Sunday 26 March 2017

'I hope we don't go the way of Portsmouth . . . '

Once a great football club, Manchester United is becoming just another business, writes Dion Fanning

'My accountant says I did this at a very bad time. My stocks are down

I'm cash poor or something. I got no cash flow or I'm not liquid, something's not flowing.

They got a language all their own, those guys.'

Isaac Davis, Manhattan

Football's comfortable old maxim that no man is bigger than a club has never been strictly accurate. A club will not be great unless it finds a man who believes he is as big as it and can look it in the eye.

The great football clubs were built by men who saw themselves as indivisible from the monoliths they created brick by brick. They believed their values were the club's values, their instincts would have to be the club's sensibility and their judgements would be the only way the club was measured.

Busby, Shankly and Revie had no choice but to view themselves as the clubs they built; anything else would have been confusing and a waste of time. They had no option but to trust their instincts. No manager has any option but to trust his instincts even if it might get him fired. Not trusting them will get him fired even quicker.

If these men were not bigger than the club, it was hard to tell the difference. But football clubs like to believe they will endure so they cling to the line that their fortunes do not depend on one man. Leeds, Liverpool and Manchester United have all survived since the departures of the great men who built them, but in very different ways. Manchester United needed another man to believe he was as big as the club.

Alex Ferguson would be wrong to doubt himself now. By force of will, he has built Manchester United. For more than 20 years he has done what was best for Manchester United by doing what he thought was best for Alex Ferguson. He had to be unreasonable, dictatorial, uncompromising and arrogant or he would not have got anything done. There were times, he said, when he would like to have been the nice guy. He dropped Jim Leighton and Leighton's wife gave him the finger, but would the nice guy have slept any better?

For 20 years he has been Manchester United. His thoughts have been their thoughts, his decisions have been their decisions and if the Glazers had their way, it might not change for the next 20 years.

Privately, Alex Ferguson had expressed some doubts about Malcolm Glazer before they took over Manchester United. David Gill, his chief executive, had even more. Those on the outside were most vocal. "He is going to be much keener to boost profits, particularly as he's going to have to borrow so much to buy the club. I can only see that it's the fans who are going to lose out here in a big way," Michael Crick, Ferguson's biographer and a United fan, said at the time.

For the Glazer years, the fans have had one thing to sustain them, one man has allowed them to overlook the way the club has been run and to believe they weren't losing out: Alex Ferguson.

In the year after Malcolm Glazer and his family took over, it was hard to see Ferguson remaining in the job, not because the Glazers wanted him out, but because the supporters did. The Glazers allowed Ferguson to stay and to rebuild. Since they arrived there have been three league titles and a European Cup. The players purchased before they arrived have been the glittering stars but they allowed the squad to be reshaped as well. They also relied on Alex Ferguson's genius.

* * * * *

The world understands the language of the business world more than it did before. It has had no choice. Last week, Manchester United, the most famous club in the world, began to absorb what had happened to it when it was bought by men in the leverage business, the business that brought the world to its knees.

The Glazers' takeover of Manchester United was done in accordance with the principles of the time. United had no debt when it was a plc. The Glazers would change that. This is what they do.

Firstly, prices went up and they continue to go up. United were the only Premier League club to raise ticket prices this season. Sales of their corporate boxes are down about 16 per cent. It is no longer difficult to get a ticket for any Manchester United match. The waiting list for season tickets is shrinking.

The Glazers didn't cause the recession that has led to a drop in demand, although a million men like them did. United had been pared down before the world collapsed and they have had to keep doing so. All around the world, companies like United that had massive debts were stripping back. "The only way you can make it work is to leverage the shit out of the balance sheet," said one stockbroker.

Alex Ferguson was hailed for signing Michael Owen last summer when it seemed like a strange way to reinvest £80m from Ronaldo. There was no problem, he insisted. There was no value in the market. Unlike Rafael Benitez, who has always let it be known how little money he has been given, Ferguson wasn't going to rock the boat.

Football is a world in which the truth is neither appreciated nor acknowledged. When Partizan Belgrade suggested last year that the reason Manchester United would not be signing their teenager Adem Ljajic was because of a "financial crisis" at Old Trafford, the comments were laughed out of town. Ljajic was not signed because he wasn't good enough, sources at Old Trafford said and there may have been some truth in that. But the greater truth was that he was no longer worth the gamble. It was another revealing insight into the pinch at United.

There is nothing unusual in that during a recession, except United's insistence that it is business as normal. Those on the inside say it has been anything but normal.

Last year, the Manchester Evening News revealed that the former players who work in the corporate hospitality suites were no longer allowed watch matches in the stand at Old Trafford. United said that it was a safety issue as the former players had been blocking the gangways, but for those on the inside it was just added to the catalogue of austerity that has become normal since the Glazers arrived.

Players have been let go, teams have been disbanded and the sense that United exists to achieve glory has been replaced by a need to exist to service the debt. This is what happens when football thinks it's a business. This is what happens when football turns into bad business.

The most favourable figures suggest a net spend on transfers of £6m a year since the Glazers arrived, a level of expenditure which would only have been possible thanks to the spendthrift days of the plc when United signed Rio Ferdinand, Wayne Rooney and Cristiano Ronaldo. One of those assets has already been sold, another is not worth selling so it is Rooney who is United's most important player but, perhaps, the only asset that can ensure the club continues in profit. Ferguson says it is "utter rubbish" to suggest that Rooney would be sold to service the debt. He is not the man to ask.

Last week, United began to promote their bond issue and were obliged to outline scenarios that could affect their profits in the future. This led to a week of bad headlines and doomsday scenarios. There was also a need to face up to reality. The performances on the field have forced people to do that, to understand that there is a link between the boardroom and the pitch, that football's line that off-the-field matters don't affect the team don't make sense any more. Not when every player is an asset to be stripped.

The fact that the Glazers have taken £10m in "management and administration fees" since July 2006 doesn't help either. In December 2008, Malcolm Glazer's children each borrowed £1.66m from the club which came to another £10m.

These sums have provoked outrage but they are not United's problem now, making the money to meet their interest payments is the trouble. The sale of players -- and Rooney is the only player who would come close to the Ronaldo sale which allowed United to make a profit last year -- seems to be the simplest way.

Otherwise they may have to consider the sale of Old Trafford or, more likely, Carrington. For investors considering the merits of the bond prospectus United are presenting, that is one of the problems. "With other companies doing something similar, you would have a clearer idea of the assets they propose to sell to ensure profits, but you don't have that with United, probably for obvious reasons," said one stockbroker.

Investors may like to hear all ideas on how the club can maximise profits but the supporters of United cannot be told there is a plan to sell Rooney, Carrington or perhaps Old Trafford. United have already received almost half of their new sponsorship deal even though it doesn't begin until next season. Rooney may not be sold but Nemanja Vidic and a few others almost certainly will. The Glazers will have to find a balance too. More than anything, they need the team to be successful.

For that reason, Ferguson cannot leave. United cannot afford more uncertainty in an unsure world and a doubtful market. There are many professional investors who believe United's bond issue will succeed but there is also some scepticism. "I would like the yield to be higher for the type of company it is," a stockbroker said last week.

United, with an unclear idea of where they will make the next big profit and uncertainty over where the club will go, are not as good a prospect as a normal business. Some suspect that if the bond is to be taken up, the yield will have to be higher than its current return of just under nine per cent.

Others are more optimistic, suggesting United could easily get to the half a billion they are looking for. Those who know the club and know football are more dismissive. Fred Done is usually paying out on Manchester United winning the league right about now. He is one of the richest men in north-west England and head of Betfred, the bookmakers.

On Friday, he gave his verdict on the bond issue. "I wouldn't touch it with a barge pole. I would like to know how much equity the Glazers have put into the club. I do not think it's very much. I am seeing empty corporate boxes, I am seeing empty seats and there are tickets on open sale which you did not see a year ago. I am seeing cracks in the team. It is just debt-ridden and as a supporter, it saddens me. I hope we do not go the way of Portsmouth."

He is not the only man thinking drastically. Yesterday Manchester United fans met to consider their response. For the Manchester United Supporters' Trust, this has been their most hectic time since the Glazers arrived. Some now want radical action, a refusal to purchase season-tickets that would force the club into administration and allow the supporters to buy it.

Across England, fan ownership is the radical solution -- being suggested at Newcastle, Liverpool and Manchester United -- to the feeling that the game and their clubs have been stolen. Fan ownership is not seen as viable by professional investors who feel that fans may be enthusiastic but they are reluctant ultimately to contribute financially above paying for season tickets. A share in the club which promises nothing more but the security of the club may only appeal to a few.

But the few are growing and the dismissive talk will not bother those who point to the judgement of the same people as they allowed debt to smother the world in recent times. "It's nothing short of sacrilege for the Glazers to consider selling Carrington but particularly Old Trafford," said Sean Bones of the Supporters' Trust. "It's up to Manchester United fans to defend any attempt to break up the club like this."

One man remains the glue. Alex Ferguson has spent most of this season insisting that he could blow the Ronaldo money in a moment if he wanted to. The truth came out last week. On Friday at his press conference, Ferguson refused to talk about the finances, the most pressing issue at the club. The militant shop steward is now a company man. But he is bigger than the company Manchester United have become.

Sunday Independent

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