Manchester United Add More Debt
It is not just any old debt as it is debt in US Dollars and that has serious implications with the GBP weakening.
Last week I did a post regarding Real Madrid and how they have turned a profit whilst also reducing their overall debt last year. The football reality is very few clubs actually turn a profit and this will become a major concern when the newly adjusted fair play rules come into play.
The new rulings are that you can use up to 30% of the clubs revenue to spend on players and no more. Increasing your debt in order to purchase players is not going to be a loophole clubs can dance through.
Owners of the clubs are required to cover the shortfalls if the club requires topping up. If we look at Manchester United there are a number of financial practices that will have to change.
For the year ending June 2022 United reported a loss of £115.5 million increasing their debt by another £95 million. This is with the revenue having increased by over 18%. The clubs debt now sits at £515 million which has a cost. Here is the bit that makes no sense as the owners (Glaziers) took home £33 million over the year. According to the new rules they need to be emptying their pockets and not filling them. The debt is going to play a role going forward as it has to be paid back unless the owners never intend to and will sell the club for a huge including the debt.
The biggest problem United have right now is that debt is increasing due to the borrowing having been done in US Dollars.
The weakening of the Pound will only raise the debt the club owes as the debt is in Dollars. Any further erosions of the Pound will make no difference how successful the club is as they will sill owe more than before.
The problem is the club has the biggest wage bill in the Premiership having added another £61m this year currently sitting at £384m per season. The problem is if the performances don't improve on the pitch resulting in points then the club will be in bigger trouble next season.
The club will not be able to keep on spending freely like they have and qualifying for the Champions League next season is no longer a want as it is now a must.
Broadcasting rights last season dropped by £7.5 million due to playing less games than the season before. Being knocked out of competitions or not qualifying for the extras is hurting the bottom line. With the player wage bill now the highest in the Premiership have they the ability to claim a top 4 spot?
The average salary paid to a United player is double that of either Arsenal and Tottenham. We know having the highest wages does not necessarily mean you have the best squad as look at United's results over the last 10 years compared to what they have outlaid.
The crunch with the new regulations regarding player purchases will not have an impact this season, but only next season. Clubs will have to run more as a business and the loop holes they have been using are slowly disappearing. The clubs with the big money backing them seem to be the ones who will actually benefit as owners can fund the shortfalls. The likes of Manchester City and Newcastle are now sitting pretty.
Honestly, they really have a lot of players that are jsut eating up the club's budget. Getting rid of Maguire, de Gea and maybe a few others will bring them down tremedously I believe.
I find their wage bill staggering for what they actually have as I don't see the value. If they don't make the top 4 they are in trouble in more ways than one as this is their shot this year and it is only 1 shot.
Manchester United have been slaughtered by the glazers for a long long time now. And these new rules can only hurt them more. The glazers have been taking out money from the club and pumping them into their real estate business all along. And in their American clubs too, which are in NFL or MLB as much as I remember.
The fans have been protesting for a long time now. If the glazers don't sell, they will have to invest into the club, which they don't want.
That is why last month they were looking for a buyer, they aren't rushing, but looks like these new rules will finally make them sell the club and the fans can rest easy.
I don't see them selling and why they inflated the selling price. Why would you sell a business if you can milk it regularly? They pocketed over 30 million this year and haven't had to put any money into the club. That is great as it is a cash cow and they honestly don't care how the team performs as they will always be taking money out. In some ways they are very happy as the club is right now as it generates enough for them to keep taking out. The investor they were trying to bring in was US based and they don't want any influence from the local fan cub as they don't care. I do not see them selling anytime soon.
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They inflated the price of the club yes, 4 billion is a big number and that ain't the value of the club. The club is working as a cash cow but they have other businesses. And this club isn't their only business. So no liability in holding on to it. If the backlash reaches a boiling point then they'll have to sell.
Americans care a lot about their reputation. Glazer's main business is real estate, running clubs isn't even their priority. If they can get upwards of 3 billion from this sale, I do believe they'll sell. As they have investments lined up in this bear economy.
There is no need to sell so my bet is they hang on to it. if someone shows them their asking price which is seriously over value then they will sell. This family doesn't care what the fans or public think so everyone is in for a long wait. When you paid nothing for something and are banking millions from it each year it is a prized investment.
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Some cash cow for the owners. Unreal. it's a win win for them. Buying Ronaldo to kee fans at bay was a masterstroke. It added another year withoit fans moaning. They will have to cough up again this year.
The reality is they can't as the new regulations for the Premiership are expected to be in place by the summer transfer window. The owners have to pay the shortfalls and why United have said they don't expect another season of purchases like this year for some time. This season has so much riding on it for the club as not making top 4 would be financially disastrous.
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Wow, that's crazy... I can't believe they are spending more on wages that City and Chelsea, madness, given the level they are at..
It is crazy and they will struggle because of the lack of quality.
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They need to qualify for at least the UCL and win a trophy this season to generate revenue. Another thing that the club need to do to reduce their debt is to let go of some players.
Though they got Maguire at a huge price, they need to let go of him , players like Ronaldo, Shaw need to go too, their huge Salary is contributing to the debt.
No. The owners taking money out regularly is keeping the debt high. The amount they are paying on the squad you would think they had the best team in the Premiership and not some mid table project trying to improve. I just don't get it as the team is nothing special and will struggle to qualify for top 4 this season.
United brought it upon themselves, the huge wages and the cash they spent in the transfer window milked the club's finances, I hope they don't cover another loss this season.
Only a few clubs make profit so with their wage bill and now the GBP dropping in value I would suggest another season will reflect more losses. A club that is losing over 2 million pounds per week is where they are currently.
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Even if they want to get rid of unwanted players to devalue salaries is harder, no player will give up a salary that won't even get half of it at another club, I think the crisis will be prolonged and exacerbated with the milking policy of the team's owners.