Tuesday, October 12, 2010

United We Stand, Divided We Fall


Pity the average Manchester United fan trying to make sense of the club’s annual financial results announced last week. On the one hand, they look great with record turnover of £286 million, operating profits climbing above £100 million for the first time and £164 million cash in the bank, but on the other hand they look terrible with a record loss of £84 million, disappointing revenue growth and a mountain of debt. No wonder chief executive David Gill admitted that the figures could be confusing, “These are very good results for the club with records here, there and everywhere, but they are complicated with non-cash items and exceptional once-off hits.”

This has been the order of the day ever since the Glazer family bought United in 2005 in a £790 million leveraged buy-out that loaded debt onto the club. They paid £250 million themselves, but borrowed the remaining £540 million from banks and hedge funds. Before the men from Florida arrived, Manchester United was a thriving business, free of debt, with plenty of cash to invest, but the Glazers have effectively mortgaged the club to the hilt.

Despite these financial concerns, United have managed to maintain their success on the pitch, winning the Premier League three times and the Champions League once in the last five years. However, there are now signs that all is not right with the team, as United “only” finished runners-up in last season’s Premier League, while they were eliminated in the quarter-finals of the Champions League by eventual losing finalists Bayern Munich. A pretty good performance by most teams’ standards, but not quite the levels that United fans have come to expect.

"Wayne's World"

In contrast, United’s support is all too familiar with the club applying liberal helpings of spin to present the financials in the best possible light. No matter how hard you look at the press release, you still won’t see the word loss appearing. Of course, at an operating level, there’s no doubt that this is a truly impressive set of figures, but the fact is that Manchester United only make profits until they make interest payments, as their enormous debts to the banks and hedge funds soak up all the profits from the playing side.

All of David Gill’s strenuous efforts to put supporters’ minds at rest only serve to raise further questions, as they ask how it is possible for a club to move from operating profits of £101 million to a loss after tax of £84 million – a massive reduction of £185 million.

The first thing to note is that what the club describes as operating profit in the press release is not what most people in the accounting community understand as operating profit, nor indeed the same as the figure that the club uses in its accounts, which is only £15 million. No, the £101 million is the dreaded EBITDA (Earnings before interest, tax, depreciation and amortisation). Many analysts like to use this measure, but Warren Buffet, the legendary investor, cautioned, “References to EBITDA make us shudder. It makes sense only if you think that capital expenditure is funded by the tooth fairy.”

Nevertheless, Buffet would accept that it makes sense to focus on the free cash flow, so there is some logic to excluding non-cash expenses (or paper losses), which in United’s case amount to £84 million. Many of these are common to all football clubs, namely player amortisation £40 million and depreciation on fixed assets £9 million, but there is one large item that is virtually unique to United, which is the £35 million amortisation of goodwill resulting from the Glazers’ acquisition of the club. In accounting terms, this means that they paid more for the club than its fair value, the difference being booked as an asset called goodwill, which has to be written-off over its estimated economic life (15 years in this case).

It is clear that United have no problem generating cash. In fact, the club is a veritable cash machine, which is what attracted investors in the first place, and this year they reported an excellent net cash inflow of £104 million. Although this was lower than the £111 million produced in 2008/09, that year included an advance payment of £36 million as part of the new shirt sponsorship agreement, offset by a £10 million directors loan, so it actually represents an improvement in real terms.

So what do the club spend all that lovely cash on? The answer is interest payments – and lots of them.

"Know your rights"

This year United’s net interest payment was a jaw-dropping £42 million, coming from seven months of interest on bank loans and five months of interest on the bond issued on 29 January. As the interest rate on the bond is higher than the bank loans it replaced, next year’s interest payment will cost even more at around £45 million.

In addition, this year’s accounts include an incredible £67 million losses from exceptional items. Most of this was due to the early repayment of bank loans, which resulted in a £41 million loss on interest rate swaps and also triggered the accelerated write-off of the remaining unamortised debt issue costs of £5 million. The swap was a derivative used to hedge against movements in interest rates, but the club did not anticipate that they would fall as far as they have in the credit crunch. Although the switch from bank loans to the bond crystallised this loss, the club claim that this was still a price worth paying, as the bond will provide them with more financial stability, though they made similar noises when they refinanced just three years earlier.

It will not have escaped those observers who are good with figures that the annual interest payment of £42 million plus the once-off £41 million paid for the bond issue add up to a sum that is horribly similar to the £81 million received last year when Cristiano Ronaldo was sold to Real Madrid. Fancy footwork on the wing replaced by fancy footwork on the balance sheet – how do you like them apples?

"His name is Rio and he dances on the sand"

There was also a £19 million foreign exchange loss arising on the translation of the dollar denominated element of the bonds ($425 million) due to the strengthening of the dollar relative to sterling in the period since the bond issue. Importantly, this loss is not a cash expense and would not be realised until 2017 when the bond is due for repayment. Furthermore, if the dollar were to weaken against sterling, future profit and loss accounts might show a forex gain here. Of course, if the dollar were to strengthen, there would be more losses. It all depends on movements in the exchange rate.

Finally, there is yet another exceptional item: a £2 million increase in an onerous lease provision on a property where the club has failed to secure an income generating tenant.

Enough of all this head-spinning accounting terminology, the main point to grasp here is that there should be far fewer exceptional items in next year’s accounts, which would improve the profit (or loss) by nearly £70 million.

In summary, the £101 million operating profits in the accounts have been reduced by £193 million for the following factors: (a) non-cash flow expenses £84 million; (b) interest payments £42 million; (c) exceptional items £67 million. We then add £13 million profit from player sales and deduct £4 million tax to produce the £84 million loss. Simples.

"Old Man River"

Of course, all of these figures have come from the Red Football Limited accounts, so exclude the crippling interest payable on the PIK loans, which are booked in the club’s holding company, Red Football Joint Venture Limited. The club insists that these loans are the responsibility of the owners, but many commentators believe that they should be included to give the true picture of United’s total debt and interest payment, as the PIKs are secured on the club’s assets. The RFJV accounts for 2009/10 have not yet been published, but we know that last year the interest was £27 million and we can estimate £29 million for this year (14.25% on last year’s PIK debt of £202 million).

That would give total annual interest of an almost unbelievable £71 million. To place that into context, this is almost twice as much as the £40 million interest payment arising from Liverpool’s equally reviled leveraged buy-out.

Interestingly, the only difference between the RFL and RFJV profit and loss accounts comes from that PIK interest, so that would imply a 2009/10 loss before tax of £108 million for Manchester United – not a million miles away from the “shock horror” £121 million loss made by big-spending neighbours Manchester City.

This should be nothing new to Manchester United fans, as the club has reported large losses in four out of the last five years. The only exception was last year’s profit before tax of £48 million, but this would also have been a loss without the extraordinary £81 million profit on player sales, due to Ronaldo’s transfer.

"The gift that keeps on giving"

However, the fact that the club only made a profit by selling their best player has to be a cause for concern for the fans, who will worry that more players will be sold in the future in order to balance the books. Indeed, Philip Long, partner at accountants PKF, has commented, “The loss shows that the business model doesn’t work unless there are player sales. It’s an absolute mess.”

The huge loss was no surprise for Duncan Drasdo, chief executive of the Manchester United Supporters Trust (MUST), who lamented, “Every time these results come out, we see how much money is being wasted.” In fact, since the Glazers’ arrival, the club has paid out around £450 million in interest and bankers’ fees (£213 million interest on bank loans and bonds, £45 million exceptional charges and £190 million PIK interest). That statistic bears repeating: nearly half a billion pounds has been wasted on the privilege of the club having the Glazers as owners.

Obviously, if the club had remained a PLC, then it would have had to pay out dividends, but nothing like this level. Equally plausibly, United could have been bought by a benefactor like Roman Abramovich, who has provided his club with massive interest-free loans. Some might consider that option a case of jumping out of the frying pan into the fire, but it does demonstrate the competitive disadvantage that United have suffered in comparison to Chelsea. All of the money paid to the Glazers could have been made available to strengthen the squad or keep ticket prices down, but has instead disappeared into the financial ether.

The damage that the debt inflicts on United’s profits can be seen if we compare their results with those of Arsenal, who are generally regarded as the poster boy for financial excellence in the football world. To facilitate a like-for-like comparison, I have only taken Arsenal’s football business, excluding property development.

The first thing that hits you is that United’s £286 million revenue is significantly higher than Arsenal’s £223 million, mainly due to commercial success. Unsurprisingly, this results in a far higher EBITDA of £101 million, which is almost twice as much as Arsenal’s £57 million.

However, this is where things start getting tricky for United, as depreciation and amortisation are considerably higher, meaning that Arsenal’s £20 million operating profit is slightly better than United’s £15 million. The difference is further exacerbated by United’s shattering interest payments, allied with Arsenal’s higher profit on player sales, all of which means that Arsenal report a profit before tax of £45 million, which is £124 million better than United’s £80 million loss. Of course, the exceptional expenses exaggerate the difference in 2009/10, but the general principle will remain the same in other years.

What is difficult to criticise is United’s revenue of £286 million, which is not only a record high for them, but also a record for all English clubs. As we have seen, they are a long way ahead of Arsenal, while other clubs are even further behind: Chelsea £206 million, Liverpool £185 million and Manchester City £125 million.

This placed United third in last year’s Deloittes Money League (based on 2008/09 results). Following the slight growth in revenue in 2010, they will remain in that position when the next Money League is published. However, we should acknowledge that revenue has increased by much more this year at both Real Madrid (to £375 million) and Barcelona (to £330 million), so they are now even further ahead, though that partially depends on the vagaries of the exchange rate. In passing, I would note that Real Madrid only made a £22 million profit (though still a profit) from their huge turnover, while Barcelona (like United) reported a big loss of £68 million. Altogether now: “revenue is vanity, profit is sanity”.

Although United’s 2010 revenue growth was very small (less than 3%), at least there was still some growth, unlike, say, Arsenal whose revenue fell actually slightly. In fact, United’s revenue growth of £120 million in the Glazer era has been mighty impressive, representing an increase of over 70%. Although you could argue that much of this is down to centrally negotiated television deals and the Old Trafford expansion that was approved by the former board, it would be churlish not to give the Glazers some credit for the rise in revenue, not least the impressive progress made in the commercial arena. Their revenue growth has certainly been better than Chelsea or Liverpool, while only Arsenal (of the Big Four) have a better 5-year growth rate at 90%, largely due to the move to a new stadium.

United’s revenue has gone from strength to strength over the past few years, leading to an impressively balanced revenue mix with no single stream dominating. The revenue split is now a healthy 37% media, 35% match day and 28% commercial. This is in marked contrast to the majority of clubs in the Premier League who have a dangerous reliance on television revenue, which is why their only strategy is to avoid relegation.

However, the big revenue question for United now is where the growth is going to come from in the future, as their gate receipts look maxed out and at some stage the seemingly never-ending rise in money paid for TV rights has to at least pause for thought. This explains their focus on boosting commercial revenue.

In the meantime, United’s match day revenue remains key to the core strategy, even though it actually decreased 8% in 2010 from £108 million to £100 million, primarily due to two fewer home games being played after earlier exits in the Champions League and the FA Cup. Nevertheless, it is still the highest of any European club, leading to a few truly gobsmacking comparisons: it is four times as much as Champions League winners Inter Milan, five times as much as Manchester City and seven times as much as Juventus. That’s a lot more cash – every single year.

The club consistently sell-out the 76,000 capacity Old Trafford, a stadium with 16,000 more seats than the next largest English club ground, The Emirates, following extensive renovation prior to the 2006/07 season which added 8,000 seats. Known to United’s supporters as the “theatre of dreams”, I’m sure that the bean counters must fully concur with his sentiment.

Of course, the other driver for the growth in match day revenue has been less palatable to the fans, namely the ticket prices, which have risen by nearly 50% under the Glazers’ ownership, although season tickets are still cheaper than those at Arsenal, Chelsea and Spurs. In the bond prospectus, the club actually boasts of its ability to increase ticket prices, “while other Premier League clubs have experienced a flattening or reduction in ticket prices in response to the economic downturn.”

These price rises (and opposition to the owners) help explain why the club’s season ticket sales are down this year from 62,000 to 59,000, though this is admittedly still by no means a poor performance.

It is difficult to foresee much revenue growth here, unless the club raises prices even more, especially as the hospitality market is considered to be “challenging”. There has been some talk about increasing capacity in the South Stand, but no concrete plans as yet.

On the other hand, United’s media revenue increased by 5% from £100 million to £105 million in 2010, which represented good growth, especially as the 2009 comparative benefited from income for winning the FIFA World Cup (£3 million) and competing in the UEFA Super Cup.

The TV money is largely made up of £53 million from the Premier League and £43 million from the Champions League. Even though United received a lower merit payment after dropping one place in the Premier League and the facility fees fell, as they were broadcast live one game less, this was more than offset by an increase in the central pot, producing an overall £1 million increase compared to 2009.

"What's going on?"

The Champions League payout was also higher, even though United only reached the quarter-finals, as opposed to the final the previous year. This was largely due to the 30% increase in the UEFA broadcasting contract, boosted by the weakness of Sterling (Champions League revenue is distributed in Euros). Interestingly, United only earned slightly less than the winners Inter Milan (£45 million), as their share of the TV pool was much higher, because this is linked to the size and value of each national TV market, which is larger in England than Italy.

Of course, United’s media revenue is still far below the Spanish giants, Real Madrid and Barcelona, as they are allowed to negotiate individual television deals, so earn around a third more at £135 million. Whether this arrangement endures is another question, given the pressure from other clubs in Spain to move to a collective agreement (as they have just done in Italy).

This gap should be narrowed next season when United will benefit from an increase in Premier League TV revenue, as 2010/11 marks the first season of the new three-year deal, which is much higher following the astonishing increase (more than doubled) in overseas rights. The increase could be as high as £10 million a year.

"So I represent value in the transfer market?"

Longer-term, it’s interesting to note that have increased their stake in MUTV Limited to 66.7% “in order to have greater influence over the future strategy of the channel.” The ability to use technology to distribute live matches is definitely one of the attractions for overseas investors.

Right now, the fastest growing source of revenue comes from commercial sponsors, rising by a notable 17% from £70 million to £81 million in 2010. According to the Money League, United’s annual commercial revenue is the highest in England (Liverpool £68 million, Chelsea £53 million and Arsenal £44 million), though the first two clubs’ revenue may have also grown over the last 12 months. However, although United’s marketing skills are to be applauded, they still fall well short of some continental European teams (Bayern Munich £136 million, Real Madrid £119 million and Barcelona £96 million).

United’s largest sponsorship contract is with long-term kit supplier Nike, running until 2015. This was worth an average £23 million a year until 2010, but increases to £25 million for the remaining years. In addition, Nike manage the club’s merchandising, licensing and retail operations, sharing the net profits equally with United.

"Let's play Happy Families"

Revenue from shirt sponsorship will also increase next year by around 40%, as the club have replaced AIG (£14 million a season) with Aon, who will pay £20 million a year until 2013/14. Only Liverpool’s £20 million deal with Standard Chartered can match this, while other clubs’ deals are far behind: Chelsea – Samsung £14 million, Spurs – Autonomy £10 million, Manchester City – Etihad £7.5 million and Arsenal – Emirates £5.5 million.

The good news does not stop there, as United have signed up many new commercial partners, including the likes of Betfair, Thomas Cook and Turkish Airlines, which has produced a 50% growth in revenue from partners other than Nike and Aon. This is an example of the enduring power of the United brand globally and the club’s ability to attract new partners, despite the negative headlines arising from the Glazers’ ownership.

This is hardly surprising if you believe some research conducted by TNS Sport in 2007, which estimated that United had 139 million core fans and 333 million followers worldwide. I have no idea whether those figures are accurate, but conclusive evidence of United’s popularity is evidenced by the sales figures from Nike and Adidas, which point to United (along with Real Madrid) selling more shirts globally than any other club.

On the costs side, the wages growth continues apace, rising 7% to £132 million, as the increase in salaries was partially offset by a reduction in performance bonuses. In other words, if the club had matched the previous season’s successes, the wage bill would have been even higher. As it stands, United’s wages are now the third highest in the Premier League, having been just over-taken by Manchester City, though I would expect that difference to accelerate next year, as this summer’s arrivals are added to City’s payroll. Chelsea’s 2009 wages are still at the top of the tree, but that may change in future, as they have been off-loading some high earners.

Wage bills of the top clubs on the continent are no better. In fact, they’re a lot worse with Barcelona’s “leading” the way last year with £224 million, followed by Inter £175 million and Real Madrid £159 million. Fortunately for them, they can just about afford this, as their interest payments are peanuts.

Although the wages to turnover ratio has increased (deteriorated) to 46%, it’s still highly respectable. In truth, it’s the best in the Premier League and is the only one below 50%, though Arsenal come close. To put this into context, over half of the Premier League clubs are operating with ratios above UEFA’s recommended maximum limit of 70% with Manchester City in pole position with 107%. How long United can compete without spending more on salaries is open to debate. In the bond prospectus, the club warned, “it may be difficult to maintain this ratio at historic levels without negatively impacting our ability to acquire and retain the best players.”

However, cost control at United has been pretty good this year with other operating expenses cut by 15% to £54 million, largely due to fewer matches, but also because 2009 included once-off charges associated with the selection of the new shirt sponsor. As the club does not provide much detail to support this figure, we cannot say for certain whether any management fees to the Glazers were included here. The bond prospectus revealed that a total of £10 million management fees had been paid between July 2006 and January 2010 and £2.9 million consultancy fees in 2009, while the new agreement allows up to £6 million per annum for management fees and £3 million for “general corporate overhead expenses”. Looking at the figures, my guess is that these have not been taken in 2010.

Further confirmation of United’s desire to contain costs comes from player amortisation, namely the annual cost of writing down the cost of buying new players, which is on the low side at £40 million, barely changed from the year before. This is much lower than those sides that have spent big in the transfer market, such as Manchester City £71 million, Barcelona £61 million, Real Madrid £55 million and Chelsea £49 million.

This is a reflection of United’s restrained spending on new players in the past few years. Since the Glazer takeover, United’s net spend is only £11 million (according to Transfer League), which is much less than their peers with the obvious exception of Arsenal. In the same period, City’s net spend is over £300 million more, while Chelsea and Spurs have spent £100 million more. Even Liverpool, equally constrained by debt, have spent six times as much. Clearly, United’s net spend is reduced by the Ronaldo proceeds, but even so, these are telling statistics.

It really does stretch fans’ credulity to breaking point when Sir Alex Ferguson claims that the reason that he has not made any marquee signings is that he cannot find any value in the transfer market. How about Mesut Ozil at £13 million or Rafael van der Vaart at £8 million? It is obvious to anyone with a pulse that the debt mountain has influenced the club’s transfer policy. This summer, the club only bought Chris Smalling, Javier “Chicharito” Hernandez and Bebe, hardly the stellar signings that the fans crave.

Even after all those interest payments, the debt has not reduced. In fact, the gross debt has slightly increased this year to £522 million, though net debt has fallen to £358 million, as cash balances are higher. As we saw earlier, most analysts include the PIKs in the club’s total debt figures. Adding our estimated interest charge of £29 million to last year’s balance, the PIK debt should now stand at £231 million, which gives total gross debt of £753 million. To paraphrase Winston Churchill, “never has so much been owed by so many to so few”, but this time it’s not meant as a compliment.

Not only is this an incredibly high amount of debt, but it is also unproductive debt for the club. In contrast to United, clubs like Chelsea and Manchester City have used their debt to fund the purchase of better players, while Arsenal used theirs to build a new stadium. United’s debt was only used to enable the Glazers to buy the company. Furthermore, it is obvious that the Glazers have no intention of reducing the debt. As Stephen Schechter, CEO of investment bank Schechter & Co, said, “I don’t believe they are de-leveraging at all.”

In January the club raised around £500 million of funds via a bond issue, which was used to repay the existing bank loans, in order to fix the club’s annual interest payments for a longer period (up to 2017) and so ensure more financial stability. However, the terms still compare badly with Arsenal’s bonds, as the debt has to be repaid quicker (7 years vs. 21 years) and the interest rate is higher (8.5% vs. 5.75%).

However, this is nothing compared to the Payment in Kind (PIK) notes, which is the most expensive debt in the Premier League. The interest rate was already a stratospheric 14.25%, before it rose to an eye-watering 16.25 % this summer after United broke the covenant whereby debt was not allowed to go above 5 times EBITDA. Unlike with a normal loan, the club do not have to pay back the principal on the debt in instalments – all the money is due to be repaid in 2017. This makes it an even more expensive way to borrow, as the club must pay interest on the growing balance. In this way, when the PIKs are due for repayment, the debt will have snowballed to £588 million, giving total debt of £1.1 billion.

"It's difficult to justify, sorry, explain"

The other component of debt that can sometimes be relevant to football clubs is that arising from player transfers, but this is not an issue for United, as they owe £11 million to other clubs, but are owed £13 million, so these basically net out. Given how Spanish clubs usually pay for players in a number of stages, it is a testament to the club’s negotiating skills that they received the entire Ronaldo fee from Real Madrid upfront.

Included within the net debt are astounding cash balances of £164 million, even higher than last year’s £151 million, though this has been boosted by cashing the £80 million Ronaldo cheque and using very little to improve the squad plus the £36 million upfront payment from the shirt sponsor. The seasonality of the cash flow also needs to be understood, as most of the season ticket money is received before the end of June and used to pay operational expenses over the next few months.

David Gill insists that the money can be spent on improving the squad, “The Glazers have retained that money in the bank and it’s there for Sir Alex if he needs it for players”, adding that “there is no pressure at all to sell any star player.”

"How much is my transfer budget?"

However, the question is how long will that cash be available? The bond prospectus allows the owners to take this money out of the club. Specifically, they are allowed to pay an immediate dividend of £70 million to Red Football Joint Venture Limited for “general corporate purposes, including repaying existing indebtedness” plus an additional £25 million dividend at any time. On top of this explicit £95 million, they are also permitted to pay out dividends up to 50% of net cash profits, as long as the club’s interest is still covered twice by EBITDA.

The assumption is that this means using the club’s cash to pay off the prohibitively expensive PIKs. As Jonathan Moore of Evolution Securities said, “There’s still pressure on them, as 16.25% is not an insignificant coupon. You’d expect the owners to take them out as soon as they’re able to.” The results show that this has not yet happened, but it may just be a question of time, as it makes no financial sense not to do so, especially as reports indicate that other parts of their business empire are struggling, e.g. a large number of shopping malls owned by the Glazers’ First Allied Corporation have defaulted on their mortgages.

Unfortunately, the Glazers appear to be determined to hang on. The vaunted Red Knights do not appear to possess the resources to mount a sufficiently attractive bid, while the Guardian has reported that the owners have already rejected several offers above £1 billion, including one of £1.5 billion from a Middle East consortium. If that were not clear enough, the board stated, “The owners remain fully committed to their long-term ownership of the club. Manchester United is not for sale and the owners will not entertain any offers.” Clearly, everything has its price and investors that employ the LBO model will normally sell when they feel that they have maximized value, so that’s unlikely to be the end of the story.

"The Three Wise Men"

Although United’s owners appear to have much in common with Liverpool’s American debt merchants, there is little chance of the club getting into a similar predicament. As Gill said, “United fans should not be concerned. We have a long-term financing structure in place, excellent revenues that are growing, we are controlling our costs and we can afford the interest.” This is undoubtedly true, but you can’t help wondering why his confidence was not supported by the bond prospectus, which candidly stated, “We cannot assure you that our business will generate sufficient cash flow from operations, or that future borrowings will be available to us, in an amount sufficient to enable us to pay our indebtedness.” It’s probably just one of those cover your backside clauses so beloved of lawyers…

Speaking of which, United are also confident that they will meet UEFA’s Financial Fair Play regulations, as most of their current losses are either once-off or of the paper variety. Gill explained the club’s assurance, “Charges related to goodwill and depreciation of fixed assets are ignored by UEFA. As a result, we can comfortably meet the qualifying criteria.” And you know what? I think he’s probably right, though it might be a close-run thing if UEFA include the PIK interest, treating RFJV as a related company.

The other point that may be interesting here is that UEFA treat dividends as relevant expenses, so they should be included in the break-even calculation. That presumably means that any dividend payments that the Glazers make in order to pay off the PIKs will be included. If so, it would be in the club’s interest to make such payments in the 2010/11 accounting year, as this is the last one excluded from UEFA’s calculations.

"Changing of the guard"

Another issue that the club has to confront is what happens if the team is less successful on the pitch? Revenue would be £40-50 million lower if the club failed to qualify for the Champions League, once gate receipts and sponsorship clauses are taken into consideration. That might seem absurd at the moment, but look what happened to Liverpool. Ageing players like Edwin van der Sar, Paul Scholes, Ryan Giggs, Gary Neville and even Rio Ferdinand will all need to be replaced, while the elephant in the room is Sir Alex’s retirement. That’s a hard act to follow. Conversely, this eventuality might also offer some encouragement to United fans, as the Glazers cannot afford for the team to fail, so at this stage an appropriate amount of spending might be approved.

I’ll leave you with two contrasting views.

The first is a down-to-earth assessment from chief executive David Gill, “We are comfortable with the business model.” Although this statement has been greeted with hoots of derision, in a funny way he’s half-right, as United’s financials look great – right up to the point when they’re confronted by massive interest payments on the debt the Glazers brought to the club.

The second is a passionate cri de coeur from MUST chief executive Duncan Drasdo, “Ostensibly we are the best-run football club in the UK for the last 20 years, generating amazing revenue, but the problem is that under the current ownership that's all being wasted because it's going into paying interest on debt. We could be competing with Man City and Chelsea for the best players. Instead of squeezing spend on players and pushing up ticket prices, we could be giving supporters who are being priced out, those that have supported the club for many years, the opportunity to watch their team. All of this is because one family decided they wanted to own our football club.”

It’s difficult to disagree with that.

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