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Sunday, 04 May 2008 00:00 |
Few Reds will need reminding of the sad result of February 10th of this year. The sombre occasion of the Munich commemorations got to the players and a defeat to city compounded the dark mood surrounding Old Trafford.
Little did we know that two days earlier Joel Glazer had put his signature to Red Football’s accounts for the financial year ending 30th June 2007, which if we had had sight of at the time, would have made the protests over the tacky AIG mural sponsorship seem tame.
What they would have told us, and what is in black and white from the accounts just released, is that Red Football lost £62m in 12 months.
In other words, Red Football lost £3m more than Manchester United Football Club made in the ‘record profits’ David Gill shouted from the rooftops in January.
Now, Gill’s integrity long since went out the window, but it’s worth bearing in mind that he would have known about Red Football’s losses at the time he tried to tell us the football club’s profits meant everything was healthy.
Behind the headline figure, terrible as it is, there is plenty of detail to debunk the myth that the Glazer’s have been good for United.
Let us start with the amazing business skills the Glazers are meant to have bought to the table. For example, how they were going to exploit foreign markets to generate extra profit.
The accounts show that income generated from abroad was actually DOWN from a heady figure of £2.5m to 1.8m. If that figure seems low, remember shirt sales are counted as UK income, due to the deal with Nike. So, the Glazers could not take the club forward in terms of foreign income.
Match day revenue was up £20m, which sounds good doesn’t it? But when you bear in mind the only variable here is prices, it hardly takes a genius to work out how that increase came around - the hiking of ticket prices beyond anything that can be sensibly deemed as reasonable or without damage to the fan base. About £1m of that increase can be directly attributed to forcing every ST holder to pay for the league cup game against Coventry, whether they wanted to attend or not. Again, hardly a sign of business wizardry, just a cold blooded milking of the supporters.
This figure will rise next year, with the latest set of price rises just announced. No doubt Gill will trumpet the fact tickets have ‘only’ gone up £2 to £4 a game, overlooking the cumulative effect of the post takeover rises, and the irrelevance of these rises to fans already priced out. Expect the headlines to be ‘some tickets only up £1’ (less than 10% of the grounds capacity), ‘an average of 5%’ (about 50% since the takeover then), and the old favourite, ‘cheaper than Arsenal and Chelsea’, (as though football tickets are somehow the only commodity where prices can be compared between Manchester and London).
Moving on, overall commercial revenue was unchanged. That means no extra income from merchandising, again an area where the PLC apparently underperformed, and where the money to pay the debts was going to come from once the Glazers got their skills to work. 2 years in the job and no progress. Imagine if that was city…..
Total staff numbers were down by 22, including 5 fewer players. Need to make some extra profit? Can’t manage to take in any more money? Make some people redundant. Thank God we have the Glazers to bring us this corporate genius.
Sad as they are though, these numbers are side dishes to the main course of debt.
The amount of debt outstanding at the start of the year was £550m. It finished at £682m, meaning the annual interest bill is now £81m. That’s £81m, which you will have noticed is rather more than the £59m record profits United just made. Doesn’t add up does it – which is why the Glazers only paid £41m in interest, and just added the rest to the debt. So not only did £41m flow out of the club, the debt STILL got bigger.
A large proportion of the interest is paid at a variable interest rate. You will recall that poor market conditions meant United couldn’t refinance at the terms that would have reduced the annual interest bill, despite spending £660,000 in legal fees trying to do just that.
The double whammy of the credit crunch therefore is the interest bill will now go up, unless the Glazers pay some debt back with their own money. Don’t hold your breath.
Unfortunately for the Glazers though, the loans are repayable in full over the next 8 years, unless they get what we would call a re-mortgage, over a longer term. That doesn’t seem likely to be possible for at least 12 months, so no relief for them there.
Strangely enough, these results don’t appear to have received the same glowing coverage as the Football Club’s results did in January. That is partly because even Gill can’t put the slightest positive spin on them, nor has he faxed every media outlet a press release on them.
A major reason you may not have heard much about Red Football’s results though is the timing of their release. Having sat on them for months, signed and audited, able to be sent out at any time, they were finally made available - guess when – the day after the win over Barcelona.
Nothing like burying bad news, is there? |
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