When it comes to money, it’s all spin
Manchester United has £165 million in the bank and is bent on spending all of it strengthening Sir Alex Ferguson’s squad this summer. At least that’s the conclusion reached by the Manchester Evening News and 1,000 blogs today after director Joel Glazer broke a five-year silence to claim that the club has “sufficient cash reserves…for investment in the playing squad.”
The proclamation came just 24 hours after the club’s holding company posted £109 million losses at Companies House. Not that supporters should worry, despite the huge losses and near £600 million debt on the books, the Payment in Kind (PIK) loans “have been paid off.” It is the near universally repeated line in media coverage of Red Football Joint Venture’s finances this week. Proving once again that when it comes to United’s finances there’s lies, damn lies and the Glazers.
The massive losses included a £64.7 million charge to set up the bond last January and £30.2 million paid in interest on the PIK debt, which has since been mysteriously financed to the tune of £242 million. Indeed, the figures are in stark contrast to those of a year ago, which included income from Cristiano Ronaldo’s £80 million sale to Real Madrid.
Yet key questions remain unanswered before supporters believe the Glazer family is to invest heavily in Ferguson’s squad. Not least the bizarre fashion in which the PIK debt was “paid off,” although it is almost certain that the family refinanced the debt through an American holding company and then subsequently moved the company to super-secretive Delaware to hide the transaction from the British media. Whatever the source of funds, the family retains the right to take dividends from the club; £125 million and counting if the Tampa-based clan chooses to do so.
Then there is the question of spending, with the club investing far less under the Glazers than the previous PLC regime in both absolute terms and as a percentage of EBITDA. The much reported, yet never actually promised, £100 million plus summer transfer fund would break a five-year habit set by the family. Not least the club’s strategy of investing in young players with a high resale value.
The third strand conspicuously missed by MEN, whose contacts within the club are near non-existent according to those in the know, is UEFA’s financial fair play regulations that effectively come into play this summer. With United’s EBITDA revenues tempered by £45 million per season in bond interest payments it is inconceivable that the club will spend a hundred million or more on summer transfers. Unless there is a departure or two of course.
The spin is in marked contrast the strict ‘no value’ line oft-repeated by Ferguson last summer when the club invested in promising youngsters and not established stars. Indeed, the Scot has been fulsome in his praise of United’s scouts who picked up striker Javier Hernández for around £7 million up-front and further performance-based bonuses. It has been a brilliant piece of business. The less said about the £8.3 million spent on Bébé, the better.
Yet, invest United surely must, with domestic rivals Manchester City and Chelsea likely to spend heavily in pursuit of glory. And even if Ferguson’s reserve team is packed with promising talent, the squad will be at least a quartet short come the summer. With Edwin van der Sar retiring, Gary Neville already picking up his pension, Owen Hargreaves likely to be released and Michael Owen out of contract, a wealth of experience will be lost to Ferguson’s cause. Paul Scholes’ future is as yet undecided, with the 35-year-old mulling retirement.
Moreover, a second defensive injury crisis in as many seasons says much for the fragile nature of too many United stars. Rio Ferdinand’s injuries now fall into the chronic camp, Nemanja Vidic has an unfortunate fragility, Jonny Evans’ ankles seem unable to keep up with the Premier League’s rigours and Wes Brown has troubled the physio more often than the opposition in a decade at the club. Then there’s the immensely talented da Silva brothers, who have each suffered multiple injuries in the past two seasons.
The question of quality – one that Ferguson strongly rejects – is one that many supporters have asked too. It is, after all, hard not to conclude that this United squad suffers poor comparison with others during the Scot’s time in Manchester. Indeed, while Ferguson’s squad has performed admirably at home this season the greatest challenges now lie ahead. Recent defeats away to Liverpool and Chelsea surmised the Reds’ performances away from Old Trafford, with United’s record of four wins joint seventh best in the Premier League.
Not that United supporters should be concerned. After all, the Glazer family is about to lavish £165 million on the transfer market. MEN has said so!