Record Profit For United

7 06 2009

large_sterling_notes_260x204James Robson, Manchester Evening News June 4, 2009

UNITED have made a world record operating profit for a football club, according to the latest figures announced. The Premier League champions made £71.8m for the season 2007-8 to put them at the top of the money tree globally. Their revenue of £257.1m also saw them outperform the rest of their Premier League rivals – with figures suggesting they are bucking the global economic crisis.

But they are still behind Real Madrid (£289.6m) in terms of revenue generated, though that owes much to the slump of the pound against the Euro. The figures – compiled by Deloitte’s Annual Review of Football Finance – come a day after United announced a new £80m shirt sponsorship deal with American financial giant Aon Corp.

That deal and the results published by Deloitte will be further justification to the Glazer family that they are fully capable of servicing the £500m debt leveraged to buy the club in 2005.

And even if they are still to win over their fiercest critics, with supporters last season petitioning the Office of Fair Trading over the club’s ticketing policies, they have found staunch allies in Sir Alex Ferguson and chief executive, David Gill, during a period of unprecedented success on the field.

While United have claimed a hat-trick of  Premier League titles since 2007, they have also reached back-to-back Champions League finals having lifted the trophy last season.

The Glazers have also backed Ferguson to the hilt in the transfer market and resisted the temptation to sell Cristiano Ronaldo last season, when Real Madrid were prepared to pay a world record £70m for the Portuguese international.

All of that after United had appeared to have slipped perilously behind Chelsea and even Arsenal following Roman Abramovich’s entrance into English football.

Gill has even gone so far as to credit the Glazers with playing a major role in leading the club to their latest period of dominance. “What happened after the takeover is that a lot of the uncertainties – with certain holders having 25 or 30 per cent stakes, and it was all very public because we were quoted on the stock exchange – all of that has been taken away now,” he said.

We’ve got the stability of the family owning the club. Long-term decisions can be taken and that’s been proved with the results we’ve achieved over the last two or three years.

In 2005 we had some issues. We’d been knocked out of the Champions League at the group stage, Vodafone announced they wouldn’t be continuing the relationship and Roy Keane left under a cloud.

But no one panicked or made rash decisions. “We were in it for the long-term and so that situation has followed through the last few years and hopefully many years to come.”

Aside from ticket price increases, many of the accusations levelled at the Glazers have failed to come to fruition. There has been no asset stripping of the club’s biggest stars, as feared by some supporters, nor has there been any suggestion of Old Trafford being renamed to bring in extra sponsorship revenue.

But one major question mark remains as to what will happen if United fail to keep up their standards on the pitch. Massive success by Ferguson’s side, plus increased TV revenue, has helped them outperform their rivals home and abroad, but should that dip, it remains to be seen how serviceable their debts would be.

Gill, however, refutes such claims. “The borrowing was put in place on a long-term basis and the club can service that debt easily,” he said “There is no real pressure. We’ve shown good growth in commercial positions since the takeover.

From our perspective, if you look at our results we are comfortable that the debt can be serviced and the club can continue to grow. “United are not the only top flight club with major debt, with the net figure for the league increasing to £3.1bn in 2007-8 up from £2.7bn the previous season.

Paul Rawnsley of Deloitte, said: “While debt in the Premier League has risen, two-thirds of this debt is in respect of just four clubs – Arsenal, Chelsea, Liverpool and Manchester United – and around £1.2bn is non-interest bearing `soft loans’.

On the positive side of the balance sheet, these four clubs also had £1bn of assets in respect of investment in stadia and other facilities and a further £450m from investment in players.

Debt is not necessarily a bad thing for clubs, as long as it is manageable within a club’s finances and is sustainable and repayable.” United’s revenue figures dwarfed those of Premier League runners-up Liverpool (£164.2m) and City (£82.3m).

The new TV rights deal sent Premier League clubs’ revenue soaring to £1,932m in 2007-8 and revenues are estimated to have reached £2bn in 2008-9 according to Deloitte. And while they are expected to grow in 2009-10, it is set to be at a slower pace given the credit crunch. Deloitte’s Dan Jones said: “The new economic realities may lead to flat matchday revenues.

While attendances continue to hold up well, many clubs have frozen or reduced ticket prices. However, the stepped increases in the domestic broadcast deal and the new UEFA Champions League TV deal make it likely overall revenues will edge up.”

Wage costs increased by £227m (23 per cent) in 2007-8 to reach £1.2bn, the largest annual increase recorded by the Premier League. Spending in both the Summer 2008 and January 2009 transfer windows reached new record levels with an estimated £675m investment in new players.

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