.

  18. 19 and Counting says:

    United has benefited from Ferguson’s genius, and stronger cash generation.

    But how long will that last?

  19. yes- the glazers are raping our profits, and have been since day one, but you cannot escape the fact that the debt is coming down year on year, and our squad IMO is still the best in the PL.
    as others have said, the club seems to be making more money these days also (debt repayments aside) and the glazers do leave the boss to it, which is great. certainly wouldnt swap our ownership situation for liverpools, chelseas or man citys……so what does that say?
    if there was something that we could do to get rid of the glazers without affecting the team we would all do it.
    harping on about “the ronaldo money” is old hat.
    personally im glad we have not re-invested cash in a wesley schneider, much rather kids like cleverly and pogba be given a chance to shine.

    • realist – actually the debt went up this half, but let’s not split hairs! It’s not about reinvesting the cash in Sneijder, it’s about these two questions: What about the Glazers’ absentee and debt-laden ownership has contributed to United’s success? How has £500m wasted been good for United?

  20. Ridiculous article and an embarrassing press release from Must. Since Ronaldo was sold we have bought Valencia, Obertan, Diouf, Vermijl, Smalling, Hernandez, Bebe, Lindegaard, Jones, Young and De Gea for just about £97m. So the Ronaldo money was clearly spent on new players not debt reduction.

    The debt reduction, which we should all welcome by the way, came from the increased revenues not from the sale of Ronaldo.

    It’s totally embarrassing to see Must and their few followers try to talk about financial matters when they clearly have no understanding of finance at all. Every time they open their mouths they put their foot in it. The people at Must are lying to us fans.

    • Matt – factually wrong. The increase in revenues over the past two and a bit years is not £92.4m. The vast increase in cash over that period came from two sources – Ronaldo and pre-payment on AON

      • Ed, I don’t think you would recognise a fact if it hit you in the face. There are no factually inaccuracies in what I posted. There are in your response.

        United’s revenues have gone up from £210m in 2007 through £287.5m in 2009 to a projected £350m for the full current year. As I pointed out the transfer budget has been broadly balanced. I make it £97m spent since Ronaldo was sold against about £96m in, including the Ronaldo money.

        You respond with a reference to revenue increases not being £92.4m, which I never mentioned and has no bearing on anything. Then you go on to confuse revenues and cash. I don’t think that you really know what you are trying to say.

        Bottom line is that the Ronaldo money has been spent on players. It’s there in black and white. You could argue that having a balanced transfer budget is wrong but you can’t argue that the Ronaldo money has gone to the Glazers. The facts don’t support you in any way.

        • Matt – it’s almost insulting to have to reply to you but I’ll do it because I’ve spent years trying to educate the ill informed and poorly educated. £92.4m is completely relevant because that’s the amount that’s been spent on bond buyback in the past two and a bit years. United’s cash position is completely relevant because that’s how much United actually has to spend on players (or more likely debt buy back). Revenue is utterly meaningless. Revenue is vanity, profit sanity and all that. And laughably you’ve even started quoting revenue figures for the past five years, to make an argument about the past two. Please just give up, you’re embarrassing yourself.

  21. as for MUST…..well, didnt they want SAF to step down for failing to attack the glazers?
    J O K E R S

  22. 19 and Counting says:

    The problem is not that we haven’t spent the ‘Ronaldo money.’ The problem is HOW we have spent it. 30m on Berbatov who now graces the United bench and can barely get a game. We could have sold him for 10-15m last summer but no. Then we go out and spend 47m on 3 players who may or may not turn out to be quality players. Bebe was bought for 7m – where was the logic there?

    We never did replace Ronaldo and his quality and that looks set to continue. No one is asking for complete overhaul or panic buys. I just want a quality central MF that can compete with the best teams in Europe for years to come. Is that to much to ask?

  23. Ed,

    We live in the 21st Century. The idea that a business/individual would buy a club like Man Utd not to make money is ridiculous.

    Club was bought for £800m (approx) by Glazers. Yes, they then borrowed against the club to finance the buy out, some may argue this should not be allowed but it happens right throughout the business world.

    I understand your point about £225m being used to pay off debts etc but it is a bit naive to think this money would not have be taken off as a dividend if a club had been bought outright with cash.

    From a business point of view it is much more tax efficient to borrow money and repay loans than to pay for the club totally up front and take a substantial dividend each year.

    At this rate of going the club will be free from debt in approx 5/6 years. The Glazers will then prob sell the club for 1.2 – 1.5 billion making a tidy profit over ten odd years of over a billion. Nice work if you can get it but please end this social crap of thinking the fans etc are being robbed of cheaper prices. If the club had been boughht outright the prices would be the same.

    By not spending big and still being in the running against the spend City have made over the last 5 years it proves the point that you don’t have to spend crazy big! Surely Torres, Carrol & Veron should be lessons learned for any club?

    Yes it would be great if the fans owned MUFC but instead of moaning about it start an MUFC buyout fund where everyone gets a vote and pays an anual fee towards buying club. open it worldwide. If this had been done before 2005 it would have need £800m, now it needs prob £1.5 billion. Mega rich individual Utd fans could contribute large donations on the basis they are doing it out of love of the club but not to get anything back. the Red Knights were in it for themselves.

    Common sense need, not irrationality.

    :D

    • Marty B – I assume its ok to reply (note to commenters above!) since you addressed this to me. Some speculation there – we don’t know what would have happened with prices without Glazer ownership. We do know that the rise in prices under the PLC was far slower in the previous five years. We also do not know when the club will be debt free. Factually, the Glazers run all their businesses with debt. In 2017 when the notes mature the family may well simply reissue more notes. They may not, but its very common practice. Moreover, if they want to IPO de-leverage now is good. Doesn’t mean they won’t re-leverage. As for tax efficiency – United is paying tax. And interest. And loans to the Glazers. And buying back bonds at a premium. All in the accounts.

      I’m certainly not saying that the club should go crazy in the market. But then again, if that’s what Ferguson wants, why should we be hamstrung? Aside from the waste and price increases, its just plain business insanity to have thrown away so much money refinancing three times in six years, each time for a worse deal.

      As for the comment about irrationality and common sense. Please. Spoilt a perfectly sensible post (even if its one I disagree with) with a childish dig.

  24. berbatov was bought before ronaldo was sold. maybe it was a deal done with the knowledge that ronaldo money would be arriving, but it was still a deal doe prior

    bebe was a waste, but i’m certain his was a deal to pay off ronaldo’s agent (mendes) for brokering that deal.

    as for last summer’s spending spree. well i’m sure everyone was shocked by that given our transfer record in recent past. but cant fault the players. not the best money can buy, but jones and de gea will be good for us, and young, well….

    fact is if we had 250mill odd to throw around in the last few years, we could have bought aguero, silva, toure, mata, nasri, bale etc. you cant go into a bidding war knowing that you have a cap. thats not how its done. sometimes you have to spend silly money. and united and fergie have done that plenty of times in the past. its just that now we play in the transfer market with a massive handicap. so if a player is deadset on joining united, like berba, then we’ll still win. but if a player just wants a big money move, like nasri, we’ll most likely lose out

    i dont think you can argue the fact that the glazers have been the worst thing to happen to united in recent history. you could argue that becoming a plc made us vulnerable to this kind of takeover, cause the free market (which has more faults that positives) allows it. all we can hope for, is that this nightmare ends soon

    • I don’t think Utd’s spending has been much different to the last 20 years or more. There was a big signing every few years (may be due one this summer, Eriksen?, Gaitan?) and never more than about 4 in the squad at any one time. The rest of the squad was made up from home grown and cheap players like Irwin, Sharpe, Kanchelskis, Solskjaer etc. These days it’s Hernandez, Samlling, Park etc so I don’t see that is much different to now. The real difference is that Chelsea and City have had silly money to spend and also these days we are compared more with Madrid and Barca. I bet if you compare Utd’s spending to Spurs, Villa, Everton over 20 years you won’t see much difference.

  25. “Bebe was bought for 7m – where was the logic there?”

    Well obviously no-one bought him hoping he was going to be shit. And he didn’t cost 7 MIL.

    And in United’s history we have never spent huge money on a ‘finished’ player of Ronaldo’s quality. Do you not remember how we got Ronaldo? We spent about 12MIL on him as a teenager and HOPED he would become a great player.

    And which 3 players are you referring to? Phil Jones? Looks a bargain. De Gea? Will look a bargain in the future. Young? Not same level as a young Ryan Giggs, but improved our squad and options immeasurably.
    Also, Chris Smalling 10 MIL. Bargain. Chicharito 6MIL bargain. Rafael and Fabio, 3MIL each – bargain.
    Football is never certain. It’s about whether net spend equates to a better squad, and for United it certainly has.

  26. united4ever says:

    Reading the posts it’s evident that if you have an opinion that isnt exctly the same as Ed he’s going to slate you for it!!!
    Let me guess he will say that you believe the spin, your not a loyal supporter or some other crap.
    Ed you need to realise that people wont always agree with you as especially as you are on your soap box spouting off.

    The majority of fans hate the Glazers and aren’t happy they brought the club with borrowed money, unfortunately that’s life deal with it.

    Manchester United is a global brand and will never go bust, once the glazers have reduced the debt to a more acceptable level they will more than likely sell the club.
    There are plenty of potential bidders that would buy united, so don’t worry about something that hasn’t happened and you can’t affect.
    The club has had darker days than this like when we lost the Babes. So chill out Ed, or go ahead and slate me like everyone else. haha

    UNITED4EVER

    • united4ever – oh please grow up! It’s a forum for debate. Or is your opinion so important that I, or anybody else here for that matter, are not allowed to counter it? I’ve heard this tired old line since I launched the site in 2004. So I’m not allowed to have or engage in an opinion that’s different to yours without it being “slating” somebody? That’s nonsense, of course. If I was really that sensitive I’d just delete the posts I didn’t agree with! More to the point, it isn’t personal. I may disagree with posters and I’m prepared to say it. But so what?

      As for the rest of your post – please feel free to note where I’ve questioned anybody’s support, or said the club is going bust?

  27. When Fergie, mutv and our board decide to tell us that there are no players out there who can improve the squad who are available !! Could someone please explain how City managed to convince Aguero, Dzeko, Nasri., Silva, Balotelli and all the others to sign!!?
    Sorry but if you want the best then sometimes you have to pay through the nose.
    I have supported United (Season ticket holder) since 1968 and even I am losing patience with the way the club has been run. Glazers ripping everyone else while a club of our stature has spent less net money on transfers over the past 5 years than Stoke, Sunderland, Aston Villa!!
    We can only hope that someone who actually cares can get the Glazers out. In my case, regretably after 44 years I will not renew my season ticket unless these greedy owners are out of our club.
    And while we’re at it, Fergie is a legend but I wish he actually stands up to the Glazers instead of sucking up to them all the time.

  28. well said deadrevel, IMO “19 and counting” sums up todays instant fix fan who does not see the bigger picture like SAF does. berbatov graces the bench simply because chico n welbecks form put him there. does he not want a club that promotes youth?
    as for selling him for 10-15 million last season……what sort of fan would rather us bank money for him rather than have his talents to call upon from the bench to win a trophy or two when needed? mindless IMO!
    oh wait….he doesnt want a panic buy, just a cm to compete with the best in europe….well guess what mr instant fix, it does not work like that, just ask chelsea!
    luckily the boss knows what hes doing and with a bit of luck this next team he is building will have that cm with the likes of cleverly and pogba in it. these players dont get games if there are “world class” players brought into the club at the first sign of someone else having a “better cm” (but not a better TEAM i might add:)

  29. 19 and Counting says:

    Commenter said:
    “Bebe was bought for 7m – where was the logic there?”

    Well obviously no-one bought him hoping he was going to be shit. And he didn’t cost 7 MIL.

    And in United’s history we have never spent huge money on a ‘finished’ player of Ronaldo’s quality. Do you not remember how we got Ronaldo? We spent about 12MIL on him as a teenager and HOPED he would become a great player.

    And which 3 players are you referring to? Phil Jones? Looks a bargain. De Gea? Will look a bargain in the future. Young? Not same level as a young Ryan Giggs, but improved our squad and options immeasurably.
    Also, Chris Smalling 10 MIL. Bargain. Chicharito 6MIL bargain. Rafael and Fabio, 3MIL each – bargain.
    Football is never certain. It’s about whether net spend equates to a better squad, and for United it certainly has.

    “When Manchester United announced that they had signed the Portuguese striker for £7.4 million in August 2010, there was confusion aplenty around the football world. Relatively unknown even in his own homeland, Bebe was plucked from obscurity by Sir Alex Ferguson – who admitted that he had never even seen the striker play before agreeing to sign him.”

    Well who has egg on their face now?

    • I think what he meant was that the selling team did not receive £7M, i.e. a lot of the money went to Mendes for services unknown but likely to be linked to something to do with Ronaldo, Jose, Nani, Anderson or De Gea.

    • 19 and counting, the press came up with the £7.4m figure because that was the release clause in Bebe’s contract. The Vitória owner later stated that if Bebe met certain appearance criteria and United reached certain targets with Bebe playing then the final fee would have been €5.5m.

      The upfront fee would have been much lower than €5.5m; probably less than £1m. Even that need not have been paid in one sum. A small fee would have gone to Jorge Mendes from United, in all likelihood. There is a suggestion that Bebe sold some of his economic rights to Mendes for a small cash sum. So Mendes would have profited from the economic rights related to the move but ownership of economic rights by agents isn’t allowed in England, so that would have stopped after the transfer.

      I hope that I’ve cleared that up and that egg is appropriately apportioned now.

      • Matt – once again you’re talking from a position of absolutely no knowledge whatsoever. Incredible ignorance that can be fixed with some basic research. So, since you can’t be bothered, I’ll make this really easy for you. Go check the accounts for the relevant period (H1 2010/11) because it lists the costs in there. In black and white. In nice easy words that you can understand. And the cost was….. £8.3 million. Paid in one instalment. All of it to Vitoria directly. Now we can assume, since Vitoria said it, that a large slice of that went to Gestifute from Vitoria. The agency owned 30 per cent of Bebe’s ‘economic rights’.

        Keep that egg.

      • Matt – I should also say after the final message that you sent (deleted) I realise I was right to put you in the moderation queue. Experience has taught me that empty vessels who shout loudest are also the first to start firing out personal insults. Yours was particularly offensive. Banned.

  30. Over the years, Ed has valiantly tried to explain the finances and what is really going on. The problem is, as this comment thread has shown, is that too many fans are too stupid to understand the situation.

    The problem for the game is that the PL, the FA and the Govt. are also too stupid to acknowledge the problem or too scared to do anything about it.

    To what degree the Glazers have affected Fergie’s spending is debatable in my view. I don’t think we’ll know for sure how much Fergie’s hands are tied in terms of transfer budget and how much Fergie is blind to the inadequacies of the midfield or really believes in this ‘value’ thing until he leaves and a new manager takes the helm.

  31. we may well get away with this blatent waste of club resources in the short term, but as soon as SAF retires and a lesser manager comes in, it’s only a matter of time before we stop competing at the top and become another arsenal, content to come fourth or third at best- CL football being the aim instead of winning the league. Hope im wrong, but i think its just a matter of time

  32. If you believe United is too big to go bust, you couldn’t be more wrong. There are over 70 banks alone in the US which have failed that had assets in excess of $1B. You could argue that United is more of a financial services company that a football club at this point.

    With the treacherous state of the Eurozone/European bond market, what happens if Greece/Portugal fail and Europe plummets into recession, Ed? Hypothetically, would United continue to buy back the bonds at a loss?

    People need to realize that it’s not the signing fees that hamstring United, but the inability to pay players wages because we need to have money for finance costs.

    Also, are the audited financial statements ever issued? If so are there ever any significant adjustment?

    • Colin – Audited accounts are issued, via Companies House, for the UK based companies. Not the holding companies of course. Buying back bonds at a loss… they’re doing that now. Or do you mean, at a loss to the original investors? I’m sure the Glazers would love to do that…

      • Ed – I guess what I was trying to ask was if United’s financials would be affected if Europe slipped into recession and if so how badly?

        • Colin – United’s income is pretty evenly split between 1) matchday income, 2) media rights, 3) commercial partnerships. Although football income is lumpy – varying by time of year and on-the-pitch success – there are also some elements locked in. The current Premier League deal has another couple of years on it, bit longer on the Euro deal. That’s not going to change substantively any time soon. Matchday – its unlikely that there will be a significant rise or fall in ticket sales. Commercial – Glazers London-based team is going great guns signing up everybody and anybody.

          Question: how far does United go in various cup competitions as this affects both matchday income and media rights. We are likely to see a fairly hefty fall H2 because of the Euro exit.

          Could a Eurozone recession hit United hard? Hard to see a dramatic or sudden effect. In commercial terms United is diversifying, so there’s certainly no risk of all eggs in one basket. Now, if any of the big TV companies should fail that might have an effect… but its hard to see it happening.

  33. Twisted Blood says:

    I must say I’m impressed by the even-handed response here. Usually, when Ed knocks out a Glazer finance article, the comments read like the MUST website.

  34. And what about another UK recession that some say is coming this year, how badly would that fuck things up for us?

    • Recession in the UK would have a far greater affect on our opponents. We still get full houses for most games and the commercial and media deals are locked in. As we continue to pay less than 50% of revenues out in wages we are in a strong position as far as FFP goes.

      The only thing likely to have a large affect on the financials would be continued failure on the pitch and that doesn’t look like happening whilst SAF is there.

  35. As regards to transfers there is only one man to blame and thats ferguson, Scholes retires in the summer ferguson spends on a winger center half and a goalkeeper when a dog with a mallet up his hole could see where we are weakest, why did paul scholes come out of retirement?? he’s played almost every match since coming back!! And ferguson gives his spin”its like having a new player” when in fact it smacks of desperation! I love scholsey but we are Manchester United i dont want to be watching giggs and scholes for the next 2-3 years let them retire as champions!

  36. err….where’s the discussion about pogba possibly leaving?

  37. Stainingred says:

    we have only ourselves to blame for this. If Utd fans had boycotted games from day 1 of the takeover the scumbag glazers would be history. They only understand MONEY and if its in short supply big problems. I have always and will always support MUST but do wish they had been more aggressive. Ed, pressure must still be brought bear on the Glazers and I will be behind you a million % For the record my son and I packed in our seson tickets when the leeches took over

  38. Matchday revenue has to be approaching exhaustion point now, I don’t see any ticket price raises much above inflation for the next season or 2.

    TV: I think this the growth area, Al Jazeera after taking the French TV deal now are likely to look at England when the rights are next up for renewal. The PL suddenly have options here and can engage BSkyB who desperately need the Premier League or they face ruin. United also have the trump card of going out on their own looking for a higher TV deal on their own ala Barca or Real.

    Commercial they have done shockingly well, the DHL deal was a coup and figures are improving year by year. Don’t like the Glazers but Kudos were it is due on a 6 month year on year basis a 17% rise is quite something. I didn’t envisage such growth.

    Still Football is an awful business to be in, midst of recession the wage inflation is terrifying up 17% even after getting rid of some high earners in EVDS, Brown, Neville and O’Shea

  39. When some people talk about the business side of United and the Glazer business model a lot of people seem to get side tracked and view United as if it were say Tescos or Shell and set aside the obvious dynamic that it maintains as a football club which includes its history and what it means to Manchester and the people that not just support the club but passionately build their lives around it.

    Manchester United has a business element within it. It is not simply a business. Once you accept that then you can start to appreciate why the Glazers are bad for Manchester United the football club. A football club should not have so much debt and should not be losing £500 million. It should be in a financially sustainable and stable position to continue to advance the sport of football and ensure it contributes to the community that supports it. I accept that money and football are not mutually exclusive. Money can be made from football but not at the expense of football. The Glazer model presents a dangerous position that threatens the primary purpose of the club and could undo all the great work undertaken over the decades. Thats why people are upset with the Glazers.

    The Glazer business model serves the Glazer family and not the club and not the community of supporters nor the City of Manchester. I’m not an economist and not a lecturer but the problem with the Glazers is perfectly clear to me. Manchester United was built by the people of Manchester and is there to serve the people of Manchester and the sport of football, its our asset. The Glazers do not respect or acknowledge that and therefore that creates conflict and threatens the sustainability of Manchester United FC. Stop having a go at Ed he is trying to protect our asset, our club our passion!

  40. 19 and Counting says:

    Commenter said:
    When some people talk about the business side of United and the Glazer business model a lot of people seem to get side tracked and view United as if it were say Tescos or Shell and set aside the obvious dynamic that it maintains as a football club which includes its history and what it means to Manchester and the people that not just support the club but passionately build their lives around it.

    Manchester United has a business element within it. It is not simply a business. Once you accept that then you can start to appreciate why the Glazers are bad for Manchester United the football club. A football club should not have so much debt and should not be losing £500 million. It should be in a financially sustainable and stable position to continue to advance the sport of football and ensure it contributes to the community that supports it. I accept that money and football are not mutually exclusive. Money can be made from football but not at the expense of football. The Glazer model presents a dangerous position that threatens the primary purpose of the club and could undo all the great work undertaken over the decades. Thats why people are upset with the Glazers.

    The Glazer business model serves the Glazer family and not the club and not the community of supporters nor the City of Manchester. I’m not an economist and not a lecturer but the problem with the Glazers is perfectly clear to me. Manchester United was built by the people of Manchester and is there to serve the people of Manchester and the sport of football, its our asset. The Glazers do not respect or acknowledge that and therefore that creates conflict and threatens the sustainability of Manchester United FC. Stop having a go at Ed he is trying to protect our asset, our club our passion!

    Well said mate!

  41. I love the idiocy of the muppets who think once the debt is paid down, the club will remain debt free under the Glazers. They will simply remortgage the club for another 500 million or more.
    Why not? They have shown the banking world there are plenty of idiots prepared to pay for the privilege of being owned by carpetbaggers from Florida. Whack up prices, take the Ronaldo money to buy back bonds, keep oldies on the staff, refuse to pay market rate for young players and let the muppets call them traitors.
    I vowed not a penny to those scum in 2005 and hold my head up high. I am not a sheep, going to be sheered continuously by the Glazers while sayin, ‘oh they are no worse than any other owners….’
    Well they are.

  42. Alfonso Bedoya Alfonso Bedoya says:

    Commenter said:
    Ed, I don’t think you would recognise a fact if it hit you in the face. There are no factually inaccuracies in what I posted. There are in your response.
    United’s revenues have gone up from £210m in 2007 through £287.5m in 2009 to a projected £350m for the full current year. As I pointed out the transfer budget has been broadly balanced. I make it £97m spent since Ronaldo was sold against about £96m in, including the Ronaldo money.
    You respond with a reference to revenue increases not being £92.4m, which I never mentioned and has no bearing on anything. Then you go on to confuse revenues and cash. I don’t think that you really know what you are trying to say.
    Bottom line is that the Ronaldo money has been spent on players. It’s there in black and white. You could argue that having a balanced transfer budget is wrong but you can’t argue that the Ronaldo money has gone to the Glazers. The facts don’t support you in any way.

    Fans like you make me sick… you’re more worried about defending the pedantic details of an irrelevant argument, than about the reality of the situation.
    Who the fuck cares… that the Glazers have raised revenue… when the simple fact is… it’s the fan who’s being fleeced to generate that income?
    Who gives a fuck about whether you can account for the Ronaldo money or not… if you’re going to ignore the promise of £25 million a year?
    And from a personal perspective… I don’t give a fuck about any of these facts or figures, beyond the stark realization that the Glazers have sucked a half a billion quid out of this club, just to service their own selfish machinations.
    I would rather the club earned less revenue, by keeping the cost of supporting United more family friendly… or spending the money on better players… or expanding OT… or given it to charity… considering the state of this fucked up world we live in… how beautiful, would it have been for United to give a couple hundred million to some of the desperately in need people around the planet, instead of watching the Glazers squander it so uselessly?
    Even spunking the lot on a solid gold statue of Katie Price flashing her rubber cleavage at Busby, and the Holy Trinity, would have been less obscene.
    But you go ahead and make your pathetic argument… see how much respect that gets you around here.
    Why not try flogging your nonsense on some bored accountants forum… they might actually give a shit, whether or not you’re right.

    “Badges, to god-damned hell with badges! We have no badges. In fact, we don’t need badges. I don’t have to show you any stinking badges, you god-damned cabrón and ching’ tu madre! Come out from that shit-hole of yours. I have to speak to you.”

  43. Pikey McScum Pikey McScum says:

    God I love a dominant man!

    *groans*

Speak Your Mind

*