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Manchester United thinks that Chelsea are a threat on the pitch but not off according to documents leaked to The Times. The documents are said to state, 'Chelsea is recognised being in a league of its own in the transfer arena, and no other Premiership club can compete with the Abramovich firepower.' However, 'its lack of brand appeal and its limited fan-base beyond the UK make it a less compelling commercial partner.' United clearly believe that their only serious rivals off the pitch are Real Madrid, whose commercial revenue in 2004-5 was £84m against United's £50m, Barcelona's £43m, Liverpool's £39m and Chelsea's £38m.
The documents reveal that the club's latest debt figure as £656m, which is forecast to reach £733m by 2012. This is not as alarming as it seems as plenty of modern businesses are built on a foundation of debt, the crucial point is whether it can be serviced. Annual interest payments have risen from £20m to £40m as a result of the refinancing. The total costs of the takeover were £831m, including bank and legal fees of £41m.
Television contracts will continue to soar, increasing the club's annual media revenue from £46m to £78m by 2012. But what comes in must go out, and the wage and bonuses bill for the squad is expected to increase from £53.2m last season to £78.1m by 2012. Increased sponsorship prospects will see the club's annual commercial revenue rise from £56m to £78m by 2012. On pitch advertising for 'platinum partners' such as Audi is a big earner with secondary sponsorship forecast to rise from £8.8m this season to £19.8m by 2010-11.
It is easy to overlook how important matchday revenue is to United, but they made £70m in this way last season and are expected to increase that to £90m this season as a result of a minimum 12.5 per cent ticket price increase and the expansion of the stadium. Ticket prices are projected to increase by 36 per cent by the start of the 2012-13 campaign. After a 2.5 per cent increase for general access seats next year, they will increase by 5 per cent a year until the summer of 2012 when there will be a one time increase of 9.5 per cent. This would see a ticket which now costs £27 rise to just over £38. The Glazers argue that such prices are already paid by supporters at Arsenal, Chelsea and Spurs and the Manchester market is in effect also a metropolitan one.
Interesting omissions from the document are the long rumoured plan to sell and lease back Old Trafford or to pursue separate broadcasting deals. The assumptions made about performance are rather conservative and are based on going no further than the second round of the Champions League. If present form is maintained, performance could improve on last year's relatively poor season and see revenues grow beyond projections.
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