United confirm significant losses
By ESPNsoccernet staff
October 8, 2010
Manchester United have confirmed their full-year operating profit stands at a record £100.8 million - but their overall losses are £83.64 million.
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Many United fans have been keen to oust the Glazer family
United became the first English club to generate over £100 million in operating profits in the results, believed to be down to the Glazer family's global marketing initiatives, but the owners have created a heavy debt burden.
Interest payments accounted for £40 million, while there was also a hefty one-off cost for the successful £504 million bond issue earlier this year.
The statement on the club's official website also pointed to the signings of Javier Hernandez, Chris Smalling and Bebe, as well as new contracts for several first-team players, and wages rose by 7% to £131.7 million.
The club's overall turnover has grown 2.9%, from £278.4 million to £286.4 million, while media revenues rose by £5.1 million to £104.8 million.
However, match-day revenue dropped 7.9% from £108.8 million to £100.2 million during the financial year, with United playing fewer games after suffering a quarter-final exit to Bayern Munich in the Champions League and a third-round FA Cup exit to Leeds United.
Perhaps the most significant factor in the results is that there is no mention of funds being taken out of the club by the owners to pay their £200 million-worth of PIK notes, which are now attracting interest at 16.25%.
The record operating profits, though, indicate that the club is still a hugely attractive proposition in terms of its global brand, and suggest there is little truth to the notion that companies are reluctant to be involved with the Glazers after repeated negative headlines.
United chief executive David Gill insisted there is no pressure to sell star players such as Wayne Rooney despite the club's big losses and described the accounts as "very good".
"We are not a club that needs to sell," Gill said. "We have money in the bank so there is zero pressure on that, no pressure at all to sell any star player whether it is Wayne Rooney or X,Y or Z. I can categorically say that.
"There was no desire at all from anyone at the club to sell Cristiano - he wanted to go and as a result we managed to extract a world record fee. The philosophy is to retain and attract the best players.
"We have £165 million in the bank but in some ways we would prefer to have £80 million in the bank and Ronaldo on the pitch.''
Gill said part of the losses related to one-off payments after bank loans were turned into a bond, totalling £47 million. He added that if 'goodwill' losses - an accounting practice relating to the original takeover - of £35.2 million, and foreign exchange losses of £19 million (which should be recovered next year) and depreciation are ignored, United would have an actual profit of about £25 million.
"There are very good results for the club with records here, there and everywhere but they are complicated with non-cash items and exceptional one-off hits," Gill said.
Fans' group have raised concerns that there could be parallels with the Liverpool crisis, where the holding company may be forced into administration next week over unpaid debts following a leveraged takeover, and the Glazer ownership of United. Gill however insisted that was not the case.
"I can't speak for any other club but the 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 - total wages are 46% of turnover - and we can afford the interest on our long-term finance.
"In our opinion if something changed in the ownership this club will survive and continue - it is covering the financing cost more than adequately. We still have cash to invest in players and to give good contracts to players and we are comfortable with the business model.
"They [the Glazers] have retained that money in the bank and it's there for Sir Alex if he needs it for players, and for investing in the training ground and the stadium.''
United are confident that they will meet UEFA's financial fair play rules despite the figures because not all the paper losses - such as depreciation - are included by UEFA when they calculate whether clubs are only spending what they earn.
