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How fast can a club go into free fall? Is Liverpool about to follow Leeds?

Arsenal on Twitter @UntoldArsenal

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By Tony Attwood

It was while we were standing outside the Auld Triangle mingling with the Leeds fans before the match on saturday that Ian reminded me of the last time we watched Arsenal / Leeds.  We were challenging to win the league with three games to go: 4 May 2003.   Unexpectedly, bizarrely, with a team containing Pires, Bergkamp, Edu, Henry, Wiltord… we lost 2-3, and so lost the chance of another championship.

I must admit to feeling extremely down and really wondered what could be done with the team to help take us up that final step.

But, of course I was back for the next match – home to Southampton who we were also meeting in the FA Cup final a little later.   We won 6-1, including not only a Pires hat trick, but also concluding with the most audacious lob I have ever seen in a match.

We won the cup; some compensation, and settled down for a new season, not knowing something rather important.  Arsenal v Leeds was the last defeat.  Arsenal v Southampton was the start of the 49.

I mention this because Leeds (a Champs League semi-final team at the time) since then has been, if not exactly in the Conference North, then certainly in the lower leagues.  The memory shows to me how easy it is for big clubs to fall.  No one has the right to stay at the top (as Man U and Liverpool with their occasional visitations into the second division will testify).

On this site we started talking about the demise of certain clubs with non-sustainable policies several years back: Liverpool and Man U for financial reasons, Chelsea because their youth policy was based on quicksand, and later we added Man City because it will ultimately face the same problem as Chelsea.  (Tottenham is a different kettle of dirty washing up water, because it looks to me as if as soon as the stadium is stored the owner will sell, and then, who knows what will happen.)

But to return to Man U, it must seem strange to predict their demise while they are sitting on top of the league.  Yet there is a problem there because the situation of the club cannot be sustained.  The waiting list for tickets has gone, the owners are no closer to solving their problems, and it is their losses that the financial fair play regs were set up to deal with.

(Actually Man U reminds me of the scenario in which a business is broke, and those owed money are howling at the gates demanding a meeting with the boss.  He turns up in a Rolls packed with bottles of champagne, and wearing a broad smile.  The shareholders and creditors are outraged and demand an explanation.  The owner says, “I don’t know about you but I am hear to celebrate the greatest moment in our company’s history” and spreads a yarn about a new development for the company.   So entranced is everyone they not only forget that they are there to get their money back they end up giving the boss even more of their funds.  He has just bought himself another six months).

Which leads me to my point: a club can stay on and on at or near the top for a long time while the financial inside of the club rots away.  And then suddenly it just drops.  Just like Leeds.

Which brings me to Liverpool: a club hardly in the best of spirits.  It is only recently that any journalists have picked up the lead of Untold in pointing out that 21 years after winning the league for the last time, the club can hardly be called  a major force.   But they’ve been in the top four until recently, and not many people really thought  it would all fall apart this quickly.  There seemed to be a simple notion that you could just get rid of the American owners and replace them with, oh, I don’t know, say American owners, and all would be ok.

But it’s not, and in my view, it can only get worse.   Arsenal in the top four have suffered years of media talk about players leaving, and mindless jibes from the AAA that “Arsenal is a selling club”.   Can you imagine what is going to happen in the summer over Reina, Kuyt and Torres?  And dear old S Gerrard?  The point is, once the rot starts, it is hard to stop.

Of course players leave all clubs (something we hardly need reminding about with Vieira at City and Henry now training with us again).  But Liverpool don’t have a decent youth policy or the money to provide anyone amazing to step into the gap, and with the club in clear trouble, the prices taken will be much lower than they would have been a year ago.  There is still no move on a new ground, and there is a decline in the income as fans start to stay away.

(Actually Leeds are partly to blame for the problem Liverpool have.  Until Leeds banks and financiers would always lend to big clubs on the grounds that “big clubs never go bust.”  Leeds showed that was untrue.)

I could continue going around clubs that appear to be falling from grace – and if I stayed in the EPL the next on the list would be Villa, whose demise is simple to understand: the owner has stopped lending (that is lending, not giving) the club money.   When that happens you know things are not good.

But let’s look at another strange case. In England I still maintain Man U are in trouble, despite being top of the league.   And curiously I have the same view of Scotland.   Rangers have won the league the last couple of years, and are still top – and yet…  the club has no control over its own affairs.  Just recently in fact Walter Smith, the manager, made it clear that Lloyds Banking Group is the organisation running the club (“dictating policy” was how Smith put it).  Things are so bad at Rangers they can’t even afford to sign a loan player during the transfer window.

Of course any sympathy one might have for a big club falling on hard times disappears when the boss says the situation is “a bit unfair” as Smith did, and that the club deserves better (a reference back to a campaign by supporters some little while ago.)   He also said the club needs “a wee bit of help.”

What Mr Smith is complaining about is that the bank has only a short-term perspective in terms of wanting its money back – exactly as Liverpool found when those awfully nice people at RBS demanded more and more and more money in default payments from Liverpool so they could do their bit to pay the £17bn in bonuses that is being lashed out on bankers this year.  (Yes, it is £17 billion in the UK, that is not a typo.  If you are not a citizen of the UK, then it’s not your fault.  But if you voted for the Coalition government, then the government is letting them do it in your name).  (I don’t normally let my political views enter the fray on this site – but I am still fuming so much about the banks – perhaps because I chair a company – I can’t help myself.  Sorry).

In fact (and lowering my blood pressure a little by moving away from the subject of bankers) Rangers cannot move in any transfer issue unless they sell first – and even then the manager has admitted that he might not get all the money from the sale.  It all depends on the wages.

So could Man U get into that situation?   I retain my belief that they are running out of places to get money for transfers, and they too are in a situation where money cannot be invested until it has been saved elsewhere.   With an old squad they have a problem, unless there is a Jack Wilshere lurking in their somewhere.

Meanwhile our situation is a little different, with the money rolling in, the new ground built, the 10 year waiting list for season tickets having survived an insane attack by the AAA’s rumour masters, and Arsène Wenger being awarded world coach of the decade by the International Federation of Football History & Statistics.

That last is a great honour of course, and it is a reflection of the success of a long term strategy of Mr Wenger and the club.  It is also a reflection of a view that knows that the long term survival of the club in the top level of football is more important than winning a trophy.   Of course trophies are wonderful and I sing and shout as much as the next man when it happens (and unlike some of the AAA I was there when we beat Leicester to complete the Unbeaten Season – I know what it feels like to watch something beyond belief).

But I also know how quickly success can fade away.  We’ve seen it with Leeds, we are seeing it with Liverpool, and I suspect Man U is not far behind.

Want more ranting and raging, plus some funny bits.  Try Making the Arsenal.

35 comments to How fast can a club go into free fall? Is Liverpool about to follow Leeds?

  • Dark Prince

    Its quite a different situation now. During the leeds demise, epl was not as a big world brand as it is today. That can be seen on the number of foreign billionaires that are involved today in different epl clubs. I dont think rich investors of different countries were as interested in buying a club as it is today. Thats why leeds united had no saviour during its demise. But today its a different story. We have Abramovich, The Glazers, Stan Kroenke, Sheikh Mansoor, Venky’s at blackburn, even Liverpool have foreign owners. And there are many other rich investors who are ready to invest in epl clubs bcoz simply epl is a growing brand. I doubt leeds united had many foreign fans those days. Look how many fan bases Chelsea has around the world. United probably has the biggest fan base around the world, it has a brand value which can rival any sort of sports club. They have a revenue which can attract many investors, we often forget that United made a record operating profits last year. They jus fell into losses due to interest of debts, which can be avoided by paying off the debts, which though The Glazers cant do right now, but some other investors can. You can assume that the debts to liverpool will decrease significantly after the takeover. Though their revenue isn’t as good, but they still have enough brand value to attract revenue. Arsenal at its present position is doing really good. And it should keep doing the same.

  • terry

    TOny, You can say what you like about the deb at our club (UTD) but the sheer fact of the reason is we are up there every season winning titles and winning silverware, wheras arsenal just taking part – making the puzzle. SUrely the fans are going to come to boiling point with the manager (if not already) that if this season goes the same way as the other 6 have done then this should be his last?

  • terry

    To be honest I don’t know if the takeover will come off, one thing for sure something is going on at United I’ve been doing some digging and on the 22nd November the day the Glazers paid of the PIK loan, they also issued new shares in Red Football JV – now whether they sold a stake in the company to someone else or just gave themselves the ability to do that who knows? One thing for sure even if the Qatar lot come in United will not change their policies dramatically and I personally would not want to see them do that. With the debt cleared it would free up £45m a year and with the overall profitability of the club United would in theory be able to spend circa £75-80m a year on transfers without fear of coming anywhere near breaching the FFFP rules. That would not put us on a par with City’s recent spending, but on the basis that you woud anticipate all clubs will have to fall inline with FFFP if they wish to be involved in Europe, it would mean United could compete with anyone for players and in fact probably outbid anyone as we would have more to play with than most because of our turnover. Cheers

    here’s an interesting one for – Apparently Qatar Holdings whihc is the Qatar Royal Fasmilies company have put a package together of £2.5bn to buy United, the offer on the table is £1.85bn to the Glazers, £500m will be used to repay the Bond and £150m will be given to SAF for transfers. So the Glazers would clear £1.85bn on the deal not bad for 5 years work !! The other interesting bit i heard was that Qatar Holdings have turned their attentions to United because they couldn’t buy Barcelona because it is owned by Socis which is it’s members. The Qatar foundation has sponsored Barcelona to the tune of a £125m shirt deal, but now find they cannot buy them, so they intend buying United to improve their football standing and the influence they have over game before the 2022 world cup. watch this space !.

  • Gooneraside

    Rave on, Tony.

    Great article.

  • A Casual Observer

    If Man-U went the same way as Leeds (and Liverpool); I would love it, LOVE IT!!

    Seriously though – it’s a disgrace the way these clubs have been run but some lessons need to be learned and in football they always seem to be learned the hard way… as the philosopher Jimmy Cliff once said “The harder they come, The harder they fall – One and all”.

    To be honest, despite everything I’ve had to put up with from Man-U fans over the years – I doubt that I’ll even gloat or say “I told you so” if the core rotted out of their club…

  • Terry: there is of course no denying that in recent times Man U have been more successful than Arsenal. And there’s no denying that we have a bunch of people (known locally as the Anti-Arsenal Arsenal – the AAA) who are calling for our manager to be sacked. It is also true that a lot of people (although not necessarily those in the stadium) are anxious about five years without a trophy. Others (especially those like me who have lived through much longer spells without a trophy, or those who remember that Sir Alex was about to be sacked just before he turned Man U around) are less concerned by the year on year count, and are more concerned that our club should be in a financially fit condition for years to come.

    My point in the article was quite different, and I am sorry I didn’t make it clear.

    I believe that the pre-Glazer Man U was almost unassailable because of its financial might, lack of mortgage, and manager who was clearly one of the best in the history of the game. But all that was changed by the advent of the Glazer family, and although on the surface it looks as if Man U is coping with this very well, my view is that it is becoming financially challenged, and that it will fall – and when the fall comes it will be big and dramatic.

    That if not a footballing view, but an economic view – and of course it is just my view. But that’s what this site is about – putting up views that are not necessarily mainstream, but which can be argued and which have some sort of logical position that can be debated.

  • terry

    Yes our club has been run by a bunch of idiots but you must know that there is no scope of us going the way of leeds. the money is always there for us to spend and we have a manager who goes out and is ambitious in the market. There will always be someone ready to take over the theatre of dreams and maybe thats why we have been more sucessful then you guys

  • A Casual Observer

    LOL!

  • terry

    @Tony thanks for your reply. I don’t like United being in debt, but I accept the Glazers know what they are doing and they are doing it ery well indeed. What we have to consider is what the intentions of any proposed new owner would be – on the basis the Qatar lot have a bottomless pit of money and would be buying United for the sole purpose of improving their profile, I can see them doing exactly the same as ADUG have done at City. It would then be the responsibility of the current management team at United to explaint he potential consequences of breaching the FFFP rules. As far as City go – their challenge is to get the club into a financial position by the time FFFP kicks in properly that they do not breach the rules. At this moment in time they are miles away from meeting the conditions of FFFP, as you have quite rightly said their Wage bill is more than their turnover. FFFP has been quite cleverly written, so they can’t just give themselves a huge sponsorship deal to meet the regulations and their turnover can only be increased by football related income – so they need to address that very quickly. Can they do it – I doubt they would have chucke that much money at it if they thought they couldn’t, will they have to pull back the spending – undoubtably

  • anthony

    Why is a dozy united fan on here

  • Anthony – I disagree. Terry, a Man U fan, is engaging is a sensible debate – and I only wish more fans from other clubs (and dare I say it, more Arsenal fans, were able to debate matters from the premise that we support who we support mostly by accident. I support Arsenal because of my father and grandfather (see my piece in Arsenal Til I Die published by Arsenal in the Community) – and everyone has their own club by accident.

    I thought Terry’s last reply was balanced and reasonable. Compare and contrast with the vitriol that we had from Bolton fans during the reign of Sam.

  • Cape Gooner

    Tony, you and I live in a dream world. We believe that having a sound financial model is good, and being at risk of financial collapse is bad. We are delusional.

    Do you find Terry’s story about Qatar unbelievable? I have no idea if it is true, but it is in no way unbelievable. That is the modern world; tens of millions of people living in poverty in Europe and the US while there are hundreds of billionaires who might fancy owning a football club.

    Your rant about the banks is, entirely appropriate in this article. The reality in football that makes sense of Terry’s comments is similar to the reality in the financial world. How does it make sense to give the banks the right to create money, and then reward the employees and owners hugely because they make money? How does it make sense to reward risk taking when if you lose the taxpayer bails you out? How does it make sense to gamble that some rich guy will come along and rescue you when you vastly overspend?

    David Dein was right and Arsène Wenger wrong. AW lives in the same parallel universe that you and I inhabit in our thoughts. To me, Terry makes no sense at all. However, I think that his reality is more real than ours.

    PS. I shall continue to be delusional as I refuse to accept the reality. I know that means I am mad, but what kind of mad?

  • Terry – I think the difference between us (and it is certainly not one I can prove, I admit that fully) is that while I agree there are one or two people still interested in buying a big club, there are problems…

    1: I am not sure the Glazers will sell, because Man U is their only source of income and the shopping malls they own are going down like ninepins. They don’t need capital which would just pay off their debts they need income – at least until the recession ends.

    2: But if they were to sell, then Man U and Man C would both either have to face a Chelsea like situation (and we can all agree they are struggling) or they would sail on, qualify for the Champs League, and then be excluded.

    Now my point is, if you have bought a club for the prestige of owning the club, what does exclusion from the biggest competition on the planet do for your image? I suspect not a lot. In fact it makes you look like a laughing stock (just my view of course, but if the press and TV take that view, then it is not good news).

    My guess is that the owner of Man C really believed that he could get around this FFP rules, but in fact can’t. I think Abramovich thought he could get Chelsea to rebuild while cutting costs just by telling people to do it. I also believe that the 10 years it has taken Arsenal to combine the youth project and the world wide scouting project into a unified young player production line, is about as long as it will take everyone else to replicate.

    But as I say these are just opinions – I can’t prove anything. I just think, through my Arsenal coloured eyes, Man U might come unstuck, and my point in the article is that they could end up like Rangers – still appearing to be at the top and secure, but in effect just a shell, ready to implode.

  • anthony

    @Terry you can say what you like but once your club owners have had enough you are in big troulbe. Who will pay the debts? Where is the cash you got from the CROL sale? It’s all being pocketed by the glazers mate. wake up n smell the coffee

  • A Casual Observer

    The thing is right… if I were a billionaire and were looking to take over a global brand that was, albeit successful, financially ‘on the ropes’ and I had a 10 year window in which to make my plans (this is the Qatar scenario [although I’m not sure of the reliability of the root source of that headline but OK – let’s just assume it’s true]) – I reckon it would make sound financial and political sense to let it fall from grace, let all concerned taste a little bit of despair and then come in on my white horse as the saviour to open arms of the muggy fan-base and grab a bargain.

    Also the assumption that the money will always be there because Manchester United are so great that the world owes them a living is perhaps a little flawed.

    Or am I being unrealistic and living in a parallel universe?

    I suppose time will tell.

  • anthony

    @terry: http://www.football365.com/story/0,17033,8750_6648615,00.html Matches Howard Webb been in control of. How many Man utd wins.

  • A Casual Observer

    A little off subject there anthony… methinks you’ll be feeding the troll with that and derailing the debate.

  • Gooner Gal

    @Tony – you’ve made some excellent points in your article and responses. It appears that we have some political views in common too.

    @Terry – what you haven’t factored into your argument is this, nobody wants yesterday’s news. Or in this instance a faded toy. Your only hope is that the Qatari’s are life long fans because if Man U do start losing and/or can’t get into Europe, then their global appeal will diminish in a similar vein to Leeds and Nottingham Forest.
    .
    At first I thought UEFA would just rewrite the fairplay rules so the big clubs could continue to participate, but with fifa so willing to disrupt club football in 2022 – I am not so sure now as they don’t have as much regard for it as I thought.
    .
    I have to admit that do have a chuckle when I think about the Man U situation. I don’t wish ill fortune on anyone, but Man U are only really in this position because of a dispute about a horse (Google John Magnier, J. P. McManus & Sir red nose)!
    .
    @ Cape Gooner – as much as I like David Dein, he brought Jabba the hutt to the club, which I have found difficult to forgive and I don’t think Arsene Wenger has got it wrong at all. He’s been the reason and difference why we are not in West Ham’s position now. As many of you will know, they also once had a conveyor belt of talented youth and were considered a big London club.

  • Byo

    @Terry-
    My 2 cents.
    You keep talking about $billions available to spend by the ManU management WHEN the club is sold to an Arab consortium- but you fail to mention whom the cash will be spent on! The question is can we continue to run football by paying over the odds for average players like ManC are doing(Barry, Milner, SWP, Kolarov, Lescott, etc)? What happens to competitive balance of the leagues? Or does every league become a 2-team competition like the Spanish league? Malaga was just acquired by an Arab group, but I don’t see much improvement in their standing yet- maybe because there is only a small pool of good players available?
    Of course if your overriding aim is trophies, then it does not matter how much debt your club is in. We really don’t know for how long Man C will get free money; it looks like Abramovic is closing his wallet; Portsmouth is mired in the championship in debt, etc. But I take solace that Leeds manager thinks Arsenal provide a template for the future. Other clubs know this but cannot admit it openly.
    Some fans understand what it is to love a club. We know you go through periods of drought and times of plenty. We also care that we want a club that will be there in 50 years for my progenitors.

  • terry

    @bayo I find it a little strange that as a fan your number one concern is for arsenal to be financial secure. Yes its important, and i agree clubs need to be more closely regulated to ensure their long term survival. But i dont think anyone can seriously say Manchester Utd are in any real danger. Debt exists in all major businesses, its what the world is built on. Its about how you manage that debt. United have understood that in order to service this debt they have to remain successful, which they have and continue to be. Arsenal are a model club in so many ways but history will not look back and say ‘ok they didnt win anything, but werent they well run’…football is like every other sport, titles, trophies and winning is what matters…

  • Jonny

    Isn’t it interesting that we have open admiration from other owners and managers – awards for our own manager citing as the best of the last decade.

    So many openly covet the model Arsene has worked to create but have been so caught up in short-term thinking or were unable to overcome the pressure for immediate success that they are now completely stuck.

    Everyone wants our model but they want to be where we are now and realise forlornly (as Tony has pointed out) that it takes 5-10 years minimum.

    The problem the AAA have is MOSTLY patience but we all know that “If you build it, it will come”.

  • walter

    Terry,

    I think you have pointed at the problem ‘in order to service the debt they have to ramin succesful’. And that is just an important point.

    What if you don’t have succes? And it is then that the problems will become visible and painful I think.

    What if SAF gets frustrated by the lack of funds and stops. You then maybe will have to face a first period of instability and managerial problems. Or you could take Darren Ferguson who is free for now. Or Sam Allardyce. 😉

    Last season you only won the league cup. Is this enough succes for a club to service the debts. And what if you don’t win anything this year?

    Look at Real Madrid. Even they with all their money (on loan also) have had many years without winning things. Barcelona also and those two play in a two team league. As the EPL is much more difficult to win each year. And getting even more difficult to win each year.

    So there is no guarantee for succes in the EPL.

    And apart from banks who are saved because the governement needs them, no one is big enough to survive and nobody will be saved by the governement.

  • typeface

    A Casual Observer,

    I think anthony makes a great point in highlighting the favours shown towards United on and off the pitch. Fergie and therefore United have become too powerful and influential for the PL. That’s why I doubt English football will let the mancs slip into the abyss like Leeds.

    Here’s an article about Fergie worth reading:

    Within the chapter, an unnamed Premier League manager offers a different comparison. “I would liken him to the mafia – if you affect his welfare in any way, no matter how good the reason is, he’ll come for you.”

    Referees’ chief Ian Blanchard admits: “As a manager and as a person he has a very influential role in this country when it comes to football. People listen to him.”

    Most obviously, people like Pulis. Along with Harry Redknapp, Steve Bruce, Sam Allardyce, David Moyes, Roy Hodgson, Ian Holloway and Alex McLeish, the Stoke manager makes up a group of managers who are always curiously loud in their support or praise of Ferguson.

    This sort of thing goes beyond mere lip service though. The League Managers Association (LMA), for example, forms many of its initiatives and proposals by canvassing the opinion of its 92 members. And many of those often conform to Ferguson’s thinking. As such, he indirectly drives a lot of what the LMA do.

    http://www.tribune.ie/sport/article/2011/jan/09/fergie-defends-corner-until-he-effectively-owns-th/

  • typeface

    More quotes from the same article:

    “Not only did the trophies give him (Fergie) the breathing space to be much more bullish, the fact they came as English football underwent rapid economic expansion allowed him to make a financial monster out of Manchester United. The club could derail the whole Premier League were they to negotiate their own TV deal – which they’re perfectly entitled to do.

    All of this, as well as Ferguson’s obvious expertise, have made him an elevated figure in the English game. Other clubs actively seek his advice when signing players or appointing new managers.

    That may sound simplistic, but the actual effect can’t be understated. Apart from a handful of top clubs, the majority of British sides are run in a woefully unsophisticated manner. One story emerged during the week of an established Premier League club exclusively drawing up their shortlist for a Director of Football out of a World Soccer list. In that sort of climate, a few words from Ferguson go an awful long way. It pays to stay in with him. Just look at the manner he recently made a point of actually recalling a Sky interviewer to defend Allardyce.

    On a more human level then, there’s also the fact that Ferguson is hugely charismatic and good company when off the clock. Every so often he’ll take a group of north-west managers to dinner. Already friends with him, many then see him as a father-figure to learn from.”

    http://www.tribune.ie/sport/article/2011/jan/09/fergie-defends-corner-until-he-effectively-owns-th/

  • A Casual Observer

    “..football is like every other sport, titles, trophies and winning is what matters…”

    This is I think where the problem lies with the atomised ‘glory hunting’ fan. They lack utterly the comprehension of what it means to actually support a club. If this statement were true then what of all the other teams out there that don’t win the league cup, the EPL, the FA cup and the CL?

    Your argument could be that the fans may as well just give up on their team and support some ‘big winners’ like Manchester United.

    On your other point about the lens of history – I believe that history will not be kind to Manchester United, Chelsea or Manchester City – paradigms are shifting in this, the mid-morning of the second great depression, and the kind of avarice and example set by the clubs who spend beyond their means to buy glory and thus ‘plump the brand’ will not come under the umbrella of ‘sport’ it will rightly be seen as cheating or ‘financial doping’ – much like PES abuse in the individual player.

    BTW – as an aside, I see your lads were vomiting on the pitch again at the weekend – I wonder what could have caused that?

    Of course, I do realise that this utterly horrible situation that your club finds itself in is not of your making but I do fear that, through the lens of history, you will be lumped in with the rest.

    Titles, trophies and winning are certainly not all that matters in terms of sport and I would much prefer to watch my team lose that see yours win [by any means necessary].

    I find this argument repellent in that it completely undermines the beauty of competition – sport is important because it breaks down boundaries and gives people hope – not because it gives the fan bragging rights in the form of a title.

  • Tasos

    A Casual Observer

    Great Post.

    Although Terry is far from a lone voice when it comes to assessing achievements within football, as we know only to well.

    Winning is all some truly care about.

  • terry

    unified young player production line???? eh didnt your young player production line just get battered 10-1 by Aston Villas unified young player production line? As for young player production lines go, Uniteds has done pretty well these last 20 years, with many PL clubs using our academy players in their first teams. What you see is what you hope to happen, but it is just wishful thinking. As for the financial side of United, you only have to look at the commercial deals they are pulling in every month to see that the Glazers have put together a sucessful model. (Even I a Glazer enemy have to admit that!!)The current debt balance stands at £506 million, however United have Cash in the bank circa 140-150m which nets the debt to around £360m. I have said it before and I will say it again, the NIKE deal will be renewed in 2 years netting United a whopping £500m over 10 years. (The current deal being worth £313 million plus commission from merchandise) The end of year accounts will show United to be the first English Club to break the £100m barrier just for Commercial deals. The current 24 commercial partners revenue is circa $40m p.a note it is paid in dollars to hedge against the US base rate v the pound to even out any move in either direction as half the issued bonds are in dollars and the other in Sterling….not the gimps I thought they were these Glazers.

  • Richard B

    Football is and probably always has been akin to an enormous poker game. Where it becomes illogical is when a club ‘bets’ more than it can ever win back from gate receipts, prize money, sponsorship or TV rights. In other words it runs at a loss – propped up by ‘financial doping’ and what may eventually become unsustainable debt. Unsustainable that is by the revenues that it generates for itself from those four sources of income. As Terry points out sometimes an outsider has felt happy to subsidize a club in order to achieve their own marketing ends or takes a very long view and feels that eventually they will get financial payback. When everyone does it there is mutaully assured destruction because we fans only really understand success as defined by trophies or at least the challenging for them and that level of success is in short supply.
    Man Utd. have achieved sufficient success to keep themselves afloat but the persistent ticket price rises at Old Trafford may be revealing cracks in that strategy. Pay back time for the owners may well be being pushed further and further into the future whilst the unpopularity that often seems go with ownership is undermining the drive towards ‘gaining acceptability’.
    The UEFA Financial Fairplay rules are obviously designed to break this cycle (if anything can) and the contortions that clubs like Utd and Chelsea are going through to cut their costs and make their debts appear ‘sustainable’ pay tribute to how seriously such clubs are taking these regulations.
    As I’ve said before on this blog, only one big club will not have to change its business strategy one iota – and that’s Arsenal. They are the template that is being used by UEFA to persuade all the rest that you can do absolutely fine (full stadium every week at the highest ticket prices in the world despite ‘no trophies for five years’). Everyone else has to change and where there is change there is a risk that things will go pear shaped. Aston Villa may well be the prime example at the moment and there may even be the early signs of problems for Chelsea.
    Once it’s established that you can only bet what you can win the poker game has the potential to take on a very different shape. And Tony is right – there may well be fewer players sitting at the table or, at very least. some different faces.

  • A Casual Observer

    Terrance, these have been covered elsewhere:

    http://swissramble.blogspot.com/search/label/Manchester%20United
    http://blog.emiratesstadium.info/archives/9769

    What I don’t get is that you, as a Manchester United fan, come here and brag about things yet to come to pass… I wish I had your crystal ball so I could enjoy watching Manchester United’s glorious future blossom from the unshakable certainty of handouts from billionaires and conglomerates… could it be that you simple epitomise the arrogance of your club?

    They do say that dogs tend to look like their owner’s after a time so I maybe the same holds for football fans?

    The future we see in our the club, a club that has been rebuilt over the last few years, is one that demonstrates financial sustainability and beautiful football… it is one our children will support – yet you brag and brag about the free money that will come your way and pour derision on the achievements of our club – you seem to forget, we did this and stayed competitive, we improved our game and we played CL football every season. Are supposed to feel shame for this because you, with your ‘rose tinted’ crystal ball and recent history of success tell us to? Are we supposed to not feel pride because a rival fan with very little soul and obvious low self esteem waves a tin cup in our faces?

    What is it exactly that you hope to gain here?

  • Notoverthehill

    I believe Terry has a very interesting conception or perhaps perception of financial wizardry!
    A far better ManIOU blogger is actually the Anderson blog, who is a ManIOU supporter and appears far more knowledgeable than our Terry. DO NOT GO AWAY Terry your viewpoint is invaluable to the “lumpen” Gunnerblogs.
    The Glazers are setting on a “cash cow” in ManIOU. BUT gates and waiting list are both falling. Ferguson in the early days could outbid anyone, very few of the stars (even Ronaldo) were home grown. Ferguson bought success and continues to buy success.
    After Sir Matt Busby, ManIOU went into freefall. Ferguson is a dictator and his legacy will be another freefall. The Glazers will then be eager to sell. Who will want to buy a football club with all the crown jewels sol off?

  • Jonny

    terry – your comments about the 10-1 drubbing either highlight your lack of knowledge or that you are intent on doing a little stirring. either way a rudimentary glance at the facts would tell you that the club moved almost all of the youth team up to the reserves ads they were simply too good to play against the level they were at. what played yesterday, barring one or two players, was essentially the youth youth team. above them are the youth team who now play regularly in the reserves and above them the reserves who have gone out on loan. if we played the youth team of last year (almost all of whom qualify) we would have won comfortably.

    as for glazer’s financial figures – you make a lot of good points but there is no doubt they have been hammered during the economic fall out and that they have made a lot of mistakes. turnover is all good and well but it’s not ever a useful or transparent measure of how well a company is doing.

    much of what you say sounds like “we are too big to fail”, history shows that this kind of hubris often precedes a dramatic fall. time will tell if it happens in man utd’s case.

    the truth is we are all speculators and spectators – that said, given the choice, i’d far rather be in the position The Arsenal are.

  • Frosty Gooner

    Great article Tony. I really enjoy these, particularly the discussions they generate. More please!

  • critic

    @terry
    1) i dn’t support arsenal for titles,cup,.. i support them bcoz of their style of play and conduct on and off the field. at first, yes, i wanted us to win cups so that we can put it deep into utd fan’s arses and then open it, but then there’s sumthing more importan than winning trophies – identity, and iam proud of it

    2) SAF was(was) undisputely one of the gr8est manager ever but now he is just a cunt. His main job for utd is to influence refs and tilt an even game in utd favour. He is blatently abusing his powers and getting praise for it at the same time. I don’t respect such cunts.
    So when he goes, utd strength will b halved..and city r doing their best to prove money can’t buy u trophies, however u guys can buy 2-3 extra ELITE team players with ur profits.

    3)It takes decades to build a brand but only 2-3 years to destroy it…eg. Liv,leeds
    So better get that notion out of ur head.

  • Mandy Dodd

    An interesting and telling article.
    As for Utd – it seems that more than ever, they are relying on friendly refs and friendly managers to get anything. Maybe some know it is Fergies last season and they are desperate to send him out on a high? Or maybe the Crap Invincibles are so poor that favours from refs are now becoming even more obvious than in the days when the likes of Roon and Ronaldo were banging in the goals. Why does even Pulis of lowly Stoke now have to speak out in favour of the mighty Fergie? And send teams to OT that will not put in a tackle?
    Most Mancs seem to think the Quataris will soon arrive and bring in Jose. The problem is, even if this happens – the EUFA fair play rules. My guess for what it is worth, the Glazers will be around for a while yet. Roon may have seen the writing on the wall, if Fergie has seen it he may soon be off. Huge pressure on the next manager/ managers
    And as others fade,as they are doing so now, all will be well at Arsenal and the AAA will look the fools, they, in the most part are.

  • Rhys Jaggar

    Interesting article.

    I think the key thing which causes clubs to go bust is signing multi-year contracts which in effect are fixed costs without linking them to future revenues.

    Both Leeds and Rangers went down the pan because they lost the income of ECL Group Stages. In Scotland. TV money is paltry so they really survive off the gate money and commercial. Rangers were way ahead of the game in the 1980s when I lived up there. We got shown around Ibrox stadium as we helped for a day on a cancer survivor doing a big walk to raise funds. We ended up at Ibrox in 1986 and it put most English stadia to shame. Now they have to sell Kenny Miller to pay off the bank.

    Leeds are actually coming back, thanks to Ken Bates’ high jinx in managing to dish out a severe haircut to the creditors, prior to taking over. Although he’s a robust character, having done that piece of rather dubious business, he’s set about putting the club back on a stable footing. Their stadium is still perfectly adequate and has plenty of business functions mid-week, they always had a good youth set up and their young manager doesn’t hark back to ‘those were the days’ and instead is setting about trying to recreate them. You’ll see them buy back their training ground in the not too distant future, I suspect…….Mr Bates actually has some money in the bank!!

    Liverpool I’m not so sure about. The debts were paid off by the new owners and the club has always run with a healthy operating profit, although lack of ECL income may put the squeezers on that. I suspect the players will leave, if leave they do, for Champions League football. Torres is at that age where he won’t want to miss out any more. After all, he grew up at Atletico, so he didn’t get it at 18…….I suspect they will have a soft touch-down outside the Champions League, but may take time working out how to challenge for that again.

    As for Man Utd, the key murky question is how the PIKs got paid off. I had the impression the Glazers didn’t exactly have £200m spare cash hanging around, as if they had they wouldn’t have run up £200m of debt at 16.25% interest rates. Sounds a bit murky to me. One wonders whether is some new shareholder?? With that gone, actually Utd can service the bond payments fine until the capital needs repaying. Which sort of points to the likelihood that the banks have found a grade A cash cow to milk in perpetuity. I think they look OK right now as they have quite a few youngsters in their squad, although quite how many they developed themselves you would have to ask. Not as many as at Arsenal, I suspect…….

    You sort of think Chelsea need a new stadium if they are to escape the sort of fall from grace which comes from dispensing with all your top stars on £150k a week to balance the books.

    I reckon West Ham will sort out their financial problems over a decade. Their owners may not be your cup of tea, but they do know how to balance the books and get a side into the Premier League. If they get the Olympic Stadium, they’ll be fine. If not, it’ll be a longer haul. But they seem to be getting to grips with the issues, at least…….

    Spurs want to ‘do an Arsenal’ a decade later. One wonders whether they are hoarding ECL cash to put down a deposit for the builders, and whether they will find a sponsor like Emirates to provide the rest. Their position may well crucially depend on whether they get a second successive season of ECL football……..and how far they get this year, as prize money goes up quite sharply through the knockout rounds.