17 January ~ Some Manchester United fans are starting to look like those old Looney Tunes cartoon characters who were so prone to falling off cliffs. Cartoon physics, of course, dictate that when running in mid-air, gravity has no effect until the character notices and reacts. Beside the huge opposition to the Glazer takeover back in 2005, there were the more complacent supporters, who thought the Glazers were not a problem if the team kept performing well. Those fans are now hanging in the air, glancing down at their club's bank balance and teamsheet, as they realise that gravity is about to suck them under.

The Glazer era has been the most successful period in the club's history. Three League titles, two League Cups, a European Cup (and another final), and a World Club Championship all attest to that. But while judging the Glazers by the team's success makes intuitive sense, it only illustrates how healthy the club were before they arrived. The Glazers should be judged by what they have given the club and what they have taken away.

United currently stand one title away from overtaking Liverpool as the most successful club in League history. But the Glazers have contributed nothing to this. In fact, they haven't contributed anything to the club at all, other than spiraling debts that were neither wanted nor needed. The Glazers borrowed heavily to buy the club, encumbering it with debts of £700 million in the process. Last year the club paid £42m in interest to service these debts, taking the total interest paid in the Glazer era to £325m. But for the world record fee received for Cristiano Ronaldo, United would have turned a substantial loss in a championship-winning season.

Despite almost doubling ticket prices in the past four years, the club have gone from being the most profitable in the world to the most indebted. And for this service, the Glazer family have paid themselves a handsome £10.9m in "consultancy fees", to go with the £10m they borrowed from the club last year. Making former players pay for their own meals on matchdays and forcing training ground staff to buy their own toast in the morning may sound like small concerns, but they are indicative of the cultural shift at the club. With the interest payments required, employees and fans can expect more embarrassingly desperate pleas for their money.

At the time of the takeover, a lot of United fans didn't mind who owned the club as long as the team remained successful. For these fans, success has been a terrible distraction. The team have only disguised the state of the club. The League titles and European Cup were won by a manager and group of players assembled before the Glazer family had any influence at Old Trafford. With the team now suffering from a lack of form and finesse, the financial constraints are becoming increasingly noticeable. When in need of some inspiration last season, Alex Ferguson would call upon Ronaldo or Carlos Tevez, who cost their new clubs a total of £127m. Ferguson now looks to Mame Biram Diouf and Michael Owen, who cost United nothing.

With a strong youth system and an annual turnover of £279m, United should not struggle to recruit quality players. As Duncan Drasdo, the chief executive of the Manchester United Supporters' Trust, said this week: "Manchester United doesn't need a sugar daddy, we just need to get rid of the leeches." These "leeches" have presided over one of the club's golden eras, but unless they leave and take their debts with them, the glory days, like Wile E Coyote, could come crashing to an untimely end. 

Comments (5)
Comment by enzee199 2010-01-17 15:33:31

Very true, the success is the result of a long project, Man U were the first Premiership club to transform themselves into a commercial powerhouse in the early 1990s just as the game itself began to ride on a generous swell. The Glazers have nothing to do with this and if anything will tople Man U from their position on the wave. The irony is that Man U who achieved their success by exploiting new financial horizons were gobbled up by the same forces.

Comment by chrisw27 2010-01-17 22:29:29

I'm not going to defend the Glazers, I'd love to be rid of them and their debts that are holding the club back. But the apacalyptic tone of this article is misplaced. You say that "but for the world record fee received for Cristiano Ronaldo, United would have turned a substantial loss" and this is technically true but it doesn't mean, as many have assumed, that United need to continually sell players just to break even. To understand why we need to look at the accounts, as published in the prospectus (page 32-32).

They include a cost of £35m for amortisation of goodwill, which is a notional charge relating to takeover accounting and not a real cost. And they also include £38 for amortisation of player registrations which is also not a cash expense but something that has to be balanced, in the long run, by new player signings or players coming through from the youth system. Also the Ronaldo sale incurred about £10m capital gains tax and pushed the company into profit which will have incurred corporation tax (another £10m?)

The proper approach is to take out all these expenses and also take out the reported £81m transfer profit and see how much money is left for buying players. So we take the reported £26m profit and add back those expenses (£35m £38m £10m £10m) and take away the £81m. This gives £38m surplus, enough to buy top players but not enough to pay sily prices (hence Ferguson's caution in the transfer market).

The real worry for fans is that this only adds up if we keep qualifying for the Champions League. There's not much margin for error here.

Comment by Tannhauser 2010-01-18 04:11:46

I don't believe the tone is out of place. The article hasn't suggested that doom is impending from the next season - but that it is only a matter of time (with well-defined limits) before the club will be put under very serious financial pressure, which will remain true no matter how many times the Glazers attempt to refinance their borrowed money, by borrowing more money.

"The irony is that Man U who achieved their success by exploiting new financial horizons were gobbled up by the same forces." - enzee199

That is absolute nonsense. United achieved their status as the richest club in the world through exploiting the newly available financial horizons - but their success was achieved through the ingenuity of one Alex Ferguson, and the great players that he promoted from the United youth academy.

Comment by ian.64 2010-01-18 07:56:46

I think the tone of the article is just right, as not only does it point out a salutary warning about the debt that can cripple a club completely - argue about 'amortisation of goodwill' all you like, a £700m debt is an astonishing whack no matter how detached you'd like to be about it - but also the astoundingly casual reaction by some fans to think that the club brand is the gift that keeps on giving and that all will be well because all is equally well on the pitch. It's not that these fans should have their noses rubbed in the accumulated mud of dread and despair of financial ruin, but that they should maintain a stout awareness and vigilance about what's happening to clubs around them, what with Liverpool's on-pitch and off-pitch decline and Portsmouth's almost-parodic financial debacle. Some supporters have perhaps built an ivory tower whose foundations have been built on the warm glow of success and see little reason to come down from such a lofty construct. More fool them.

Ironically, the other desperate course these clubs could take is to find a money-man who could pour in vast oceans of wealth to wipe out debts and give their managers a hefty Man City-like blank cheque to make everything all right again. The cure for debt being the acquisition of vast wealth to spend with all the ease you might pour water from a tap.

Then the pendulum could swing - inflated fees and wages that look like weekly lottery wins - to another kind of financial senselessness altogether.

Comment by Lincoln 2010-01-18 16:05:37

Whether United are in debt or not in debt or whether Liverpool in debt or not in debt, it concerns me not. Firstly because the chance of either going to the wall is unlikely as someone will be around to save them (as we speak a consortium somewhere are lining up to bid for Utd). This is different from smaller clubs who simply get an obituary in the national media rather than getting everyone in a lather. Secondly I couldn't give a fig. Call me old fashioned (27 years old) but I can still remember a time when I didn't know every board member of the big four and barely knew who any chairman was in the top league. I now get at least 10 seconds a weekend of seeing Carson Young sitting down at a game, although the Abramovich cam is notable in its absence. Football coverage is little more than a financial and business commentary, with relatively little coverage given to actually playing football, save a few controversial decisions. Even then it is about how much it costs the club concerned e.g. getting relegated via a bad decision on the last day or missing out on a Champion's league place. Sure footy is all about money now and I am not that naive. But it is beginning to turn me away from football because I feel that I am not knowledgeable about the game because I can't understand most of what chrisw27's post is talking about, much less be able to debate using some of the terms down the pub with my mates during a game.

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