The wording was brutally harsh but it made the diminished esteem Manchester United are now held in by much of the business world abundantly clear.
It was, the investors of the club’s shirt sponsor TeamViewer said in November, a sign of “appalling judgment” to agree a £235m deal with a club that has not won a trophy since May 2017 and failed to qualify for this season’s Champions League. Less than a month later it was announced that a “mutual” agreement had been reached that would see United buy back the rights to shirt sponsorship from the German firm.
This may be one example at a time when the global economic crisis is tightening the belts of marketing and sponsorship departments across the board, but it is also symptomatic of United’s waning status as a commercial force and another reason why the Glazers’ ownership of the club has allowed a rot to set in.
What will hurt even more is a glance across town, where City are recording unprecedented commercial revenues. Entering the 189th derby between these two rivals, it seems that those in blue have become more successful off the pitch as well as on it.
In November, City announced that they had recorded profits of £41.7m and that their commercial takings were worth £309.4m – a 14 per cent year-on-year increase – after announcing more than a dozen new sponsorship deals.
Chairman Khaldoon Al Mubarak then used the publication of those financial results to provide rivals with an ominous warning. City, he said, would now “define new and unprecedented goals” as they “recognise the fundamental truth that continuously delivering football success for our fans will also continue to create value for our shareholders.”
Khaldoon Al Mubarak, the Manchester City chairman, pictured alongside Pep Guardiola and the Premier League trophy. (Image:Getty Images)
Opposition supporters and critics continue to ask questions around those sponsorship deals and whether the financial fair play rules have been breached – to the extent that United’s director of football John Murtough responded to a request for his opinion over whether the neighbours have artificially raised the value of sponsorship deals during a recent fans’ forum.
“Without commenting on the validity of the allegations made in the question, nor on any particular club, Manchester United is firmly in favour of robust rules governing financial fair play and transparency in football,” Murtough said.
“It is crucial that these rules are fully enforced by governing bodies in order to preserve the credibility, fairness and sustainability of football at both domestic and European levels, and we will continue to advocate for this approach.”
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The Premier League have been investigating City’s financial conduct since March 2019 – but there is no sign of that protracted process, which was held up by legal challenges launched by the club, drawing to a close. Details of what is exactly being looked into have been kept secret.
It follows UEFA banning the club from the Champions League for two seasons in February 2020 because of what the governing body claimed was evidence of City “overstating its sponsorship revenue in its accounts … between 2012 and 2016” – only for the Court of Arbitration for Sport to overturn their decision upon appeal. City also had a €30m fine reduced to €10m.
City have continuously and vehemently denied any wrongdoing and previously described leaked emails linked to the Premier League investigation as taken “out of context” and an “attempt to damage the club’s reputation is organised and clear.”
John Murtough, right, pictured with Erik ten Hag at the head coach’s unveiling last May.
The question Murtough replied to was part of a wider discussion around United’s transfer plans this month, with a warning that signings would not be made for “the sake of it” this month despite the club cutting ties with Cristiano Ronaldo and saving about £16m in wages from the forward’s tempestuous departure.
That is partially a consequence of the £214m they spent last summer, on arrivals including Casemiro and Antony, but is also a knock-on impact of how the club has been run by the Glazers for years.
In the past three seasons their losses after tax have been £23m (19/20), £92m (20/21) and £116m (21/22). The pandemic is a major reason for that but United’s debt has also climbed above half a billion with the pound’s collapse against the dollar complicating matters further. Much of their debt is with US lenders.
Their most recent accounts said that net debt increased “primarily due to £64.6 million of unrealised foreign exchange losses on the retranslation of USD borrowings in addition to a further drawdown on our revolving facilities of £40.0 million.”
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That is also connected to their dwindling cash reserves, which stood at a healthy £308m in the summer of 2019 but are now just £24.3m. Again, the club points to the pandemic as an explanation for that alarming reduction – even if their stagnancy in every other area of the business is impossible to ignore.
Having previously been the standard-bearers when it comes to commercial income, the £232m posted in their last set of accounts was only the sixth highest in Europe – and £77.4m shy of City’s figure.
United are still an attractive proposition to players because of the history and prestige but they can no longer compete economically with their neighbours for much the same reasons another rival manager, Jurgen Klopp, has outlined now Liverpool find themselves in a similar position.
There are clear signs of improvement on the pitch under Erik ten Hag. United have won 15 of their 18 games since the first derby of the season in early October, players such as Marcus Rashford are performing at the expected level consistently and a win on Saturday lunchtime would close the gap to a single point.
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City come into the game under more pressure, with several of Guardiola’s top players misfiring and a shock League Cup defeat away to Southampton leaving them dazed and confused.
But at a time when much is being made of the issues the game faces because of state ownership, not least competitive imbalance, one aspect has become indisputable: City are operating on a different financial plane.
“Our aim was clear – to one day be the club that set the benchmark for others,” Al Mubarak said in November. “The statistics and results show that in many ways we are beginning to achieve our long-term ambition.”
United may be threatening to catch up on the pitch. Off it the gap continues to widen.
Source: mirror.co.uk
