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July 2021

Untold Economics: Could Man U in trouble despite the huge income?

By Tony Attwood
In football there is a bit of a rule that says that you can lose money and win things, and that’s fine.  But to lose money and not win things – that is called “doing an Everton”.
Of course the world has got more complex now that Manchester City and Chelsea have looked at Leeds United route to fame and glory from the top of the league to the the third division and then seen their spend-spend-spend approach not as a warning but as a blueprint.
But to be fair they have done it differently – the pot of money they have seems to be real, where as that invented by the Leeds board was imaginary.
So what is it with Manchester United.  Doing well in the league, out of the Champs League, and for several years having had people like me talk about how the squad seems to have taken on the notion that the older the better.
The interesting insight is that since the golden generation of Beckham et al Manchester United have had to do what most clubs have to do – buy in some players to bolster the few that rise from the youth ranks.
But, surprisingly for the club with such a huge financial potential in the past five years MU’s net spend in  the transfer market is £56.9m.
Elsewhere the net spend has been as below.  Newcastle and Arsenal are + as they have made money on transfers, while all the rest show the figure they have lost.  (A lot of the Newcastle money came from the £30m for Carroll and £12m for Milner).
Newcastle +£40.2m
Arsenal +£32.2m
Everton £3m
Manchester United £56.9m
Aston Villa £68.2m,
Sunderland £62.7m
Stoke City £61.2m
Tottenham Hotspur £76m
Liverpool £84m
Chelsea £144.9m
Manchester City £437.1m
(figures from the Guardian and Transfer League)
Of course it must be admitted that in recent years Man U have achieved much more than Arsenal in terms of trophies, and yes of course I (along with every Arsenal fan) would have loved to see some of their silverware come our way.

And yes Manchester United have spent money but they have funded this by selling the jewel in their crown (Ronaldo) and releasing more and more players (Paul Scholes, Gary Neville, Edwin van der Sar and Owen Hargreaves, John O’Shea, Wes Brown and Gabriel Obertan to name a few).

Their league position says they are doing ok.  But… they chose not to or could not afford to buy  Wesley Sneijder, Samir Nasri, Luka Modric…, and meanwhile in terms of their youth development they were knocked out of the league cup by Crystal Palace at home – which is an unfortunate thing to happen just before going out of the Champions League.

Now I know that looking for signs of United’s decline is a game that has been played for years and years.  That mega-income from marketing created the ability to succeed and has driven the transfers.  But consider the Glazers cost to Man U.

In 2009-10 the EPL clubs lost £500 million overall.  16 clubs made losses, four made a profit.  In the case of Manchester United the Glazer family has cost the club £350m in interest, fees, loans and bank charges since 2005.  In the year to June 30 2010, United paid £42m interest on the £500m loans the Glazer family originally took out to buy the club, and refinancing that debt cost another  £65m.  They are the bankers favourite club.

Leaving aside the Glazers, there are four models in football finance:

Model A: The benefactor pumps money in and the club aims to buy the best talent around.  This used to be the standard model, but now Chelsea and Man C have taken it to extremes and Uefa want to cool it somewhat.  In fact it is this model that the Glazer’s reversed.

Model B: The marketing model.  Manchester United developed this from the 1960s onwards when it was not at all fashionable, building on the desire of their support from across the UK (remember the notorious Man U Supporters Club London Branch?) to identify with the club.  Arsenal are often said to have struggled in the wake of the ever enlarging Man U onslaught onto the market, but there are, I am told, real signs of an Arsenal marketing breakthrough which will be revealed in next season’s figures.

Model C: World wide scouting and youth development.  Arsenal are still supreme at this, finding the brilliant young players and taking them to higher levels.   The profits on players like Adebayor, Fabregas, Nasri, Vieira, Henry, Anelka are just not seen anywhere else in football.

Model D:  Matchday income.  Model D although helpful is not enough on its own.  Model D is income from TV, the ground and the like.

Here’s the latest matchday income chart expressed in Euros with the final column showing the club’s position in the overall money league.

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1 Real Madrid 129.1 1
2 Manchester United 122.4 3
3 Arsenal 114.7 5
4 FC Barcelona 97.8 2
5 Chelsea 82.1 6
6 Bayern Munich 66.7 4
7 Liverpool 52.4 8
8 Hamburger SV 49.3 13
9 Tottenham Hotspur 44.9 12
10 Celtic 43.4 n/a
11 Benfica 40.2 n/a
12 Internazionale 38.6 9
13 Atlético de Madrid 35.9 17
14 Rangers 31.5 n/a
15 AC Milan 31.3 7

Match day income comes from three sources – the money taken at the ground on the day, the broadcasting income and the other commercial activities

Matchday % Broadcasting % Commercial %
1 Real Madrid 30 36 34
2 FC Barcelona 25 44 31
3 Manchester United 35 37 28
4 Bayern Munich 21 26 53
5 Arsenal 42 38 20
6 Chelsea 32 41 27
7 AC Milan 13 60 27
8 Liverpool 23 43 34
9 Internazionale 17 62 21
10 Juventus 8 65 27
11 Manchester City 20 43 37
12 Tottenham Hotspur 31 43 26
13 Hamburger SV 34 23 43
14 Olympique Lyonnais 17 54 29
15 Olympique de Marseille 18 50 32
16 Schalke 04 18 25 57
17 Atlético de Madrid 29 50 21
18 AS Roma 16 53 31
19 VfB Stuttgart 26 42 32
20 Aston Villa 27 58 15

What this shows is that Arsenal have used the matchday income as a way of catching up Manchester United while they have been stuck over the marketing income because of the long term deals signed for the new stadium.

Now here’s the point: matchday income is the hardest to increase without building a new stadium, because you have a set number of seats and the cost of entry (although it can go up) doesn’t go up very often.   In the UK the clubs cannot go out and negotiate on their own and the EU ruling allowing us all to buy into Greek and other TV stations to watch saturday afternoon games is having an impact on Sky, which pays the bills.

Further, broadcasting rights are impossible to manipulate on their own since they are related to the contract signed and the desire of the broadcaster to show your team – plus the sharing process that occurs in some countries such as England, so that even unpopular teams get a fair size of the cake.

But marketing income can be manipulated, and Manchester United has been at full speed ahead for decades – and yet there is still a slow down in their purchasing of players.

The other problem (and it is one rarely written about – indeed I got a load of abuse from some correspondents when I dared suggest that the highly regarded Swiss Ramble had not taken it into account) is that marketing income does have a limit.  It is much more expansive than matchday income because it has nothing to do with a fixed number of seats in the stadium, but even so, there comes a point wherein the limit is reached.

With marketing income it is hard to see where the limit is – I thought that Man U might have reached it two years ago, and then they do a deal over the training kit, which shows what I know about marketing.   But even so my thesis is right: there is a limit.

We all know that because of the front loaded deals on the Emirates Stadium Arsenal have had their hands tied.   We all know Manchester United has been filled with success in this area.  It is a judgement as to whether Man U have reached the limit – but if they have, just at the moment that Arsenal have started to unleash their marketing power, backed by the legend of Wenger, the entire history of the club, and the quality of the stadium, then things could be changing.

And it could also be a second explanation – along side the Glazer’s – as to why Man U are not outspending everyone else on new players.

The marketing bubble bursts, the Glazer money keeps coming out of the club, and suddenly Arsenal are relieved of the burden of the deals that restricted their income in buying the stadium.
Funny ol game.

30 comments to Untold Economics: Could Man U in trouble despite the huge income?

  • Two Left Feet

    I love your analysis but I believe your thesis is partly flawed. Your assumption is that because Man Utd haven’t spent mega-money over the last 5 years, it signals that there are potentially internal concerns at the club regarding future revenues. I don’t think that’s necessarily the case however since despite the Glazers soaking away millions of pounds every year in interest charges and what not, Man Utd continues to make good operating profits and the books show that they have enough money to spend. The fact that they went out and spent £50 million this summer despite winning the league last year shows that!

    On the marketing front, they have been an absolute roller-coaster and while it will be difficult for them to maintain the same pace of growth, given the growing popularity of football in the overseas markets and the huge untapped fan base that still exists in these markets, I think it may still go on for a while. Arsenal, as you and countless others have pointed, have been constrained in this regard because of the LT deals done with Nike and Emirates. Even then I believe that more could have been done such as the training kit deal that MU did or greater partnerships in Asia and Africa. The Asian tour this summer and the rumored tour of Africa next year are positive signs though and I am sure that income from commercial activities will increase for the club going forward, especially in 2014 5Let’s hope AW is still around at that time to actually use that!!) Whether we will actually catch up with MU in the next five years however is something I am entirely unsure of!

  • Woolwich Peripatetic

    @Two Left Feet,
    I would think the Man Utd transfer problem was called Chelsea. United could put in a huge, overvalued bid for a player and both Chelsea and now Man City could gazzump them. Or clubs just don’t want to sell to them because they want credit and City pay cash. So about the only players they can buy are English, overpriced and looking to get an England cap, something fairly easy to achieve there. None of whom possesses the playmaking skills they need.

  • Mandy Dodd

    Interesting analysis. Also, Utd will soon need to bring in a new manager, who will want his backroom staff and players, costly for a club at utds level.
    I actually think utd have been in decline for a year or two, the Rooney situation last year was telling, just a few chosen refs and other EPL managers have done everything to keep their lord and master top of the pile. This will not last forever

  • paul

    Very intesting article ( as usual ) Personally I think the Glazier’s type of owners are the worst thing to happen to any club at any level. I would hate if Arsenal were loaded with half a billion pound of debt.
    I know that Utd spent £50 millon in the Summer but didn’t they get @ £120 million for being in the Champions league final? I’m sure if we had made it there then Arsene would have a had a huge transfer kitty to spend too.
    Gooner for life.

  • bob

    I’m sick to the stomach to write this, but I think you understimate their long-term strategic partnerships, the true marriage (kleenex, please) of worldwide brands. Yes, everything does have a limit, but it’s small consolation to invoke this, as, imo, I don’t see MU being even close to maximizing their potential. Beyond their own merchandise store and heavy sales in the Nike stores, etc., they are the most sought-after, sports strategic partner of choice for companies big and small.

    You obliquely reference, but do you fully account for the fact that MU has had massive partnership deals announced this year.
    The one with DHL announced in August.
    This articles covers the DHL shirt deal and adds Concha Y Toro wines, a Smirnoff Vodka tie-in, Turkish Airlines, Kumho Tires, something big in Seoul, Audi, Hublot watches, and growing:

    Further, beyond the Aon and Nike logos in evidence, there’s been partners like Thomas Cook, Bharti Airtel, Saudi Telecom, etc.
    Had enough? It makes me sick to admit: but they’re head and shoulders above everyone in their aggressive brand recognition and ongoing projection. To me, this, plus still being the EPL’s face worldwide, I fear it’s why they’re too big to fail on the pitch. (It’s not just the betting.)

  • RedGooner

    Anyone watching the chelsea game 1-1 was good for us NOT sure why Wigan didnt get a penalty you wont see a clearer one all season walter. Maybe theres a different view on the rules by some.

  • Gord

    Apparently FIFA may throw ManU a bone. If the Swiss FA doesn’t act against Sion, Basel may be kicked out of Champions League.

  • bob

    Two Left Feet,
    I basically agree, but think you’re not following through on the full implication of what you’ve set forth. Let’s face it, no one will actually catch up to them on the marketing front, given the magnitude of the actual and growing sponsorship gap. To overtake them, in my view, requires massive league-wide fan pressure for fair play on the pitch: an end to Fergie time, video replay (ref in the booth style), published post-match ref reports, rugby style mic-a-ref in the telecasts, etc. etc., none of which the EPL will countenance unless they are pressured to do so by an aroused fanbase or other serendipities. .

  • bob

    Two Left Feet,
    You’ll see my reasoning once my previous comment comes out from moderation. Sorry, I assumed it was already there; so I hope to hear from you once/if you get to read it. Cheers.

  • critic

    We will see whether arsenal are able to sign RVP and theo to prove they have enough faith in our future success and brand.

  • bob

    Yes, lurking with doomsday intent, are we?

  • Gooner Gal

    @ Tony,interesting article.

    Oversaturation and in the product cycle, the concept of maturity are things to which you refer when you highlighted that marketing does have its limits and it does apply to Man U. However, like other brands that have withstood the test of time, football club marketing cycles are renewed all the time and therefore do not have to have an absolute end. Players come and go, management changes, adjusted style of play and winning silverware etc all present opportunities to create new interest in a brand like Man U, which in turn creates marketing opportunities.

    Although, Man U do have a few problems in these highlighted areas. Aside from Rooney and Giggs, Man U no longer have players with global appeal and even those two are tarnished. They need to buy a few household names like Sneijder or bring in a well known manager like Mourinho or keep winning silverware to sustain commercial momentum. As Tony points out, without ‘refreshing’ the brand, there is a very real possibility that Man U’s finances could be seriously affected in only a short period of time.

    A quick fix would be to buy a top player, but with more nouveau riche football clubs about looking for marque signings to make a statement of intent, Man U may have spend quite a bit and I am not sure the money is there anymore. I don’t think the Glazers would ever sack Ferguson, but I don’t think he can operate in a landscape which isn’t tilted in his favour anymore, so he may very well retire in the next two years. I am not sure who would be crazy enough to take the Man U job now with no money to spend and deal with the huge weight of expectation on his shoulders to be honest, which is another problem.

    Winning silverware, without the ref’s help has proved to be difficult so far this season, they are already out of two competitions, which of course affects matchday revenues as well as commercial activites. If Man U go out to Man C in an embarassing fashion in the FA cup, it could have a greater impact on their commercial activities than maybe anticipated as it could signal that Man U are no longer the top EPL club to be associated with in future.

    That said with the feasible possibilities still available, I don’t think there is a marketing bubble as such for Man U. There are definate iceburgs in the waters though, which will be interesting to observe how they navigate them.

  • Gord

    With respect to Manchester United possibly being thrown a bone by FIFA, I think this is unfair to the competition.

    ManU did all that it could, to finish in 3rd place.

    If some team in the first 2 places needs to be eliminated because of a FIFA directive, what is the most fair is some kind of competition between ALL the remaining teams in 3rd place in their groups: ManCity, Trabzonspor, ManU, Ajax, Valencia, Olympiakos, Porto and Plzen. Having those 8 teams compete for the now vacant place (deemed to be second place, regardless of where they were) would be the most fair. But, To have another 3 rounds of play among those 8 teams to decide who gets to take the place of FC Basel (which is only wrong, because it is Swiss), probably can’t happen. There is no time. What there is time for, is a draw. But ManU should not get a “free pass” into the next round, because some bureaucratic decision has eliminated a higher placed team in Champions League.

    And if StomachBladder decides that a fair choice isn’t possible (not that he hasn’t been suspected of endless corruption in the past), it is just another reason for the world to think that FIFA is corrupt.

  • bob

    Gooner Gal,
    The strategic partnership agreements may likely be long term (3 years plus) rather than conditioned on a losing season even. Right now they are sitting pretty. If ManU flame out in one or two seasons even, something highly unlikely, they will not lose those legal agreements until they lapse, at which point they are smart enough to know that big purchases of name brand players will put the sheen back on the tarnished brand scenario. And what, pray, makes you think the Fergie might not get the benefit of doubts on ye old tilted pitch when it’s crunch time? Their biggest financial threat – and most everyone’s threat – is clearly a severe economic downturn.

  • My thesis has never been that Arsenal can catch Man U up in terms of the world wide marketing, just as I don’t think Man U can catch up Arsenal in terms of world wide scouting. But I do think that the gap might get less.

    Also I don’t believe that the gap between Arsenal and Man U is that huge, and therefore a modest decline in the marketing gap could make quite a difference.

  • bob

    p.s. In fact (warning alert), ManUre might sleaze its way back into the CL competition if Basel are suspended from the competition – a now real possibility because of a pitched dispute between the Swiss FA and UEFA. That possibility realized, methinks, would be a “sign” of things to come. (Or as the Good Book says and the FIFA/UEFA boys know, the evidence of things unseen.)

  • bob

    Does the marketing gap in your thinking include these strategic partnerships? Do you know that ManUre is the number one in that area in ALL of sports – not only football. And that they are at it full time, full tilt at expanding those partnerships, as well as fielding offers for them at an all time clip? What difference-making modest dip do you see making all that much difference? What difference do you mean?

    To me, the difference we all seek would be made on a level-playing field, the kind that (league-wide, starting anywhere) petitioning for video replay and the like would constitute be a big step forward. No goal line technology will do this, btw.

  • bob

    Also, what is the evidence that ManU don’t have comparable worldwide scouting to us? That’s been stated as long as I’ve been loving Arsenal, and it’s kind of been an article of faith. But with their money, do you actually think they don’t have a comparable scouting system? Believe me, I’d be HAPPY to really know otherwise; but I would like someone to actually demonstrate the scouting-gap that your affirm, and which most of us, myself included, have assumed.

  • Marc

    The TV money won’t be affected by the EU ruling for long. As soon as the current deals come up for re negotiation the prices to Greece etc will go through the roof. The clubs don’t care where the TV money comes from as long as it comes in.

  • Gooner Gal

    @ bob, this is what I mean, if you were in negotiations for a long term strategic partnership, you would be evaluating the future direction of the brand to which you would be associating with. In the future, Man U may not be able to place the same premium price on its branding rights that it does now if the issues that I have highlighted are not arrested. Which in turn could affect the Glazer’s ability to pay down debt and the downward spiral of them taking out more money to pay for other businesses, leaving less in the pot to buy players and spend on wages etc would continue.

    Of course Howard Webb and Co, could ride to the rescue of Man C, but there are small optimistic subtle shifts happening. I never thought it would be possible for Newcastle to get an important penalty at Old Trafford like they did last month or Man U go out in the CL* with the teams they had in their group or Crystal Palace beat them at home like they did.

    Again of course Man U’s biggest threat is the wider economic
    crisis, no one has said any different. In fact the premise of what I was responding to in Tony’s article are the specific ways that Man U could be affected in this tougher climate.

    @ Tony, I don’t think it would be impossible to make significant gains on Man U commercially. We have overtaken Liverpool, which would of been unthinkable years ago.

    *As Gord said above, if Man U are given a reprieve in the CL then it will be a great shame.

  • Gooner Gal

    ****I meant to say Of course Howard Webb and Co, could ride to the rescue of Man U, not Man C!

  • Gooner Gal

    ****I meant to say Of course Howard Webb and Co, could ride to the rescue of Man United, not Man C!

  • bob

    “The profits on players like Adebayor, Fabregas, Nasri, Vieira, Henry, Anelka are just not seen anywhere else in football.” Is this standard operating procedure? Are you making a virtue of necessity? I find us at a philosophical impasse on this score.

  • bob

    Gooner Gal,
    You say: “In the future, Man U may not be able to place the same premium price on its branding rights that it does now if the issues that I have highlighted are not arrested.”
    Of course (to echo your phrasing) your assuredness only holds water if and only if it all works out the way you see it. I think it’s wishful thinking. I share that wish, but I also think it’s that, a wish; not based on anything solid. You say: “I am not sure the money is there anymore.” Any statistics on this? “I don’t think the Glazers would ever sack Ferguson, but I don’t think he can operate in a landscape which isn’t tilted in his favour anymore…” All you offer on this is turning what you call “subtle shifts” into seismic shifts. “[Fergie] may very well retire in the next two years. I am not sure who would be crazy enough to take the Man U job now with no money to spend….” Now it’s no money to spend? “And deal with the huge weight of expectation on his shoulders to be honest, which is another problem.” Last time I looked, “the huge weight of expectation” goes with any top-4 job, of course.

  • Gooner Gal

    @ bob, I am happy to have a discussion or an arguement, if I were able to work out what you are saying that is different to my points. It would great if you were able to clearly state or put forward your own alternative view.

    For the most part the whole article is extrapolated supposition, considering the future of a club.

  • Gooner Gal

    I will have to amend my last point a bit to say that I am happy to happy to have a discussion or arguement with you, if I think it is worthwhile, as I just don’t have the time.

  • FIFA/UEFA are in an interesting position regarding Sion and Basel.
    Ordinarily those two will not tolerate any interference by local government in the affairs of the member football associations.
    HOWEVER since both are head-quartered in Switzerland they are subject to the decisions of the Swiss courts!
    Blatter and Platini cannot tell the Swiss FA to disregard the ruling of a Swiss court (or face suspension) without being dragged in front of the same court on charges of contempt. Swiss judges aren’t particularly known for being easy going and laid back either.

  • Mandy Dodd

    Not having any knowledge of Swiss law, but I would also like to think Basle would have grounds for suing EUFA until they squeak if they are thrown out of the CL, as none of this has anything to do with them.
    I can quite believe EUFA would love to have Utd back in by any means so they can arrange their annual end of season game with Barca (or maybe Madrid this year) but cannot believe this will happen, that is going too far for even EUFA / FIFA …..surely??

    On the subject of the CL, any guesses on who we will draw if we get past Milan? I thought we would get Napoli this round, close but wrong. Bet I will not be wrong on who I predict if we get through the next time!

  • bob

    Mandy Dodd,
    If EUFA/FIFA use all this to return ManUre to the pitch, that surely would be the crown jewel in their mutual admiration and joint contempt for fans and the sport. I do love your questioning formulation that speaks volumes: “cannot believe this will happen, that is going too far for even EUFA / FIFA …..surely??” Indeed.