|
Man U in a possible financial crisis.
Rule 1 of club management: Do not attempt to outspend the Russian billionaire.
LINK
Beneath veneer of success, Man. United struggles with finances
As Manchester United prepare to face Chelsea in the first all-English Champions League final in Moscow on May 21, it might appear that everything is fine and dandy with the club's owners, the Glazer family.
Malcolm Glazer and his sons faced a storm of criticism when they bought United in 2005. But in football, as with any other sport, nothing placates supporters more effectively than sustained success. With the 2007 league title already in the bag and the 2008 crown just one win away, the Glazers have delivered. Even Sir Alex Ferguson, a Glazer sceptic in 2005, conceded that the Americans had stuck to their side of the bargain. "I'm very fortunate that the Glazer family have been tremendous in letting me get on with the job. I think that speaks volumes for our club," Ferguson said.
Scratch beneath the surface, though, and a very different story emerges. This week it was revealed that the club suffered a £58 million loss last year and now owe a total of £764 million to their various creditors. The accounts for the year ending in June 2007 also disclosed that United owe £56 million in outstanding transfer fee instalments to other clubs.
Most worrying for the Glazers is the news that they still owe £152 million to hedge funds at a rate of interest of 14.25 percent. With a recession threatening to engulf the world's financial markets, the Glazers cannot find anyone willing to take on the debt at a more reasonable interest rate. The hedge fund loans were the most controversial element of the financial package used by the Glazers to fund their takeover of United. This "leveraged" buyout loaded liabilities onto a club which had previously been debt-free. Now the Glazers are struggling to re-finance.
The Champions League final will thus be a battle between the free-spending oligarch in Chelsea's Roman Abramovich and the credit-crunched Glazer. While the English media speculate that the Russian billionaire will use a slice of his £12 billion fortune on a world-record bid for Lionel Messi, United fans must contend with the news that the Glazers only paid off £42 million of the £81 million in interest due on their debts last year. The outstanding interest payments, accrued to the hedge funds, have been rolled over, to be repaid in 2016 -- or whenever the Glazers can re-schedule their debts.
United's success this season can partly be attributed to some astute deals in last summer's transfer market. More than £50 million was spent on Owen Hargreaves, Anderson and Nani, as well as a loan deal for Carlos Tevez. All four have been skilfully assimilated into the United squad. As the ageing legs of Ryan Giggs and Paul Scholes prohibit them from taking part in every match, so Nani and Anderson have stepped in as youthful replacements. Hargreaves, though injury-prone, has provided European know-how, while Tevez has offered much-needed alternative attacking options, though his performances have been overshadowed by the sheer brilliance of Cristiano Ronaldo.
Whereas some successful clubs tend to rest on their laurels, United crucially invested heavily in new recruits on the back of their 2007 EPL title. Now, it appears, that those players have yet to be paid for. It's a high-risk strategy that is dependent on further success. In the coming weeks, United could land an historic domestic and European double. But if they lose to Chelsea in Moscow, the Glazers' complicated finances could start to unravel.
_____________________________________________________________________
I'm sure a collective group of billionaires from Dubai would step in and buy should the need to do so arise. Thoughts?
|
