The Swiss Ramble has been reviewing the finances of Manchester United under the ownership of the Glazers,
In the last 15 years since the Glazers took control in 2005
Manchester United have generated an impressive £5.9 bn revenue, but had £5.4 bn
expenses (including £2.9 bn wages and £1 bn player amortisation), leading to
£467m operating profit. This was boosted by £257m profit on player sales, but
£817m interest meant a £92m loss.
The club had £1.0 bn net spend on players (purchases £1.4
bn, £0.4 bn sales), but spent almost as much (£704m) on interest on the loans
taken out by the Glazers. Only £185m was spent on infrastructure (stadium and
training ground). Cash flow before financing was therefore £57m.
The club also spent £244m on loan repayments and £125m on
dividends, partly financed by £299m from various share issues (net of
subsidiary acquisition). As a result, the club ended up with a £14m net cash
outflow.
Fans will be painfully aware that their club has paid huge
sums for the privilege of having the Glazers as owners. Since the leveraged
buy-out they have spent £1.1 bn on financing: £704m interest, £244m debt
repayments and £125m dividends. This has averaged £42m in the last five years.
The £1.1 bn cost
of financing the Glazers’ ownership is “only” 16% of £6.8 bn expenditure since
June 2005, but it is a huge sum. It’s more than £1.0 bn spent (net) on players
and could have been spent on improving the squad (or even the increasingly
shabby Old Trafford).
League of their own on interest payments
Where United are in a league of their own is interest
payments, which add up to a staggering half a billion pounds since 2010, which
is more than all the other Premier League clubs combined. The next highest is Arsenal,
whose £140m pales into insignificance compared to United.
If you think that the interest payments are bad, wait until
you look at the dividends. Manchester United’s £122m (around £23m a year in
2020) is again by far the highest. In fact, they are the only Premier League
club currently paying dividends
You would hope
that after the loan repayments debt would have reduced, but it has remained
around £500m for the last few years. It did come down from a peak of £773m in
2010 after PIK loans (16.25% interest rate) were repaid, but the club had no
debt before the Glazers.
The harsh reality is that after all the Glazers financial
engineering, the club still have £526m debt, which is the second highest in the
Premier League, only “beaten” by Tottenham Hotspur £831m. Therefore, the
draining of the club’s resources will continue for the foreseeable future.
Supporters of the Glazers will point to their commercial
acumen, in the belief that revenue growth has somehow justified the fact that
the club has (to date) had to shell out over a billion quid to finance the
takeover, but is this really the case?
It is certainly
true that revenue has nearly tripled under the Glazers, rising by £336m from
£173m to £509m, but it is worth noting that two clubs have outpaced them in
this period, namely Manchester City and Liverpool, who have grown by £417m and
£370m respectively.
Of course, commercial has been the engine for growth, rising
£224m from £55m to £279m, but it is worth noting that there has been zero
growth for the last four years (and the new TeamViewer deal is worth much less
than Chevrolet).
Broadcasting income has tripled from £46m to £140m, but the
£94m growth is lower than Manchester City £166m, Liverpool £152m, Chelsea £130m
and Spurs 107m, which reflects the lack of success on the pitch, most notably
in Europe.
Similarly, the £18m increase in match day revenue from £72m
to £90m is less than the growth at four other members of the Big Six, as others
have invested in stadium moves or expansion.
Nevertheless, Manchester United remain a financial powerhouse.
They generated £5 bn revenue since 2010, which is by some distance the highest
in the Premier League, a cool £1.1 bln ahead of Manchester City £3.9 bn.
Many clubs make
good money from player sales, but United have only delivered £291m from the
activity in the last 11 years, significantly less than Chelsea £707m and Liverpool
£552m. Not only is this lower than the rest of the Big Six, but also worse than
Everton and Southampton.
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