Why Manchester United Fans Should Stop Worrying and Learn to Love Their Yank Owner
As Manchester United head to the European Champions League final against F.C. Barcelona in London on May 28, having already won the Premier League title, it becomes harder and harder to argue that Malcolm Glazer's ownership has been bad for the club.
Man. Utd. fans despise Glazer in part because he's American -- he also owns the Tampa Bay Buccaneers -- which makes them suspicious that he doesn't really love football. But mostly it's because his 2005 takeover loaded up the club with debt. Interest payments on the loans eat up cash that could be spent buying the new players Man. Utd. needs to keep winning; and Glazer has increased ticket prices at Old Trafford during a period when the club has, on paper, never been richer.
Man. Utd. released Q3 2011 numbers last week, and they showed 5.7 percent revenue growth to £231.7 million for the first nine months of the team's financial year. (Click to enlarge snapshot of Man. Utd.'s income statement, below.)
Most of the growth came from increases in sponsorship and media fees, making Glazer less and less dependent on the 80,000 fans who buy tickets to watch actual games at Old Trafford every other Saturday. Man. Utd. currently has gross debt of £477 million, which incurred interest payments of £47 million -- almost exactly the size of the club's loss through Q3, £50.8 million.
Matchday revenues actually decreased 3.7 percent to £81.5m million because the club played one fewer matches at home. But commercial revenues -- from advertisers, lead sponsor Aon, and shirt maker Nike (NKE) -- increased 30.1 percent to £75.3 million. The team is on track to see commercial revenues reach £100 million this financial year, making Manchester the first club to reach that milestone.
Note how match ticket revenue and commercial revenue are now nearly equal. Man. Utd.'s fans -- who want the club sold -- most recently vented their anger at the club over an announcement that Glazer would raise ticket prices by 6.5 percent. But keeping prices down at Old Trafford simply makes fans' money less interesting to Glazer, and less crucial to the club's overall business. In the next few years, commercial revenues will likely far outstrip gate receipts -- and Glazer will be largely free from his reliance on his club's own fans.
At Old Trafford, spring has sprung
At the beginning of the year, Man. Utd.'s financial picture looked perilous, judging by the headlines. The club allegedly faced "a Debt Crisis of 'Galactico' Proportions" following the sale of Cristiano Ronaldo to Real Madrid, leaving it "in a worse financial position than Ireland, Greece."
Come spring, and Glazer's debt is mostly eclipsed by the fact that the club has won four league titles since he arrived in 2005, and may perhaps win its second Champions League cup by the end of this month.
As I've noted before, Man Utd.'s debt is manageable. The fans have little to complain about. If, as Forbes believes, United is worth $1.8 billion, the debt such a sale would likely create could leave the club in a far worse position than it is now.
So, sorry, United fans. Better the (red) devil you know.