Debt and decline: American family’s troubled reign at United explained

Having an official noodle partner in Japan may have left them open to mockery but there is no doubt that Manchester United have become a money-making behemoth under the Glazers’ ownership.

Their annual revenue more than trebled from £173 million in 2006 to £627million in 2019 before coronavirus crisis struck and they made a profit in more than half of those years.

Their lack of a Premier League title since 2013 and the occasional failure to qualify for the Champions League has hardly dented that growth, which has been fuelled primarily by a surge in commercial revenue from £55million 15 years ago to a record £279million last year. It is questionable if that would have been achieved but for the Glazers’ takeover, which triggered a hugely successful regional approach to sponsorship that has milked United’s global popularity to deliver 53 such tie-ups.

However, their recent trophy drought – coupled with gluts for their biggest rivals – has coincided with a flat-lining of that commercial revenue. Manchester City and Liverpool, who have adopted similar regional models to United, have not only closed the gap but are threatening to surge by in coming seasons.

Debt

The root of fan opposition to the takeover. United were debt-free before being bought out using hundreds of millions of pounds in bank loans. That instantly put them more than £550 million in debt and on the hook for tens of millions of pounds of interest payments each year.

Net debt rocketed to £773million in 2010, the same year the anti-glazers green-and-gold campaign began. By the end of it, the family had paid off more than a quarter of that figure, having raised a £500million bond issue.

The debt continued to fall after flotation on the New York Stock Exchange and shares were sold to external investors and, in 2019, it almost dipped below £200million. But the pandemic has caused it to surge to £455.5million. Loan repayments made since 2005 total £244million, but only £6million of that was in the past five years. It is also dwarfed by interest payments of £704million, £496million of which have been made in the past decade, more than every other top flight club combined. The total figure could exceed £1billion by the time the debt is repaid – if it ever is.

Dividends

If fans were not angry enough about the debt being loaded onto the club, the Glazers began paying themselves annual dividends, with the total they have received since the takeover reaching £125million.

Almost all of that has been pocketed in the past five years, the same period in which debt repayments have all but ceased. It included a £23million dividend during the pandemic, albeit one signed off on before the crisis. United are the only top flight club to pay regular dividends, something the Glazers will argue is offset by the huge increase in revenues. But, coupled with interest payments and debt repayments, that takes the total “cost” of their ownership past £1 billion.

Transfer spend

One of the biggest complaints about the Glazers’ early tenure was that they failed to invest properly in the squad, relying on Sir Alex Ferguson to get the best out of an increasingly below-standard set of players. This is borne out by a net transfer spend of just £153million during the Americans’ first eight years in charge. In the seven years since, that net spend surged past £1billion as they backed a succession of managers’ attempts to bring in fresh blood.

However, many of those recruits flopped, while it could be argued money used to service the Glazers’ debt would have been better spent on improving the squad. Their failure to appoint a director of football has also drawn criticism amid the success of Liverpool’s recruitment department at identifying players.

Infrastructure spend

Before the Glazers, Old Trafford was the jewel in the Premier League crown. The lack of investment since has been one of their saddest legacies, with just £185million spent on it and the training ground.

In the interim, Arsenal and Tottenham Hotspur have built new homes, while Liverpool and City have spent hundreds of millions redeveloping their own.

Conclusion

For all the success United have enjoyed off the field, there is no escaping the spoils of this have been used more to line the pockets of the Glazers and their creditors (£1.073 billion) than on improving the squad (£1.005billion). Coupled with the lack of investment in Old Trafford, the almost complete absence of owner engagement, and the recent trophy drought, it is easy to see why the Super League fiasco has had the impact it has.