Over a billion spent on Glazers' ownership of United

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.