How Not To Invest In A Football Club

As a football writer and dedicated aficionado of my beloved Manchester United, it's been difficult maintaining my silence for this long over a matter that affects me so deeply. However, in this article, I want to avoid talking so much about the footballing performance of the club, and instead, focus on the financial aspect of its demise over the last decade. Whether you're a football fan or a reader that simply has no interest in football, I hope that, by the end of this article, you'll appreciate how heartbreaking it is to witness the decline of a once-great institution that is held dearly in the hearts of over 700 million people worldwide. As a club, Manchester United is not suffering from a superficial wound or a surface cut. The truth is that it is bleeding internally, and it shows no sign of stopping.

Let's start from the beginning. Manchester United is one of the most successful clubs in world football. It has a global reputation of historic success, and has played host to some of the world's greatest footballing talents in decades gone by. Cristiano Ronaldo, George Best, Wayne Rooney, Bobby Charlton, David Beckham, et al, have all played a fundamental role in shaping and cementing Manchester United's position at the top of the footballing pyramid. However, those glory days are gone. My childhood memories of the club winning countless Premier League trophies, of shrewd signings who have turned into fan favourites, and of that night in Moscow, have since been eroded from recollection. Now, all that's left is the disappointment, dismay, and a longing for change. So, the question is as follows: With whom does the blame lie - the clowns on the pitch, or the fools in the boardroom? My gut tells me the latter. Ladies and gentlemen, this is how not to invest in a football club...

For those of you that are blissfully unaware of the inner workings of one of the most poorly run football teams in the world, Manchester United is owned by the Glazer Family. Malcolm Glazer, who first acquired a small stake in the club in 2003, ended that calendar year with 75 per cent control of the club's shares. In the following months, he delisted the company from the stock exchange, and increased his holding in the club to about 98 per cent of total outstanding shares. How did Malcolm Glazer afford his c.£800m acquisition of United shares? Largely through loans - his initial purchases racked up interest payments of more than £60m per annum. Fortunately, most of this debt was paid off, and the Red Devils were in a strong financial position. The noughties saw Manchester United win title after title - its 2007/08 side gaining global recognition as one of the best footballing lineups in history.

Then, in 2012, in a bid to boost the finances of the club, Malcolm Glazer, now supported by his three sons (Avram, Joel, and Bryan), re-listed the company in an IPO on the New York Stock Exchange (NYSE). As a result of further financing the club through increased debt, United fans launched an assault on the owners of their beloved club, and the Love United Hate Glazers (LUHG) movement was established. That movement is still extremely active today, and the hashtags #GlazersOut and #LUHG trend online on a daily basis, such is the discontent towards the hierarchy of the club. You may have the following questions: What are the Glazers doing that is so wrong? Don't most companies have large amounts of debt? How does this affect Manchester United as a football club? Well, let's dig in...

The anti-Glazer movement claims that, since their takeover in the mid-2000s, just £44m of the original debt has been paid off by the owners. At this rate, "it would take Manchester United 158 years to be debt-free." Moreover, the Glazers are draining the club of funds - over £750m has been used in the last decade to service the debt, and the c.£500m that the club has gained by raising equity on the NYSE since 2012 has ended up in the Glazers' pockets, rather than the club's. Ed Woodward, the Chief Executive of the club (and the bane of most fans), is consistently granted a substantial increase in his annual remuneration, yet his performance in the role has been dreadful.

What is most concerning for fans like me is that the owners seemingly don't care about their club. As long as it makes money from its plethora of commercial sponsorships and partners, the team's on-field performance is unimportant. Ed Woodward even confirmed this in a powerful message to the club's stakeholders:

The sporting ambitions of the club have become secondary to financial gain for the Glazers and their puppets in the Old Trafford boardroom. With over £1bn taken out of the club since 2005, fans have questioned where that money has gone. It should have been reinvested in the club to improve its on-field performance, but instead, much of it has gone straight to the Glazers, while the rest has been used to service a debt that is "incomparable with that of any other club in world football."

What does all this mean for the club today?

At present, Manchester United should be well into its rebuilding process. Since the legendary Sir Alex Ferguson retired, David Moyes, Louis van Gaal, Jose Mourinho, and Ole Gunnar Solskjaer have all stepped in to replace him as manager. However, a combination of poor management, and a lack of support from the board and owners, has meant that Manchester United has been plunged even further into decline. As an open letter from fans of the club to the Glazer family expressed:

"We used to challenge for titles, now we must choose which rival we would rather see win the league. Where Champions League football was a given, we now fail to even qualify. Where we attracted the most exciting players, we now watch every transfer window unfold in horror, as the speed and ambition of our rivals to attract the best is matched only by the dithering frugality of your executive vice-chairman, Ed Woodward."

Take the current situation as an example of the greed of the Glazers and the incompetence of the executive team - the club's biggest historical rival, Liverpool, has just won the Premier League for the first time in over thirty years. It has one of the most robust teams in the world, and its years of being in the shadow seem to have dissipated into continental and domestic success. Chelsea Football Club, another rival, is on the verge of announcing the €100m signing of the German wunderkind, Kai Havertz from Bayer Leverkusen. Granted, a marquee signing doesn't guarantee success, but Havertz's arrival will take Chelsea's summer spending upwards of £200m, after already completing deals for the mercurial Timo Werner, as well as Hakim Ziyech, Ben Chilwell, Malang Sarr, and Thiago Silva, or O Monstro, as he is affectionately referred to by adoring fans. Manchester City has spent £80m already in this transfer window, and are heavily linked with Lionel Messi, arguably the world's best player, who, at the age of 33, still commands around £1m in weekly wages! Even Arsenal, and the newly promoted Leeds United, are increasingly pulling off some auspicious and ambitious signings. The Glazers' lack of investment is a prime example of how not to invest in a football club; unfortunately, it seems that United's local rivals, Manchester City, have learnt that pumping money into a club to source the best global talent, is the quickest way at achieving success. Paris Saint-Germain, Chelsea, and Red Bull Leipzig would agree!

Now let's compare the above with the situation in Manchester. Although United finished the previous domestic campaign in third place, this does not tell the full story. Likewise, the January arrival of Bruno Fernandes, who single-handedly saved the club from a much more dire fate, begs the question as to why the owners are so reluctant to spend money on players who can quite clearly impact the performance and future of the side, both in footballing and financial terms.

Two months into the transfer window, Manchester United have spent a big fat £0. While rival clubs are posting signing announcement videos on social media, United's feeble online response (posting throwback videos of historic club legends, goals, and matches), is a sad and damning indictment that only reinforces the idea that the team is so far removed from its former glory days. The Red Devils are unable to compete with its rivals, and, until money is invested in the club, and Solskjaer receives the backing that he deserves, this deterioration can only worsen. Other clubs, aware of the Glazers' frugality, will continue to demand exorbitant fees for their players, and a promised rebuild of the team will never be realised. The most worrying of all is that the club has enough money to sign superstars; it just won't open its cheque book. And don't be fooled into believing that the potentially imminent £40m arrival of Donny Van de Beek from Ajax will change anything...

So, folks, there you have it. It is painful to see your beloved team linked in the newspapers every day with footballing superstars that you know your club's owners don't have the ambition or desire to sign. It hurts to know that there are over 700 million people in the world who dream of being the owner of such a rich and historically successful football club, and it hurts, even more, to know that they could all probably do a better job than the current owners. So next time someone talks about their football team doing badly, hopefully, you'll understand that it's not a question of just signing some better players; rather, and in the case of Manchester United, it is about a self-serving and soulless management and ownership team that cares more about commercial deals with Taiwanese noodle and Swiss watch companies than it does about the team that millions of devout fans tune in to watch each week. Football and finance have more in common than one may think, and the case at Old Trafford suggests that finance and investment [or the lack of] pose a grave threat to the future of the club.