United affairs suffering from debts

United affairs suffering from debts

Published Aug. 16, 2012 1:00 a.m. ET

Brazilian midfielder Lucas Moura is just 20-years-old and one of the most coveted young players in the world. So it was natural that Manchester United, which likes to think of itself as the biggest soccer club on the planet despite claims from Real Madrid and Barcelona, wanted him. Yet Lucas preferred to join Paris Saint-Germain. A few days later, United signed Robin van Persie and, for all the fuss made over the capture from of the attacker voted the Premier League’s top player last season by both journalists and his fellow professionals, there was no getting away from the fact that the Dutchman represented a slightly cheaper option.

Not exactly bargain-basement either. At $15 million a year salary plus a transfer fee of $35 million, van Persie cost more than either of United’s other summer signings; Japanese midfielder Shinji Kagawa from Borusia Dortmund ($25 million) or youngster Nick Powell ($9 million). But van Persie is 29-years-old and that makes him a significant exception to United’s transfer policy. Lucas, whose fee would have been nearer $55 million, would have been more characteristic of the recent style of the club’s head coach, the venerable Sir Alex Ferguson. No wonder the young Brazilian’s decision to favor Paris caused Ferguson to splutter that "the game’s gone mad."

There were two contributory factors to it. One was that PSG, perennial underachievers – who last won the French championship in 1994 – was taken over a year ago by a company headed by the fabulously wealthy heir to the Qatar throne, Sheikh Tamim Bin Hamam Al Thani, who has behaved accordingly in the transfer market since. Another was that United, which ought to be able to challenge even Al Thani’s financial muscle, appears to be fighting with one hand tied behind its back

This is because United is owned by a family, the Glazers, that seems more interested in taking money out than putting it in. While PSG were adding Lucas to a new roster already featuring such notables of the European game as Zlatan Ibrahimovic, Thiago Silva and Ezequiel Lavezzi, the Glazers were preparing to pocket $110 million last week. The other half was to be used to bring down the club’s debt to an estimated $530 million.


What makes the fans angry – impossible to canvass the views of the many millions across the globe – is that United never used to have any debt at all until the Glazers came along in 2005. Ever since then, the interest repayments and various commissions allied to the deal have been blamed for every transfer that doesn’t happen; though not by Ferguson, who has always praised the Glazers for letting him run the soccer side of the club without interference.

The 70-year-old Scot reiterated his admiration for the owners recently while reacting scornfully to rumors that he would benefit financially from the unpopular flotation. "There’s not a grain of truth in this," he said, and the blogger involved was quick to apologize. The last thing Ferguson wants is for the fans to turn against him, as they never have. United’s fan base will always be grateful for the club’s extraordinary success since he arrived from Aberdeen in 1986. Even Van Persie signing will ensure a feel good factor around the place for at least the early part of the season.

Yet the truth is that Ferguson bears a heavy responsibility for the Glazers’ ascent to power. For it was Ferguson who, though his interest in horse racing, befriended the Irish breeder John Magnier and gambler J. P. McManus. In 1999, while the fans were basking in the glory of United’s treble – completing Champions League triumph over Bayern Munich in Barcelona – it became known that the Irishmen had bought around 7 percent of United’s shares.

Most people perceived this as a positive development which would strengthen Ferguson’s power base. No doubt Ferguson assumed the same. But the following year, Magnier gave him a share in the stallion Rock Of Gibraltar and, when this became extremely valuable – the horse’s stud value was at one stage estimated at $75 million – the men fell out as Ferguson demanded his "rights." It became a bitter dispute that Ferguson, given the strength of his adversaries, who by 2004 owned nearly a quarter of United, could hardly win. He was forced to settle on Magnier’s terms, accepting a couple of million out of court. And United certainly lost.

Magnier and McManus now had 29 percent of the club and, if they were seen as villains by Ferguson’s legion of admirers, they were soon to be supplanted by the Glazers, to whom they sold out for $360 million (a profit of nearly $200 million). Once a model of financial prudence to all soccer, United now had a debt of more than $900 million, the consequence of the leveraged takeover. How much it has cost to service is hard to calculate. It is enough to say that the amount dwarfs the $150 million United claim Ferguson has in reserve for squad replenishments.

Without the debt burden, the club would surely have been able to compete with even PSG in the transfer market. When you bear in mind that United, unlike PSG, are able to spend freely under the terms of UEFA’s Financial Fair Play regulations, United’s earnings from television, merchandising and so on put them number on in a Forbes list of global sports clubs and franchises.

Ferguson, when protesting about PSG’s summer spending, declared, "when somebody’s paying 45 million euros for a 19-year-old [Lucas] you have to say the world’s gone mad." Yet Ferguson once gladly paid 40 million euros for an 18-year-old. Ferguson will not need reminding that the boy concerned was Wayne Rooney in 2004 – a year before the Glazers came.

As United prepare to kick off their Premier League season with a visit to Rooney’s old club Everton on Monday night, the fans are worried that buying big has fallen too far down the club’s list of priorities. Van Persie’s partnership with Rooney will have to click straight away to soothe those fears – at 29 there is not a lot of time to lose.