If there’s one thing that the history of football teaches us, it’s that nothing is forever. The wheel always turns. There’ll always be a faster gun riding into town one day and a new kid will arrive in the playground with a bigger stick. It’s the harsh lesson that Manchester United fans, sated with trophies aplenty courtesy of the reign of Sir Alex Ferguson, are now having to endure.
Not so long ago, that Sky Blue banner trumpeting the transfer of Carlos Tevez across the city, was an itch that so many Reds’ fans found difficult to scratch, and that was irritating enough. But things have grown from there. Liverpool and the ‘Noisy Neighbours’ have scampered away with all the pots that were once harboured so jealously as the sole property of the Theatre of Dreams. Perhaps worse than that though, the differing financial situations of the two clubs suggest that things may not change for the better any time soon. Whilst Manchester City continues to enjoy the largesse of the oil-rich rulers of Abu Dhabi, at Old Trafford money is pouring out of, rather than into, the club, and that’s what may put a brake on this particular wheel turning again – for a while at least.
Full control of Manchester United was secured by the Glazers towards the end of 2004, a few years before Sheikh Mansour bin Zayed al-Nahyan took control of Manchester City, but while the latter’s tenure in control has benefited the club massively to the tune of almost £1 billion, the reverse has been applied at Old Trafford, wherein reports suggest that the American owners have extracted a similar figure from the Old Trafford coffers. As owners, that is of course entirely their prerogative. For fans of the club though, it is their bane.
To purchase Manchester United the Glazers took out loans totalling £660 million and roughly £265-£275 million was secured against the assets of the club itself. This type of deal is known as a leverage buyout, allowing the Glazers to buy the club despite lacking the funds. For the first time since 1931, Man United were plunged heavily into debt with interest payments of £62 million per year.
In the early days, as Ferguson continued to deliver trophies that also brought in an abundance of money, to offset the debt-levered takeover those first few difficult years were managed. Without the legendary Scot’s amazing abilities, it’s difficult to see how the scheme could have been sustained, as the club served as a continuing vehicle to provide wealth to its owners.
Even today, the club still manages to strike sponsorship deals that, according to reports on its figures released for 2018/2019, suggest income generation of some £623 million per year, substantially more than their Premier League counterparts. The problem is of course that as well as that inflow of money, there’s a massive outflow as well, which can turn such apparent financial muscle into a scenario wherein Ed Woodward, can tell his manager that funds for transfers are restricted. Indeed, if the former JP Morgan executive hadn’t tapped into the rich seam of such lucrative deals, the huge debts loaded onto the club may arguably have been unmanageable.
To make matters worse, according to @SwissRamble on Twitter, over the last five years Man United have paid out £89 million in dividend payments to owners and £120 million on interest payments. The latest accounts also revealed the club’s borrowing remains at a figure approaching £430 million, the costs of which are stated at £20+ million each year. A figure Ole Gunnar Solskjaer would’ve liked to invest in more talent on the pitch had it not been required to sustain the debt.
With the club 97% in the hands of the Glazer family, there seems little prospect that things will change soon. There used to be an old saying that the only way to make a small fortune owning a football club was to begin with a big one. Some, if not many, Manchester United fans may argue that the Glazers have turned that particular adage on its head, using the well-oiled money-making operation that is Manchester United to fund its own movement into their portfolio and, from there, to then continue providing a substantial income to them.
Any fan of any football club who believes the people who take control of their club has merely altruistic aims is either extremely naive, or extremely lucky. Football clubs, especially at the top end of the range, are no longer sporting institutions; they are financial enterprises, and making brass is more important than accumulating silverware. For fans of Manchester City who, for so long, were the poor benighted relations in the Greater Manchester football family, the current scenario must feel especially delicious. On the other side of the city however, despite the club still funding massive transfers, there’s a feeling of what might have been had not the money earned by the club been syphoned away to its American owners.