The 322-page document released by Manchester United to accompany their successful bond issue lays bare some of the most fundamental risks that the club faces as a business. It therefore provides a level of transparency that is not usually possible. Journalists and analysts like ourselves can provide our assessment of what we think is happening, but this document tells us how the club sees things. And there are some real concerns. Here a few highlights about some of the main ones:
The 322-page document released by Manchester United to accompany their successful bond issue lays bare some of the most fundamental risks that the club faces as a business. It therefore provides a level of transparency that is not usually possible. Journalists and analysts like ourselves can provide our assessment of what we think is happening, but this document tells us how the club sees things. And there are some real concerns. Here a few highlights about some of the main ones:
- Goodbye Sir Alex Sir Alex Ferguson has contributed greatly to the club’s success. Yet he is 68 and even he cannot go on for ever. He has said that he will not stay beyond the age of 70. The club admits, ‘Any successor to our manager may not be as successful as he has been. A downturn in the performance of the first team may adversely affect our ability to attract and retain such coaches and players.
- The Manchester City problem United may have defeated City over two games on the pitch, but they are much more serious rivals than they were. The club states, ‘In the Premier League recent investment from wealthy team owners has led to teams with strong financial backing. The increase in competition could result in our first team finishing lower in the Premier League than we have in the past and jeopardising our qualification for or results in the Champions League.
- Proposed Uefa regulations on debt There is a risk in conjunction with player salaries and transfer fees, the “financial fair-play” initiative could limit our ability to acquire or retain top players and, therefore, materially adversely affect the performance of our first team.’
- Economic climate 16 per cent of United’s corporate and executive tickets remained unsold at 30 September 2009. ‘Continued weak economic conditions may adversely affect our match-day and media revenues and could eventually affect our commercial and sponsorship revenues, each of which could have a material adverse effect on our business.’
- Threat of terrorism ‘Our club and our players could be potential targets of terrorism and civil unrest. [Directed at the Glazers? – ed] In addition, Old Trafford is an iconic stadium and a potential target for terrorism.’
There is no doubt that the bond issue has forced Glazer advisers to say far more about the family’s stewardship of the club and views of the football business than they would prefer. The Glazer sons do have a long-standing interest in soccer as it would be called in the US. Joel, Bryan and Avram were season ticket holders of the Rochester Lancers, who played Major League Soccer in New York where they were born. At college, Joel roomed with an English student who was a fanatical Spurs supporter. However, the family always believed that United underexploited business opportunities. The club’s commercial side is run from a 45-strong London office headed by former JPMorgan Chase banker Edward Woodward. Ticket prices have risen, but the club’s continuing reliance on debt means that it is banking on continual trophy accumulation to meet interest payments. This is a high risk strategy.