Source: Wikipedia
Manchester United’s struggle with the Glazers and their debt figures seem to be evidence that foreign takeovers are more than likely to fail.
The situation is starting to look increasingly desperate at the world’s biggest club as yet another year has revealed the poor financial health the club finds itself in.
The Glazers’ released the documents today which confirmed that the debt for Man Utd’s parent company, Red Football Joint Venture Ltd now stands at a massive £716 million.
To add to the ire amongst the Man Utd supporters were reports that the Glazer brothers were making huge drawings for their own personal purposes.
Things are looking especially bleak for the Red Devils as the Glazers are believed to be considering selling Old Trafford or the training ground facilities at Carrington.
And amidst all this chaos voices from inside Manchester seem to suggest that the club may opt to sell some of its big names like Wayne Rooney to allow more funds to come in.
So how bad is the situation for the Glazers exactly?
Fact & Fiction
The first thing one needs to do is dispel the inevitably crazy stories which keep coming up in the media.
The likelihood of the Glazers selling Old Trafford is almost next to nil as the stadium holds a great significance in the history of the club.
Any such move is likely to lead to fans trying to bring down the Red Devils management and the Glazers won’t be able to silence their discontent this time.
Similarly Wayne Rooney’s links to Barcelona are the concoctions of the media trying to move this story ahead.
There is no one in the current squad who is more important to the team than Rooney. Sir Alex Ferguson would personally throttle the brothers if they start offloading players.
As for the debt levels £716 million is an astronomical figure but in football such figures have become common.
Around Europe many of the top sides have debt in excess of £250 million. The Times revealed the debt levels of various clubs recently.
- Real Madrid – £609m
- Barcelona – £436m
- Internazionale – £386m
- AC Milan – £348m
- Arsenal – £300m (approx)
- Liverpool – £250m (approx)
Foreign Takeovers
If you look at the debt with United and Liverpool it has almost entirely been incurred during the takeover bids launched by their respective owners.
The Glazers and Gillet & Hicks borrowed extensively to buy the majority controlling stake in the clubs and are now tasked with paying it back.
Unfortunately for the club this means that its financial module is overhauled because of the new management and it now needs to cope with the added borrowings.
This season one of the prime reasons why none of the Big Four bought heavily was in order to refinance their debt levels.
Chelsea have successfully paid off theirs, Arsenal incurred their debt due to building the Emirates stadium but despite their reimbursements being regular the debt levels are coming down slowly.
It is thus clear that takeovers might bring in with them a huge influx of cash, but in the long run the club needs to pay it off one or another. And on most occasions they need to really tie their purse strings to service the repayments.
A Domestic Model
There have been past examples for the Premier League where the owners’ discomfort has resulted in the team’s downfall. The last such instance being Newcastle’s relegation in the previous season.
Leeds Utd also experienced a severe meltdown as the owners were unable to repay the borrowings and the team went from European semifinalists to third division football in just over half a decade.
In such circumstances it looks like that in club management tactics England has fallen far behind its European counterparts. French champions Bordeaux boast of remarkable talent in their squad but have no debts weighing them down.
Even in Spain the likes of Sevilla have managed to create extremely competent squads without the injection of some foreign capital. The team has been founded on nurturing and spotting young talent.
It seems that English sides too should think of returning to the days of developing talents than wait for wealthy owners to buy the club and throw money out of the window.
Because even if you the fans don’t realize it at that time that money being thrown around has to be eventually repaid.
Tags: bepl, bpl, debt, financial trouble, glazer, man utd, premier league
