A Detailed Look at United's Finances

RedCurry

Full Member
Joined
Apr 25, 2016
Messages
3,928
391m debt... Yikes.
So we are borrowing money to sign players.
How do we know we borrowed money to specifically buy players?

And even if we did, that would be nothing major. Maybe one of the selling clubs wanted all cash without breaking down the payments as is common with most transfers. In that case, borrowing money from a bank and breaking payments that way is just the smart way to go about it. I've mentioned that on the forum before.
 

Tom Cato

Full Member
Joined
Jan 3, 2019
Messages
1,955
Let's start by saying this is not a defence of the Glazers. The Glazer family have been nothing short of disastrous for Manchester Utd, I don't believe there is even a debate to be had here. However, one thing has continued to frustrate me recently - and that's this idea that Manchester United can and should spend £200m+ net every single year.

I believe our fans are right to question the impact the Glazers have had on our spending over the duration of their tenure as owners of the club. I believe it is an indisputable fact that between 2005 and 2010, the Glazers dramatically curtailed transfer spending in order to balance the books. During this period, we actually had a positive net spend, which is crazy for a club who at the time where competing for major domestic and European trophies.

The reason for this is that when the Glazers initially bought the club, they did so by borrowing £275m at an interest rate of 14.25%. The debt grew steadily during the early years of Glazer ownership and this resulted in us paying back upwards of £70m in interest repayments alone up until around 2012. All during a time when the clubs annual turnover peaked at around the £363m mark.

In 2010, the debt was restructured to be much more manageable as the Glazers used a £500m bond to wipe out the high-interest PIK loans and borrow at a much cheaper rate. As of 2013, finance costs have been reduced by about 66% and now stand at about £20-25m per annum.

However, I and many others rightly believe that a huge amount of damage was done during this period. Those first ten years of Glazer ownership are often referred to sarcastically by Utd fans as the 'no value in the market years' - as this was the line the Glazer puppet Alex Ferguson would often trot out to justify their penny pinching approach. That of course is absolute, utter nonsense and looks even more ridiculous now with hindsight than it so obviously was at the time. Even before we get into the recent transfer inflation caused by the new TV deal, it's just an incredibly nonsensical statement to make because the 'value' of a player is what a club is willing and able to pay.

Some posters may remember I created a not-to-dissimilar thread to this one where I analysed the Glazer spending up until around 2017 which transfer inflation applied for context. The purpose of this thread was to disprove the notion that United had spent enough money to guarantee trophies and was partly a defence of Moyes, LvG and Jose Mourinho - who at the time was constantly beaten with the stick of having a squad costing £900m which was 20pts behind City's less expensive squad (as the gutter press constantly delighted in reminding us without context). My point at the time being obviously that we had done most of our spending during peak transfer inflation years whereas City had sensibly accumulated a squad consisting of many players purchased before fees increased exponentially (Aguero, Silva, Fernandinho, Kompany etc...etc...)

Nevertheless, this thread is not about going over old ground. So yes, the Glazer family cut costs between 2005 and 2010 (especially) and harmed the club immeasurably during this period.

HOWEVER - as I said in the opening paragraph, my frustration is with a few very prominent voices on social media who are constantly misunderstanding (deliberately or not) our current predicament and misleading a large percentage of our fanbase in the process. These social media warriors are constantly banging on about our lack of spending, the lack of investment, cost-cutting etc...etc...writing about all manner of conspiracy theories as to why Ole has been appointed, why we are focusing on young, English players, why we have missed out on certain players, amongst many other examples.

This notion of cost-cutting post-2014 simply does not stand up to any kind of scrutiny whatsoever and it's incredibly frustrating for me because I believe constantly moaning about spending (or lack thereof) ignores the real issues with how the club is being run in 2020. I personally believe that one man is responsible for our predicament right now and that man is Ed Woodward. The man who was given a warchest by the Glazer family to go and revitalise and rebuild Manchester United after the retirement of Alex Ferguson - only for him to piss this money down the drain faster than you can say "Adult Disneyland".

So, I'm not a financial expert by any means and I am happy to be corrected on any of the statements I make or the figures I put forward below. However, I have spent some time going over our Annual Reports since 2013 and have found the following (apologies if I've interpreted any of this wrong - correct me if you can)

NET TRANSFER SPEND

2012/132013/142014/152015/162016/172017/182018/192019/20Total
PSG
£131,620,000​
£98,460,000​
£42,570,000​
£83,880,000​
£67,230,000​
£157,140,000​
£101,700,000​
-£9,810,000​
£672,790,000​
Manchester City
£14,000,000​
£89,800,000​
£60,000,000​
£73,700,000​
£165,050,000​
£177,550,000​
-£2,050,000​
£91,350,000​
£669,400,000​
Manchester United
£51,100,000​
£66,700,000​
£104,200,000​
£28,150,000​
£102,000,000​
£136,200,000​
£47,030,000​
£65,500,000​
£600,880,000​
Barcelona
£29,250,000​
£65,790,000​
£76,430,000​
£11,430,000​
£81,860,000​
£127,800,000​
-£4,460,000​
£87,390,000​
£475,490,000​
Inter Milan
£11,480,000​
£44,040,000​
-£5,890,000​
-£11,760,000​
£126,950,000​
£52,480,000​
£13,950,000​
£97,970,000​
£329,220,000​
Juventus
£44,550,000​
-£11,560,000​
£24,920,000​
£67,840,000​
£17,020,000​
£16,830,000​
£134,100,000​
£20,740,000​
£314,440,000​
Chelsea
£72,000,000​
£49,309,000​
£5,100,000​
£9,100,000​
£51,300,000​
£80,200,000​
£144,600,000​
-£152,000,000​
£259,609,000​
Liverpool
£41,300,000​
£20,300,000​
£38,380,000​
£28,000,000​
-£6,460,000​
-£28,000,000​
£127,500,000​
-£28,600,000​
£192,420,000​
Real Madrid
£4,500,000​
£55,800,000​
-£12,000,000​
-£62,410,000​
-£6,750,000​
-£79,200,000​
£25,790,000​
£186,750,000​
£112,480,000​
Tottenham
-£1,300,000​
-£16,300,000​
-£1,250,000​
-£7,850,000​
£27,700,000​
£24,750,000​
-£11,000,000​
£61,000,000​
£75,750,000​

These are the net transfer spends of some sample 'big spenders' from across Europe since 2012. I picked this date as to the best of my understanding, 2013 was the last year we paid out £70m+ in interest repayments.

Quite clearly you can see from this table that the notion of any kind of cost-cutting or restrictive spending (restrictive NOT restricted - PLEASE NOTE) just does not stack up. Only the two clubs owned by countries and pumped full of oil-money have spent more than Utd net over the last seven years. I've got United supporting friends who mean well but just like this forum they seem to believe that clubs like Barcelona and Real Madrid spend £200m+ net every Summer. They don't. Simple. It's a myth. Remember, whether enough money has been spent to win trophies is not my argument here...my argument is that I think it's pretty difficult to say 'lack of spending' or 'lack of investment' is the reason we're currently 5th and playing in the Europa League when clubs like Real and Liverpool have managed to win European trophies on much more limited budgets.

OPERATING PROFIT

Operating Profit
2013​
2014​
2015​
2016​
2017​
2018​
2019​
Manchester United
£146,419,000​
£23,835,000​
-£483,000​
£36,598,000​
£39,209,000​
-£37,629,000​
£18,881,000​

Now, another common argument when you point to our net spending is 'we are Man Utd, we SHOULD be spending that every year' and very often users of this argument will point to our status as one of the richest clubs in the world, as measured by TURNOVER. However, what this clearly ignores is the amount of profit we are making. As the old saying goes, 'turnover is vanity, profit is sanity'. That certainly applies when you're measuring a companies/club's ability to invest in capital assets i.e. players! So what are we asking the Glazer family to do here? You can see the club is not making huge amounts of profit which is somehow being left sat in the bank or taken out of the club by the Glazers (hang on...before anybody jumps in at this point...will clarify shortly!)...so are we asking the Glazers to spend beyond their/our means? The facts and figures don't lie...there's barely been any surplus since 2014 to actually spend on additional transfers!

FINANCE COSTS

INTEREST
2013​
2014​
2015​
2016​
2017​
2018​
2019​
Overall
Manchester United
72,082,000​
27,668,000​
35,419,000​
20,459,000​
25,013,000​
24,233,000​
25,470,000​
230,344,000​

Now, when I said a few sentences ago that there wasn't a huge amount of surplus money sat left in the bank every year or being taken out of the club by the Glazer family, I appreciate many will have instantly thought of the interest payments the club makes every year. Now again, remember, I'm not here to defend the Glazer's ownership. They are parasites in that they have contributed nothing and only take out of the club. The interest payments above demonstrate this. United would have been £230m better off at least since 2013 had we not been leveraged with debt by the Glazer family. So in that respect and in the eyes of fans I'm sure, £230m extra could have been spent on footballers. (I realise this is too simplistic for any finance bods out there as corporate debt reduces tax etc...etc...but let's not go down complex financial wormholes here!) However, ask yourself....think back to the net spend table. Would we be significantly better off had we spent another £230m over a 7 year period under the direction of Ed Woodward? I for one am not at all convinced we would be. Looking at the interest payments and money taken out IS relevant to the anti-Glazer argument of course....but I don't think it addresses the issue of WHY we are SO bad right now. Clearly, interest payments or not, enough money has been spent since 2012 to enable us to AT LEAST be competitive and the truth is we're far from it and our squad is an appalling mess.

WAGES

Wages are often overlooked by those who often cry under-investment because it REALLY doesn't suit the narrative in any context. Now, many are aware that Utd set an upper limit of 50% wages/turnover....i.e. no more than 50% of the clubs turnover should be spent on wages. This is actually fine and many clubs have higher percentages ratios without having such a big total bill. I accept that argument and it's reasonable to expect the club to spend 50% of it's turnover on wages moving forward. No problem here. However, look at the table below;

WAGES
2013​
2014​
2015​
2016​
2017​
2018​
2019​
Manchester United
£202,561,000​
£232,242,000​
£263,464,000​
£295,935,000​
£332,356,000​
£363,189,000​
£367,056,000​

Would any fan in their right and sane mind describe those annual wage bill as 'value for money'?. I think we all know the answer to that! How on this Earth do we spend £367m annually on wages for the absolute mob that turn out for us week in, week out? This is very relevant to me for a few reasons. One, offering players insane wages makes it hard to sign new players and difficult to shift existing players on daft wages. Two, money spent on wages is a HUGE percentage of our overall expenditure, therefore reducing spending on wages COULD be re-invested in the transfer market as capital expenditure. Three, I keep seeing this 'cost-cutting' argument...well of course costs have to be cut don't they! I believe Alexis pushed us up to the 'ceiling' of 50% wages/turnover and I believe the club has recognised that if we want to remain profitable moving forward and continue to be able to invest in players, this has to be reduced before new signings can come in.

CONCLUSION

I have decided to summarise a lengthy OP with a few bullet-points for ease of review.

* Glazers undeniably cut-costs whilst high-interest loan repayments were made, especially against the backdrop of much reduced revenues compared to recent years.

* This very likely hurt us well into the LvG/Jose era, with respect to actually competing for trophies

HOWEVER

* Fans need to re-assess their expectations on what Manchester Utd CAN spend...even if the Glazers did want to benevenently pile every penny earned back into the club £200m+ summers every year put the club in financial jeopardy

* The Glazers DO drain money out of the club but this hasn't stopped us having one of the highest net transfers spends in the world over the last seven years

* The Glazers clearly threw off the shackles once Ed took over as CEO and interest payments had been reduced/TV money increased significantly.

* Ed Woodward has overseen all of that money being wasted

* I believe the club have recognised this and are attempting to remedy the situation by moving players on and setting a platform for a re-build

* I do not believe any conspiracy theories about prolonged 'cost-cutting' exercises. It makes no sense for the Glazers to deliberately weaken the team and devalue the brand. Remember, they bought the club with just £270m of their own money...the long term strategy is SURELY to increase the value of the club significantly and sell for a big profit.

* Following on from the above....why would the Glazers cut costs to make £12m a year between them in dividends when a successful Man Utd could be worth £3.5/4BN to a potential buyer. It would be like having a Golden Goose and slaying it for it's meat!

* Would United be better off without the Glazers? Almost certainly so.

* Are our recent troubles down to under-investment and cost-cutting when it comes to the playing staff....I believe not. I believe our issues sit firmly with Ed Woodward (and again arguably with the Glazers as the people who appointed him and continue to allow him to do a job he is making a right pigs ear of!)

Comments and input welcome - please read the OP carefully before critiquing, I can't be bothered fielding loads of lazy responses where posters trot out lines they've read on Twitter that have been addressed above!

You're a bit wrong about the Net spend and how the club actually puts this into the books. Looking at Net spend and figuring out a pattern or try to judge our actual buying power is not really all that useful.

Player spend is amortized over the length of the players contract. The way its put into the accounting books is the sum of purchase fee, agent fee, ages, sign-on bonus accumulated over the contract length

For example Bruno Fernandes £50m, salaries over contract £50m, agent fees etc etc £20m - 5 year, year 1 asset spend £24m year 2 £24m etc etc etc. not £50m outright as your post implies. This is how the NET spend will appear in the clubs accounting. The example is just that, an example.

The annual reports are just that, reports, but they offer no conclusion into the book-keeping, just a summary of ingoings and outgoings in the fiscal year, and most importantly. How the club performs financially which is what this thread is all about.

Business done before July will appear in the previous years fiscal overview etc. A few things to consider is that clubs use this fiscal window to "decorate" the books if you will. For example a new sponsor deal will always begin July 1st and end June 30th.

Regarding player purchases. They are never paid out in full unless agreed previously. The norm is installments over 1-2 years (2 being the most common). The reason for this is really quite simple, cash upfront requires just that, a huge wad of cash.

If you want to gauge the clubs buying power, look at its EBIDTA (Earnings before interest, tax, depreciation and amortization). Hopefully Ill get back to this post later because there's a lot to address regarding the clubs wage bill. Or primarily, why its so incredibly high.

The club has a wage bill that fits its financial powers, so there's not really a lot to raise eyebrows over that alone. The part to criticize is WHO earns that money, but the wage bill itself is fine.

The real thing that is deeply troublesome is the Glazer family and its dividends. The Glazers are the ONLY owners that take out dividends from the club. Period. No other club in the Premier League pays dividends to its shareholders. They are the only owners that take money out of the club annually, and that is very telling of the difference in ownership between the Glazer family and the Fenway Sports Group for example.
 

midnightmare

Full Member
Joined
Sep 22, 2015
Messages
1,043
Location
Midian
I get all of that but if you look into what we have been doing since 2013 is we have spent poorly and have increased operation cost close to where it doesnt make any sense. But while we have been doing that our CL hit rate is close to 50% and we haven´t been competitive in any way or form. There is a need for investments both on the pitch and into the infrastructures of the club, with the current cash flow and going by our past 5 year form we look strapped for cash to realize either of these and would be betting on something that we haven´t been reaching consistently for the last 7 years. The tasks in hand will cost huge amount of money and it looks like we don´t have the money or the success to borrow for it.
well, yes and no. Yes, it’s tough and needs smart work. No, as in it’s not true that we don’t have the money or ability to borrow.

The bulk of our operating costs as with any football club, are wages. We can reduce these drastically. We’ve reduced a fair bit already and can do a lot more just from sales and smart replacements (buying doesn’t affect the P&L by the purchase value but only depreciation).

So then we are looking at whether we can finance the buying. Here, we need to assess the ability to finance payments and also manage profitability. Now, the “money in the bank” helps pay our chunk and the difference between gross and net debt shows we still have plenty of sanctioned debt to dip into. It’ll increase interest costs but we’ve now lowered those to manageable levels and it’s better to pay those as I’ve mentioned before.

And how to we manage the cash flows and profits? Simple. As I stated several times on these pages before, sell Pogba! That’s a must. Reduces wages and gets in the up-front payment cash (some part of spending requirements now becomes debt-free). Having the debt sanction enables us to even sell him with a structured payment system over 2-4 years.

So yes, we do need to spend to buy (to balance books short term) but we have the ability to leverage. All that’s questionable is the will. I’m assuming of course, that our spending will be in line with the record under Ole (therefore good, smart and successful) and that Ole won’t continue to be sub-par on results or will be replaced by a manager who will take us forward.
 

MonkeysMagic

Full Member
Joined
Jul 28, 2015
Messages
599
Location
Euclidean space
All of this begs the question: Why do the Glazers allow such an incompetent fool as Woodward to not only waste huge sums of money but also devalue their asset as surely 'reduction in turnover' would do? Perhaps it also calls into question their own competence as businessmen, whether they know much about football or not!
 

Skills

Snitch
Joined
Jan 17, 2012
Messages
31,399
All of this begs the question: Why do the Glazers allow such an incompetent fool as Solkskjaer to not only waste huge sums of money but also devalue their asset as surely 'reduction in turnover' would do? Perhaps it also calls into question their own competence as businessmen, whether they know much about football or not!
Yeah it's hard to justify what they could possibly be thinking.
 

Tom Cato

Full Member
Joined
Jan 3, 2019
Messages
1,955
All of this begs the question: Why do the Glazers allow such an incompetent fool as Woodward to not only waste huge sums of money but also devalue their asset as surely 'reduction in turnover' would do? Perhaps it also calls into question their own competence as businessmen, whether they know much about football or not!

Is this a serious post? I want to reply but I'd like to know if you are trolling or not, because I'm not sure this is an actual real life opinion.
 

MrPooni

Full Member
Joined
Feb 10, 2012
Messages
2,355
People need to stop giving the likes of @ravelston and @Redjazz so much shit for having the audacity to regularly provide coherent, honest and agenda-free analysis of our finances on a quarterly basis simply because the conclusions of their posts don't exactly jive with people's particular flavour of anti-Glazer doom mongering.
 

Crashoutcassius

Full Member
Joined
Oct 10, 2013
Messages
6,990
Location
playa del carmen
This is the best thread on the forum for hilarious opinions

The quality of the opinions here really throw doubt on the quality of the opinions in the rest of the forum for me... do people understand football as much as they understand finances?
 

ROFLUTION

Full Member
Joined
Jan 22, 2009
Messages
4,140
Location
Denmark
Have we though?

We temporarily deflected half of Sanchez's terrible contract which will be back on our books and unmovable after 6 months.

Looking at our contracts we have a lot of overvalued contracts on our books:

Rashford - £200k p/w is steep, for what he's shown and figuring a tax for image rights etc due to his popularity £170k p/w (Kane/Salah earn £200k to put that into perspective)

DeGea - £375k. Even with DeGea at his peak one would question if paying a GK that much money ever made sense for the value they would bring to a top club with an elite defense. With him being washed up & poor over the last yr or so (Liverpool is the only decent game he's had in ages) he's absolutely overvalued and we'd get the same return from playing someone like Romero for £120k p/w & pocket the £250k p/w in change

Martial - £230k. While Martial's talent deserves his hefty salary, his injury proneness and inconsistency with his play at times makes him overvalued (to be fair we have not had a midfield for a few months now)

Mata - £160k. Perhaps the most headscratching move of the summer was to give him a huge 2 yr contract for being a backup player, instead of giving Gomes that opportunity for a fraction of the price.

I could go on with the coaching staff being underqualified, Jessi (Messi in useless games) Lingard, Phil Jones
I somehow doubt this is true, hence his low value as a player for us and any other club at the moment. Where did you get this figure from?
 

arthurka

Full Member
Joined
Jan 20, 2010
Messages
11,992
Location
Rectum
well, yes and no. Yes, it’s tough and needs smart work. No, as in it’s not true that we don’t have the money or ability to borrow.

The bulk of our operating costs as with any football club, are wages. We can reduce these drastically. We’ve reduced a fair bit already and can do a lot more just from sales and smart replacements (buying doesn’t affect the P&L by the purchase value but only depreciation).

So then we are looking at whether we can finance the buying. Here, we need to assess the ability to finance payments and also manage profitability. Now, the “money in the bank” helps pay our chunk and the difference between gross and net debt shows we still have plenty of sanctioned debt to dip into. It’ll increase interest costs but we’ve now lowered those to manageable levels and it’s better to pay those as I’ve mentioned before.

And how to we manage the cash flows and profits? Simple. As I stated several times on these pages before, sell Pogba! That’s a must. Reduces wages and gets in the up-front payment cash (some part of spending requirements now becomes debt-free). Having the debt sanction enables us to even sell him with a structured payment system over 2-4 years.

So yes, we do need to spend to buy (to balance books short term) but we have the ability to leverage. All that’s questionable is the will. I’m assuming of course, that our spending will be in line with the record under Ole (therefore good, smart and successful) and that Ole won’t continue to be sub-par on results or will be replaced by a manager who will take us forward.
As much as it is a must to sell Pogba it's as much a must to keep us in the CL. That alone will provide us around 50m a year and we will keep the Adidas money as well. If we fail again with the CL spot we will see another year of significant revenue drop for Utd. But I agree with you on the opportunities for us to keep reducing cost that seems to be showing some decent results. But that leaves us with the problems we have with funding a stadium revamp or another projects regarding other areas. That will need to be borrowed or at least looks like it.
 

Steve Bruce

Full Member
Joined
Aug 19, 2008
Messages
511
As much as it is a must to sell Pogba it's as much a must to keep us in the CL. That alone will provide us around 50m a year and we will keep the Adidas money as well. If we fail again with the CL spot we will see another year of significant revenue drop for Utd. But I agree with you on the opportunities for us to keep reducing cost that seems to be showing some decent results. But that leaves us with the problems we have with funding a stadium revamp or another projects regarding other areas. That will need to be borrowed or at least looks like it.
The alternative that I personally wouldn't like is a big sponsorship deal for the stadium to fund the revamp
 

the chameleon

Full Member
Joined
May 20, 2012
Messages
716
All of this begs the question: Why do the Glazers allow such an incompetent fool as Woodward to not only waste huge sums of money but also devalue their asset as surely 'reduction in turnover' would do? Perhaps it also calls into question their own competence as businessmen, whether they know much about football or not!
Exactly, they are just a bunch of incompetent rich kids who lucked on being born to a rich businessman father. I doubt that their business acumen has ever been tested. It was their old man who bought the club. Our club is just another resource to finance their expensive lifestyles.
 

arthurka

Full Member
Joined
Jan 20, 2010
Messages
11,992
Location
Rectum
The alternative that I personally wouldn't like is a big sponsorship deal for the stadium to fund the revamp
The Saudis have some great oil companies.. The Aramco Old Trafford Reds has a great ring to it..
 

midnightmare

Full Member
Joined
Sep 22, 2015
Messages
1,043
Location
Midian
As much as it is a must to sell Pogba it's as much a must to keep us in the CL. That alone will provide us around 50m a year and we will keep the Adidas money as well. If we fail again with the CL spot we will see another year of significant revenue drop for Utd. But I agree with you on the opportunities for us to keep reducing cost that seems to be showing some decent results. But that leaves us with the problems we have with funding a stadium revamp or another projects regarding other areas. That will need to be borrowed or at least looks like it.
The stadium is actually a huge question mark. My blunt assessment is that nothing will move on that for another 2-3 years (minimum). Real Madrid's stadium upgrade of the Bernabeu was estimated at just about 500 Mn GBP (525 Mn euros I think). This was back in 2018 - so add inflation as you will. Oh and it is meant to upgrade a stadium that's starting out larger and much better on infra than the current crumbling Old Trafford.

This kind of money obviously has to come through debt financing. Now, any club undertaking such spending needs to have three things in place:

1. It has to be generating massive profits to avoid having to completely wipe out the ability to fund sporting imperatives
2. A balance sheet that can afford that kind of debt infusion without disproportionate costs (the lenders build in risk premia if the balance sheet is not healthy enough)
3. There must be a good expansion of capacity as well - to ensure that the stadium returns more than it took to upgrade / make

We now face three issues! One or each of the above:

1. This is the "smallest" of the issues, but merits mention. We are not generating "massive enough" profits as things stand - unless we reduce our wage bill; now, we do seem to be moving in that direction though so perhaps there is mitigation. We would however need to show 2-3 years of robust profits in order to justify bullishness in terms of a minimal impact of the debt financing on our ability to spend on the footballing aspects

2. Our balance sheet is not healthy enough to take on another 700 Mn GBP of debt; I say 700 Mn, because you should remember that the debt you take would normally exceed (by at least 10-12%) the estimated cost of the project. This is standard practice of course - though it still assumes that overruns will be minimal. Firstly, this 700 Mn is already significantly higher than our annual revenues. Secondly, we currently have close to 400 Mn GBP of net debt. Adding another 700 Mn would mean that our debt burden would be 2X of revenues. That's not healthy. By contrast, Real Madrid's debt for the stadium was comfortably below their annual turnover at the time itself. While I get the fact of structured drawal and payment, this is not healthy and financiers could well charge higher rates for such funding.

3. We have that issue with the tracks and the club does not (if I am not wrong) yet have a plan in place for how to increase capacity. So a stadium upgrade could well end up not yielding as much extra revenue as it should, in order to justify the costs.

In effect, Point 3 is probably easily resolved and my guess is that the club already has a good idea of how to manage this side. Point 1 makes CL qualification essential and also makes it important for us to better monetize the brand while curtailing our spending (sell Pogba, Alexis and some more high-earners). Point 2 is therefore the critical path. It will be addressed automatically (provided decent finance management) if we manage Point 1, but only over a period of 2-3 years.
 

sun_tzu

The Art of Bore
Joined
Aug 23, 2010
Messages
15,200
Location
Pretend inferiority and encourage his arrogance.
2. Our balance sheet is not healthy enough to take on another 700 Mn GBP of debt; I say 700 Mn, because you should remember that the debt you take would normally exceed (by at least 10-12%) the estimated cost of the project. This is standard practice of course - though it still assumes that overruns will be minimal. Firstly, this 700 Mn is already significantly higher than our annual revenues. Secondly, we currently have close to 400 Mn GBP of net debt. Adding another 700 Mn would mean that our debt burden would be 2X of revenues. That's not healthy. By contrast, Real Madrid's debt for the stadium was comfortably below their annual turnover at the time itself. While I get the fact of structured drawal and payment, this is not healthy and financiers could well charge higher rates for such funding.
I wouldnt worry about the balance sheet too much ... I dount it would sit on there

My gut feel would be that if they wanted to redo the stadium they would set up a holding company for the stadium (for example sold trafford limited) ... take out a bank loan to buy the stadium from Manchester united

Then sign a 100 year lease as Manchester United as the occupiers (probably subject to rent reviews every 5 years) ... essentially a chunk of money is released to either pay down debt, buy players (or take a whacking dividend from and my money is on the latter) and the rental fee from united each year would fund the interest payments for the stadium purchase and renovations.

When the works are complete sell naming rights in the stadium , sell manchester united, increase rents and kerching .... huge proffit on the united sale, income from naming rights, 100 year tennant easily paying off the loan you took and making a whacking proffit and in 30 years rinse repeat till after 100 years you sell it and build flats
 

arthurka

Full Member
Joined
Jan 20, 2010
Messages
11,992
Location
Rectum
The stadium is actually a huge question mark. My blunt assessment is that nothing will move on that for another 2-3 years (minimum). Real Madrid's stadium upgrade of the Bernabeu was estimated at just about 500 Mn GBP (525 Mn euros I think). This was back in 2018 - so add inflation as you will. Oh and it is meant to upgrade a stadium that's starting out larger and much better on infra than the current crumbling Old Trafford.

This kind of money obviously has to come through debt financing. Now, any club undertaking such spending needs to have three things in place:

1. It has to be generating massive profits to avoid having to completely wipe out the ability to fund sporting imperatives
2. A balance sheet that can afford that kind of debt infusion without disproportionate costs (the lenders build in risk premia if the balance sheet is not healthy enough)
3. There must be a good expansion of capacity as well - to ensure that the stadium returns more than it took to upgrade / make

We now face three issues! One or each of the above:

1. This is the "smallest" of the issues, but merits mention. We are not generating "massive enough" profits as things stand - unless we reduce our wage bill; now, we do seem to be moving in that direction though so perhaps there is mitigation. We would however need to show 2-3 years of robust profits in order to justify bullishness in terms of a minimal impact of the debt financing on our ability to spend on the footballing aspects

2. Our balance sheet is not healthy enough to take on another 700 Mn GBP of debt; I say 700 Mn, because you should remember that the debt you take would normally exceed (by at least 10-12%) the estimated cost of the project. This is standard practice of course - though it still assumes that overruns will be minimal. Firstly, this 700 Mn is already significantly higher than our annual revenues. Secondly, we currently have close to 400 Mn GBP of net debt. Adding another 700 Mn would mean that our debt burden would be 2X of revenues. That's not healthy. By contrast, Real Madrid's debt for the stadium was comfortably below their annual turnover at the time itself. While I get the fact of structured drawal and payment, this is not healthy and financiers could well charge higher rates for such funding.

3. We have that issue with the tracks and the club does not (if I am not wrong) yet have a plan in place for how to increase capacity. So a stadium upgrade could well end up not yielding as much extra revenue as it should, in order to justify the costs.

In effect, Point 3 is probably easily resolved and my guess is that the club already has a good idea of how to manage this side. Point 1 makes CL qualification essential and also makes it important for us to better monetize the brand while curtailing our spending (sell Pogba, Alexis and some more high-earners). Point 2 is therefore the critical path. It will be addressed automatically (provided decent finance management) if we manage Point 1, but only over a period of 2-3 years.
I fully agree with this.
That´s why I don´t see us buying 5 players this summer, they will be 3 max but we will move Pogba out.
We will need to reach the CL, sell of huge players on huge wages and keep on adding better commercial deals that will be hard given the other issues we have on the field.
All that while we will need to keep spending limited and wages sensible and that won´t happen if we don´t reach the CL or compete for honors. So there in lies our problem we cannot build neither a better squad or a better stadium under the current business model and with our debt rising we won´t get great deals on the investment needed for our stadium revamp.

Just don´t see how the Glazers and Ed will move us further.
 

Adisa

likes to take afvanadva wothowi doubt
Joined
Nov 28, 2014
Messages
38,126
Location
Birmingham
It's not even up for debate. Just look at our annual reports. The club is already spending circa the maximum it can spend on transfers.
I always laugh at the notion that the Glazers don't care what happens on the pitch. It's simply not true. What happens on the pitch has a medium to long term impact on the finances of a club.
The cost to this club for the last six years is far more than the €1bn spent on transfer fees.
 

Adisa

likes to take afvanadva wothowi doubt
Joined
Nov 28, 2014
Messages
38,126
Location
Birmingham
I wouldnt worry about the balance sheet too much ... I dount it would sit on there

My gut feel would be that if they wanted to redo the stadium they would set up a holding company for the stadium (for example sold trafford limited) ... take out a bank loan to buy the stadium from Manchester united

Then sign a 100 year lease as Manchester United as the occupiers (probably subject to rent reviews every 5 years) ... essentially a chunk of money is released to either pay down debt, buy players (or take a whacking dividend from and my money is on the latter) and the rental fee from united each year would fund the interest payments for the stadium purchase and renovations.

When the works are complete sell naming rights in the stadium , sell manchester united, increase rents and kerching .... huge proffit on the united sale, income from naming rights, 100 year tennant easily paying off the loan you took and making a whacking proffit and in 30 years rinse repeat till after 100 years you sell it and build flats
What are the FFP rules on PPE spending?
I am not sure your analogy would be allowed.
 

midnightmare

Full Member
Joined
Sep 22, 2015
Messages
1,043
Location
Midian
I wouldnt worry about the balance sheet too much ... I dount it would sit on there

My gut feel would be that if they wanted to redo the stadium they would set up a holding company for the stadium (for example sold trafford limited) ... take out a bank loan to buy the stadium from Manchester united

Then sign a 100 year lease as Manchester United as the occupiers (probably subject to rent reviews every 5 years) ... essentially a chunk of money is released to either pay down debt, buy players (or take a whacking dividend from and my money is on the latter) and the rental fee from united each year would fund the interest payments for the stadium purchase and renovations.

When the works are complete sell naming rights in the stadium , sell manchester united, increase rents and kerching .... huge proffit on the united sale, income from naming rights, 100 year tennant easily paying off the loan you took and making a whacking proffit and in 30 years rinse repeat till after 100 years you sell it and build flats
This would not be allowed. If you set up a HoldCo which takes the stadium, the HoldCo would need to buy the stadium outright from Manchester United in a complete arm's length transaction. That would, however, then lead to an immediate leasing agreement being needed and the club having to immediately commence paying the lease. The ability of the HoldCo to raise debt would depend entirely on the terms of the lease being clearly profitable and covering not just the debt costs but doing so while managing a healthy DSCR.

This sounds great in theory, but just will not work. If it was this simple, loads would have done it already. We're not the only club that needs a stadium refurbished / made.

Oh and all this is before considering that UEFA would not look at this as a purely financial issue. FFP allows them to go well beyond what the taxman considers - and they could well rule that the debt if "effectively" carried by the club.

The only way the club avoids this kind of burden is by immediately selling the stadium naming rights (it would be a truly massive cash injection) and then using that to fund the profit gap caused by the cost of debt etc. I don't however, think that even the Glazers will go that far. Not now, at least. Though, if we were to (do indulge me, this is a hypothetical scenario) win a PL-CL double some year, they could well make use of the immediate euphoria and spike in valuation to make such a move.
 

Lentwood

Full Member
Joined
Jan 2, 2015
Messages
3,093
Location
West Didsbury, Manchester
You're a bit wrong about the Net spend and how the club actually puts this into the books. Looking at Net spend and figuring out a pattern or try to judge our actual buying power is not really all that useful.

Player spend is amortized over the length of the players contract. The way its put into the accounting books is the sum of purchase fee, agent fee, ages, sign-on bonus accumulated over the contract length

For example Bruno Fernandes £50m, salaries over contract £50m, agent fees etc etc £20m - 5 year, year 1 asset spend £24m year 2 £24m etc etc etc. not £50m outright as your post implies. This is how the NET spend will appear in the clubs accounting. The example is just that, an example.

The annual reports are just that, reports, but they offer no conclusion into the book-keeping, just a summary of ingoings and outgoings in the fiscal year, and most importantly. How the club performs financially which is what this thread is all about.

Business done before July will appear in the previous years fiscal overview etc. A few things to consider is that clubs use this fiscal window to "decorate" the books if you will. For example a new sponsor deal will always begin July 1st and end June 30th.

Regarding player purchases. They are never paid out in full unless agreed previously. The norm is installments over 1-2 years (2 being the most common). The reason for this is really quite simple, cash upfront requires just that, a huge wad of cash.

If you want to gauge the clubs buying power, look at its EBIDTA (Earnings before interest, tax, depreciation and amortization). Hopefully Ill get back to this post later because there's a lot to address regarding the clubs wage bill. Or primarily, why its so incredibly high.

The club has a wage bill that fits its financial powers, so there's not really a lot to raise eyebrows over that alone. The part to criticize is WHO earns that money, but the wage bill itself is fine.

The real thing that is deeply troublesome is the Glazer family and its dividends. The Glazers are the ONLY owners that take out dividends from the club. Period. No other club in the Premier League pays dividends to its shareholders. They are the only owners that take money out of the club annually, and that is very telling of the difference in ownership between the Glazer family and the Fenway Sports Group for example.
The sole purpose of including the figures on net spend was to show just how much money we have spent since 2012

The underlying point of the whole post is to show that, despite the accusations of the fans, the Glazers probably are spending as much as can be realistically expected right now

I don’t see the dividends as being “deeply troubling” at all. Of course I would rather we didn’t pay them but I hardly think they are the reason we aren’t making more signings.
 

Lentwood

Full Member
Joined
Jan 2, 2015
Messages
3,093
Location
West Didsbury, Manchester
I fully agree with this.
That´s why I don´t see us buying 5 players this summer, they will be 3 max but we will move Pogba out.
We will need to reach the CL, sell of huge players on huge wages and keep on adding better commercial deals that will be hard given the other issues we have on the field.
All that while we will need to keep spending limited and wages sensible and that won´t happen if we don´t reach the CL or compete for honors. So there in lies our problem we cannot build neither a better squad or a better stadium under the current business model and with our debt rising we won´t get great deals on the investment needed for our stadium revamp.

Just don´t see how the Glazers and Ed will move us further.
What’s wrong with “three max” though? This is my point - posters seem to believe signings three players a window is below par but it really isn’t.

Of course we need more than three players to challenge, hence why we’re going to have to be patient.

The club shouldn’t overstretch and spend money we don’t have, especially since there are no guarantees of success either way!
 

arthurka

Full Member
Joined
Jan 20, 2010
Messages
11,992
Location
Rectum
What’s wrong with “three max” though? This is my point - posters seem to believe signings three players a window is below par but it really isn’t.

Of course we need more than three players to challenge, hence why we’re going to have to be patient.

The club shouldn’t overstretch and spend money we don’t have, especially since there are no guarantees of success either way!
Nothing just we won't buy 6 and we won't buy 3 unless we sell.
 

Lentwood

Full Member
Joined
Jan 2, 2015
Messages
3,093
Location
West Didsbury, Manchester
Nothing just we won't buy 6 and we won't buy 3 unless we sell.
We will sell Pogba and probably bring in two “big” signings plus a couple of young players for £5m-£15m

I would expect that we will possibly also sell as many from Smalling, Jones, Lingard, Rojo and Sanchez as we can
 

arthurka

Full Member
Joined
Jan 20, 2010
Messages
11,992
Location
Rectum
We will sell Pogba and probably bring in two “big” signings plus a couple of young players for £5m-£15m

I would expect that we will possibly also sell as many from Smalling, Jones, Lingard, Rojo and Sanchez as we can
Agree
 

red thru&thru

Full Member
Joined
Mar 2, 2004
Messages
4,835
Even Duncan Castles believes we will spend big in summer, after listening to yesterday's investors call.
 

DanClancy

Full Member
Joined
Sep 22, 2015
Messages
971
People need to stop giving the likes of @ravelston and @Redjazz so much shit for having the audacity to regularly provide coherent, honest and agenda-free analysis of our finances on a quarterly basis simply because the conclusions of their posts don't exactly jive with people's particular flavour of anti-Glazer doom mongering.
Agenda free? I beg to differ.
 

ManchesterYoda

Full Member
Joined
Nov 26, 2016
Messages
665
I don't hate the Glazers or Woodward. Fans foam at the mouth saying how much they hate them but it doesn't influence me at all. Since Ferguson retired our problems have been ON THE PITCH. The manager is responsible for what happens. Each manager has had quality players and funds available. I don't blame the Glazers or Woodward for the failure of the manager, I blame the manager.
 

Skills

Snitch
Joined
Jan 17, 2012
Messages
31,399
I don't hate the Glazers or Woodward. Fans foam at the mouth saying how much they hate them but it doesn't influence me at all. Since Ferguson retired our problems have been ON THE PITCH. The manager is responsible for what happens. Each manager has had quality players and funds available. I don't blame the Glazers or Woodward for the failure of the manager, I blame the manager.
This sums up my feelings but I also do blame Woodward/Glazers for not being decisive enough and sacking the managers in a more timely manner. Their dithering has made the situation worse, where if they were decisive and fecked them off earlier we would've been better off.

But then again, they're also in an unenviable situation where the fanbase of their club just has a huge hard-on for managers. This puts unnecessary restriction on them, on doing things the 'United way' - which itself is a complete failure outside of the time it landed two all time great managers.
 

ManchesterYoda

Full Member
Joined
Nov 26, 2016
Messages
665
This sums up my feelings but I also do blame Woodward/Glazers for not being decisive enough and sacking the managers in a more timely manner. Their dithering has made the situation worse, where if they were decisive and fecked them off earlier we would've been better off.

But then again, they're also in an unenviable situation where the fanbase of their club just has a huge hard-on for managers. This puts unnecessary restriction on them, on doing things the 'United way' - which itself is a complete failure outside of the time it landed two all time great managers.
They hired Moyes after Ferguson recommended him and sacked him as soon as Champions League qualification was impossible.
Next they went for experienced coach with great CV and sacked him for failing to secure Champions League qualification despite winning a trophy.
Next they went for someone with an even better CV and sacked him early in the season because we were bottom half of the table and playing awful.
Now they have gone for a club legend who had an amazing spell as caretaker, because 2 great CV managers failed.
I don't blame them for any decision they've made. Many fans blame Woodward, in hindsight, for hiring managers who keep failing, but I don't, because I never questioned the appointment of any of them at the time they were appointed and neither did the majority of fans.
 

Skills

Snitch
Joined
Jan 17, 2012
Messages
31,399
They hired Moyes after Ferguson recommended him and sacked him as soon as Champions League qualification was impossible.
Next they went for experienced coach with great CV and sacked him for failing to secure Champions League qualification despite winning a trophy.
Next they went for someone with an even better CV and sacked him early in the season because we were bottom half of the table and playing awful.
Now they have gone for a club legend who had an amazing spell as caretaker, because 2 great CV managers failed.
I don't blame them for any decision they've made. Many fans blame Woodward, in hindsight, for hiring managers who keep failing, but I don't, because I never questioned the appointment of any of them at the time they were appointed and neither did the majority of fans.
That's the problem. They've only made a change once the situation was unrecoverable. It's a very poor way to do things and a strategy no other club chooses to employ.

They need to be more proactive and make a change when the situation is recoverable. Had we sacked Moyes earlier we could've squeezed CL football and would've been less cornered in the 14/15 transfermarket. Had we sacked Mourinho at the end of 17/18 we could've bought someone into build on his work, rather than someone to pick up the pieces.
 

ManchesterYoda

Full Member
Joined
Nov 26, 2016
Messages
665
That's the problem. They've only made a change once the situation was unrecoverable. It's a very poor way to do things and a strategy no other club chooses to employ.

They need to be more proactive and make a change when the situation is recoverable. Had we sacked Moyes earlier we could've squeezed CL football and would've been less cornered in the 14/15 transfermarket. Had we sacked Mourinho at the end of 17/18 we could've bought someone into build on his work, rather than someone to pick up the pieces.
It would have been wrong to sack Mourinho at the end of that season as we finished 2nd. Only in hindsight was it correct to sack him at end of that season.
Moyes should not have been sacked before unless we were so bad we were in the bottom half. In his first season he should be given the chance to achieve Champions League qualification with a title winning side. He was and failed and was rightly sacked. Moyes failed. We finished 7th after winning the league and blame Moyes 100%. I don't blame Ferguson for recommending him, I don't blame Glazers or Woodward for listening to Ferguson's advice. I blame Moyes.
 

Skills

Snitch
Joined
Jan 17, 2012
Messages
31,399
It would have been wrong to sack Mourinho at the end of that season as we finished 2nd. Only in hindsight was it correct to sack him at end of that season.
Moyes should not have been sacked before unless we were so bad we were in the bottom half. In his first season he should be given the chance to achieve Champions League qualification with a title winning side. He was and failed and was rightly sacked. Moyes failed. We finished 7th after winning the league and blame Moyes 100%. I don't blame Ferguson for recommending him, I don't blame Glazers or Woodward for listening to Ferguson's advice. I blame Moyes.
Why would it have been wrong? We were massively stagnating under him in the second half of that season. He had turned the situation toxic within the dressing room and all the signs were pointing towards a massive meltdown. So why would it have been wrong to sack him?

And again why would it have been wrong to sack Moyes when it seemed like he was going to fail to achieve even the minimum level?

Our fans need to wake up and realise we're not some art project. Like our rivals, we need to be run like a more ruthless and efficient organisation. This isn't 1986 anymore, our rivals are a lot more competent, competition is more fierce and there's far more on the line now if we don't meet the minimum standard. Because the way we're run at the moment, we're basically the Woolworths and other extinct high street shops of the football world.
 

Adam-Utd

Part of first caf team to complete Destiny raid
Joined
Sep 10, 2010
Messages
24,513
With interest rates now at 0.25% we can effectively borrow free money and pay it back over a number of years.

It would be foolish not to take advantage of this now, build a great squad then pay it back later.
 

Red4Life_#7

Full Member
Joined
Aug 15, 2014
Messages
746
Let's start by saying this is not a defence of the Glazers. The Glazer family have been nothing short of disastrous for Manchester Utd, I don't believe there is even a debate to be had here. However, one thing has continued to frustrate me recently - and that's this idea that Manchester United can and should spend £200m+ net every single year.

I believe our fans are right to question the impact the Glazers have had on our spending over the duration of their tenure as owners of the club. I believe it is an indisputable fact that between 2005 and 2010, the Glazers dramatically curtailed transfer spending in order to balance the books. During this period, we actually had a positive net spend, which is crazy for a club who at the time where competing for major domestic and European trophies.

The reason for this is that when the Glazers initially bought the club, they did so by borrowing £275m at an interest rate of 14.25%. The debt grew steadily during the early years of Glazer ownership and this resulted in us paying back upwards of £70m in interest repayments alone up until around 2012. All during a time when the clubs annual turnover peaked at around the £363m mark.

In 2010, the debt was restructured to be much more manageable as the Glazers used a £500m bond to wipe out the high-interest PIK loans and borrow at a much cheaper rate. As of 2013, finance costs have been reduced by about 66% and now stand at about £20-25m per annum.

However, I and many others rightly believe that a huge amount of damage was done during this period. Those first ten years of Glazer ownership are often referred to sarcastically by Utd fans as the 'no value in the market years' - as this was the line the Glazer puppet Alex Ferguson would often trot out to justify their penny pinching approach. That of course is absolute, utter nonsense and looks even more ridiculous now with hindsight than it so obviously was at the time. Even before we get into the recent transfer inflation caused by the new TV deal, it's just an incredibly nonsensical statement to make because the 'value' of a player is what a club is willing and able to pay.

Some posters may remember I created a not-to-dissimilar thread to this one where I analysed the Glazer spending up until around 2017 which transfer inflation applied for context. The purpose of this thread was to disprove the notion that United had spent enough money to guarantee trophies and was partly a defence of Moyes, LvG and Jose Mourinho - who at the time was constantly beaten with the stick of having a squad costing £900m which was 20pts behind City's less expensive squad (as the gutter press constantly delighted in reminding us without context). My point at the time being obviously that we had done most of our spending during peak transfer inflation years whereas City had sensibly accumulated a squad consisting of many players purchased before fees increased exponentially (Aguero, Silva, Fernandinho, Kompany etc...etc...)

Nevertheless, this thread is not about going over old ground. So yes, the Glazer family cut costs between 2005 and 2010 (especially) and harmed the club immeasurably during this period.

HOWEVER - as I said in the opening paragraph, my frustration is with a few very prominent voices on social media who are constantly misunderstanding (deliberately or not) our current predicament and misleading a large percentage of our fanbase in the process. These social media warriors are constantly banging on about our lack of spending, the lack of investment, cost-cutting etc...etc...writing about all manner of conspiracy theories as to why Ole has been appointed, why we are focusing on young, English players, why we have missed out on certain players, amongst many other examples.

This notion of cost-cutting post-2014 simply does not stand up to any kind of scrutiny whatsoever and it's incredibly frustrating for me because I believe constantly moaning about spending (or lack thereof) ignores the real issues with how the club is being run in 2020. I personally believe that one man is responsible for our predicament right now and that man is Ed Woodward. The man who was given a warchest by the Glazer family to go and revitalise and rebuild Manchester United after the retirement of Alex Ferguson - only for him to piss this money down the drain faster than you can say "Adult Disneyland".

So, I'm not a financial expert by any means and I am happy to be corrected on any of the statements I make or the figures I put forward below. However, I have spent some time going over our Annual Reports since 2013 and have found the following (apologies if I've interpreted any of this wrong - correct me if you can)

NET TRANSFER SPEND

2012/132013/142014/152015/162016/172017/182018/192019/20Total
PSG
£131,620,000​
£98,460,000​
£42,570,000​
£83,880,000​
£67,230,000​
£157,140,000​
£101,700,000​
-£9,810,000​
£672,790,000​
Manchester City
£14,000,000​
£89,800,000​
£60,000,000​
£73,700,000​
£165,050,000​
£177,550,000​
-£2,050,000​
£91,350,000​
£669,400,000​
Manchester United
£51,100,000​
£66,700,000​
£104,200,000​
£28,150,000​
£102,000,000​
£136,200,000​
£47,030,000​
£65,500,000​
£600,880,000​
Barcelona
£29,250,000​
£65,790,000​
£76,430,000​
£11,430,000​
£81,860,000​
£127,800,000​
-£4,460,000​
£87,390,000​
£475,490,000​
Inter Milan
£11,480,000​
£44,040,000​
-£5,890,000​
-£11,760,000​
£126,950,000​
£52,480,000​
£13,950,000​
£97,970,000​
£329,220,000​
Juventus
£44,550,000​
-£11,560,000​
£24,920,000​
£67,840,000​
£17,020,000​
£16,830,000​
£134,100,000​
£20,740,000​
£314,440,000​
Chelsea
£72,000,000​
£49,309,000​
£5,100,000​
£9,100,000​
£51,300,000​
£80,200,000​
£144,600,000​
-£152,000,000​
£259,609,000​
Liverpool
£41,300,000​
£20,300,000​
£38,380,000​
£28,000,000​
-£6,460,000​
-£28,000,000​
£127,500,000​
-£28,600,000​
£192,420,000​
Real Madrid
£4,500,000​
£55,800,000​
-£12,000,000​
-£62,410,000​
-£6,750,000​
-£79,200,000​
£25,790,000​
£186,750,000​
£112,480,000​
Tottenham
-£1,300,000​
-£16,300,000​
-£1,250,000​
-£7,850,000​
£27,700,000​
£24,750,000​
-£11,000,000​
£61,000,000​
£75,750,000​

These are the net transfer spends of some sample 'big spenders' from across Europe since 2012. I picked this date as to the best of my understanding, 2013 was the last year we paid out £70m+ in interest repayments.

Quite clearly you can see from this table that the notion of any kind of cost-cutting or restrictive spending (restrictive NOT restricted - PLEASE NOTE) just does not stack up. Only the two clubs owned by countries and pumped full of oil-money have spent more than Utd net over the last seven years. I've got United supporting friends who mean well but just like this forum they seem to believe that clubs like Barcelona and Real Madrid spend £200m+ net every Summer. They don't. Simple. It's a myth. Remember, whether enough money has been spent to win trophies is not my argument here...my argument is that I think it's pretty difficult to say 'lack of spending' or 'lack of investment' is the reason we're currently 5th and playing in the Europa League when clubs like Real and Liverpool have managed to win European trophies on much more limited budgets.

OPERATING PROFIT

Operating Profit
2013​
2014​
2015​
2016​
2017​
2018​
2019​
Manchester United
£146,419,000​
£23,835,000​
-£483,000​
£36,598,000​
£39,209,000​
-£37,629,000​
£18,881,000​

Now, another common argument when you point to our net spending is 'we are Man Utd, we SHOULD be spending that every year' and very often users of this argument will point to our status as one of the richest clubs in the world, as measured by TURNOVER. However, what this clearly ignores is the amount of profit we are making. As the old saying goes, 'turnover is vanity, profit is sanity'. That certainly applies when you're measuring a companies/club's ability to invest in capital assets i.e. players! So what are we asking the Glazer family to do here? You can see the club is not making huge amounts of profit which is somehow being left sat in the bank or taken out of the club by the Glazers (hang on...before anybody jumps in at this point...will clarify shortly!)...so are we asking the Glazers to spend beyond their/our means? The facts and figures don't lie...there's barely been any surplus since 2014 to actually spend on additional transfers!

FINANCE COSTS

INTEREST
2013​
2014​
2015​
2016​
2017​
2018​
2019​
Overall
Manchester United
72,082,000​
27,668,000​
35,419,000​
20,459,000​
25,013,000​
24,233,000​
25,470,000​
230,344,000​

Now, when I said a few sentences ago that there wasn't a huge amount of surplus money sat left in the bank every year or being taken out of the club by the Glazer family, I appreciate many will have instantly thought of the interest payments the club makes every year. Now again, remember, I'm not here to defend the Glazer's ownership. They are parasites in that they have contributed nothing and only take out of the club. The interest payments above demonstrate this. United would have been £230m better off at least since 2013 had we not been leveraged with debt by the Glazer family. So in that respect and in the eyes of fans I'm sure, £230m extra could have been spent on footballers. (I realise this is too simplistic for any finance bods out there as corporate debt reduces tax etc...etc...but let's not go down complex financial wormholes here!) However, ask yourself....think back to the net spend table. Would we be significantly better off had we spent another £230m over a 7 year period under the direction of Ed Woodward? I for one am not at all convinced we would be. Looking at the interest payments and money taken out IS relevant to the anti-Glazer argument of course....but I don't think it addresses the issue of WHY we are SO bad right now. Clearly, interest payments or not, enough money has been spent since 2012 to enable us to AT LEAST be competitive and the truth is we're far from it and our squad is an appalling mess.

WAGES

Wages are often overlooked by those who often cry under-investment because it REALLY doesn't suit the narrative in any context. Now, many are aware that Utd set an upper limit of 50% wages/turnover....i.e. no more than 50% of the clubs turnover should be spent on wages. This is actually fine and many clubs have higher percentages ratios without having such a big total bill. I accept that argument and it's reasonable to expect the club to spend 50% of it's turnover on wages moving forward. No problem here. However, look at the table below;

WAGES
2013​
2014​
2015​
2016​
2017​
2018​
2019​
Manchester United
£202,561,000​
£232,242,000​
£263,464,000​
£295,935,000​
£332,356,000​
£363,189,000​
£367,056,000​

Would any fan in their right and sane mind describe those annual wage bill as 'value for money'?. I think we all know the answer to that! How on this Earth do we spend £367m annually on wages for the absolute mob that turn out for us week in, week out? This is very relevant to me for a few reasons. One, offering players insane wages makes it hard to sign new players and difficult to shift existing players on daft wages. Two, money spent on wages is a HUGE percentage of our overall expenditure, therefore reducing spending on wages COULD be re-invested in the transfer market as capital expenditure. Three, I keep seeing this 'cost-cutting' argument...well of course costs have to be cut don't they! I believe Alexis pushed us up to the 'ceiling' of 50% wages/turnover and I believe the club has recognised that if we want to remain profitable moving forward and continue to be able to invest in players, this has to be reduced before new signings can come in.

CONCLUSION

I have decided to summarise a lengthy OP with a few bullet-points for ease of review.

* Glazers undeniably cut-costs whilst high-interest loan repayments were made, especially against the backdrop of much reduced revenues compared to recent years.

* This very likely hurt us well into the LvG/Jose era, with respect to actually competing for trophies

HOWEVER

* Fans need to re-assess their expectations on what Manchester Utd CAN spend...even if the Glazers did want to benevenently pile every penny earned back into the club £200m+ summers every year put the club in financial jeopardy

* The Glazers DO drain money out of the club but this hasn't stopped us having one of the highest net transfers spends in the world over the last seven years

* The Glazers clearly threw off the shackles once Ed took over as CEO and interest payments had been reduced/TV money increased significantly.

* Ed Woodward has overseen all of that money being wasted

* I believe the club have recognised this and are attempting to remedy the situation by moving players on and setting a platform for a re-build

* I do not believe any conspiracy theories about prolonged 'cost-cutting' exercises. It makes no sense for the Glazers to deliberately weaken the team and devalue the brand. Remember, they bought the club with just £270m of their own money...the long term strategy is SURELY to increase the value of the club significantly and sell for a big profit.

* Following on from the above....why would the Glazers cut costs to make £12m a year between them in dividends when a successful Man Utd could be worth £3.5/4BN to a potential buyer. It would be like having a Golden Goose and slaying it for it's meat!

* Would United be better off without the Glazers? Almost certainly so.

* Are our recent troubles down to under-investment and cost-cutting when it comes to the playing staff....I believe not. I believe our issues sit firmly with Ed Woodward (and again arguably with the Glazers as the people who appointed him and continue to allow him to do a job he is making a right pigs ear of!)

Comments and input welcome - please read the OP carefully before critiquing, I can't be bothered fielding loads of lazy responses where posters trot out lines they've read on Twitter that have been addressed above!
Cracking post, complete hats off to you. I'm glad we've changed our model.
 

cyril C

Full Member
Joined
Nov 26, 2017
Messages
1,492
With interest rates now at 0.25% we can effectively borrow free money and pay it back over a number of years.

It would be foolish not to take advantage of this now, build a great squad then pay it back later.
Of course no and guess you don't really mean that.

The ability to spend, is in fact constrained by FFP. Historically the Club has been using a crude yardstick of wages no more than half of revenue, which is a comfortable benchmark because the FFP is much more specific. We are in a comfortable position to borrow 50-100m but the club should be careful about adding too much wages. i.e. get rid of Sanchez you can start singing, get rid of Rojo, Jones, Lingard, more ammo.

On the other hand, the Club can take advantage of low rate to borrow money to rebuild the stadium. However, unless you think all bankers are stupid, no-one can borrow money at 0.25%, except those use it to speculate
 

Adam-Utd

Part of first caf team to complete Destiny raid
Joined
Sep 10, 2010
Messages
24,513
Of course no and guess you don't really mean that.

The ability to spend, is in fact constrained by FFP. Historically the Club has been using a crude yardstick of wages no more than half of revenue, which is a comfortable benchmark because the FFP is much more specific. We are in a comfortable position to borrow 50-100m but the club should be careful about adding too much wages. i.e. get rid of Sanchez you can start singing, get rid of Rojo, Jones, Lingard, more ammo.

On the other hand, the Club can take advantage of low rate to borrow money to rebuild the stadium. However, unless you think all bankers are stupid, no-one can borrow money at 0.25%, except those use it to speculate
FFP is spread over a number of years, and something we can happily pay off.