John Burn-Murdoch, the chief data reporter at the Financial Times., has produced a scorching analysis of Manchester United under the influence of Jim Ratcliffe. The key message is that it is one thing turning around a struggling chemicals company by cutting costs: quite another to use that technique to restore a football club to greatness.
‘Ratcliffe, who bought about a 25 per cent stake in Manchester United early
last year, might have seemed a sensible choice as a co-shareholder for the
Glazer family given his business record. But rejuvenating a football team
requires more than standard corporate measures such as streamlining processes
or cutting the cost base. It requires much more cultural and strategic change.
This is clear from the very financial accounts Ratcliffe has
been tasked with turning around. There is no mystery as to why United’s finances
have deteriorated so rapidly in recent years. On the revenue side, commercial
and match-day income have held up well. But broadcast incomes — largely
determined by the club’s progress on the pitch — have fallen markedly.
Multiyear downturns are not entirely unheard of among football’s financial
giants, but the length and depth of United’s decline is unprecedented going
back to the 1980s. No erstwhile dominant club has fallen this far.
The club’s poor finishing position in the Premier League
alone is on course to wipe £46mn of revenues across this and last season.
Failure to qualify for the highly lucrative Champions League tournament has put
it a further £90mn into the red over the past three years, according to
analysis by football finance expert Kieron O’Connor. And if, as seems likely,
United fails to qualify for any of next season’s European competitions, that
would mean another £80mn of foregone income.
A dire recruitment
policy
Football-related reasons also account for ballooning costs.
The club’s recruitment policy has been particularly dire, both on and off the
pitch. United has spent more money on redundancy payouts for failed managerial
and executive appointments in the past decade than any other club in Europe,
including almost £30mn in the last three seasons. As for players, the picture
is even worse. More than half the club’s most expensive signings in the past
decade have been failures, going on to spend less than a third of the available
time on the pitch.
This is a worse record than any other major club across
Europe, and amounts to tens of millions wasted per year. No club has a spotless
record in the transfer market. But United’s £81mn annual accounting charge
attributable to signings who are not active on the field of play is roughly
double the average for peer clubs at home and abroad.
Particularly striking
is that the market value of players signed by United tends to depreciate almost
immediately upon arrival, instead of rising as is the case for most peers.
Whether an indication of paying over the odds, or that the club’s on-pitch
malfunctions are causing players’ performance to deteriorate at Old Trafford,
the data paints a damning picture.
Over the past three years, adding together the annual £45mn
in lost broadcast revenues from poor results, £5mn in compensation packages for
failed recruitment at the managerial and executive level and a further £40mn in
wasted transfer fees, we arrive at £90mn per season for the costs of
dysfunction, equating to almost 90 per cent of the club’s annual losses over
the same period.
Ratcliffe’s most high-profile proposed remedies to
date on the business side have involved cost reductions — cutting jobs
for non-footballing employees and scrapping free
lunches for club staff. But old-school corporate cost-cutting fails to
address the underlying reasons behind the club’s deterioration both on the
pitch and in the accounts. Turmoil on the sporting side has prevented any
joined-up thinking about the club’s identity and player recruitment.
Ratcliffe brought in a new manager last November, but
results have been scarcely better, if not worse. Continued
decline on the pitch will comfortably drown out the proceeds from a few deleted
cost items.'
Comments
Post a Comment