Coronavirus crisis one of ‘most testing’ periods in Man Utd’s history, admits Ed Woodward after financial hit
ED WOODWARD’S summing up of the current crisis is alarming, even if you are not a Manchester United fan.
The executive vice-chairman told investors the Covid-19 outbreak represented “one of the most extraordinary and testing periods in the 142-year history of Manchester United”.
It is quite a statement when you consider that in that time, to quote managing director Richard Arnold, “this club has endured two World Wars, a global depression, the credit crunch and a previous pandemic”.
Not to mention the tragedy of Munich.
But as Arnold added “the economic ramifications from this global pandemic will continue to resonate for years to come”.
And they are already being felt at Old Trafford.
If you follow a club which has not enjoyed the years of football and financial success that the 20-time champions of England have, you may well wonder how your team will weather a storm that is blowing even United off course.
And if you support United, you will worry that England’s most powerful footballing business is losing control of its bid to recapture those glory days.
For a few years, the problems were self-inflicted.
Hundreds of millions were wasted on the wrong players or backing the wrong manager, while the football philosophy that helped generate all that money was neglected.
But the latest financial figures Woodward was discussing yesterday, show how things which are not his or the Glazers’ fault will hamper their efforts to make up for those mistakes.
It WAS, of course, partly down to them that United were not in the 2019-20 Champions League and so already guaranteed to make less money this season.
But the coronavirus crisis has made a bad situation worse. United’s chief financial officer Cliff Baty said: “We estimate Covid-19 had a negative impact of roughly £23million on revenues until the end of March.”
Of that £23m, £15m is part of the rebate to Premier League broadcasters because of the disrupted schedule — with the total figure set to be £20m per club, even if the season resumes.
The remaining £8m of losses came from postponed matches, the Old Trafford Megastore being closed and other pandemic-related factors.
United fans who hate owners the Glazers will be appalled at the huge £127.4m rise in net debt to £429.1m.
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That makes a gross debt of £531m. As recently as last September, the net figure was £203.6m — the lowest since the Glazers heaped £540m of debt on to the club to fund their 2005 takeover.
But debt is only a problem if you cannot afford to service it and there is no suggestion United are in that position. At least not yet.
What makes the situation more difficult for United — and for every other club — is not knowing how long this crisis will last and what football and the world will look like afterwards.
Business hates uncertainty and no club is more of a business than United. One of the few things they do know is if they fail to qualify for the next edition of the Champions League, adidas can/will slash their annual £75m kit sponsorship by 30 per cent.
Right now they cannot be sure whether Project Restart will be a success or, if it is, Ole Gunnar Solskjaer’s team will earn a top-four place.
If the season were abandoned, would the final standings be resolved in a way that works in United’s favour?
Covid-19 is not the only thing muddying the waters.
Will neighbours Manchester City succeed in their appeal against their two-year Champions League ban, due to be heard by the Court of Arbitration for Sport from June 8-10?
If the suspension is upheld, or reduced to one season, United’s current fifth place should be enough for them — or whoever finishes there.
Regardless of how this campaign is resolved, when will the next Champions League tournament take place and what will the TV and prize money be?
Their pre-tax loss of £28.55m for the three months to March 31 this year included the first instalment of the initial £46.6m fee for Bruno Fernandes.
The 25-year-old Portuguese midfielder was showing signs of being the player who would transform Solskjaer’s team into a cohesive unit.
But United need to bring in more stars of a similar calibre to close the gap on their rivals.
Next question: when will the transfer window open and what will it be like?
It has been suggested cash-rich United will be well-placed to take advantage of the new reality and prey on weaker clubs.
With £90m in cash reserves and £150m available on credit, maybe talk of a £200m-plus summer spending spree on players like Jadon Sancho and Jack Grealish is not as fanciful as it might sound.
On the flipside, if their ability to improve the squad were to be reined in by the crisis, players like Sancho might wonder if Old Trafford was really the best possible destination.
Even before the pandemic, there were rumours Solskjaer would have to sacrifice Paul Pogba to fund his plans.
But how much would Pogba fetch in the new transfer market? So many questions — and no proper answers.
When the immediate crisis has eased, United will still generate more cash than most clubs in the world.
Barcelona apparently need to hold a firesale to avoid serious financial problems.
But in the Glazers, United have owners who have never been prepared to invest their own money in the club, unlike Sheikh Mansour at City or Roman Abramovich at Chelsea.
Once upon a time, United were happily trapped in the virtuous circle of success generating money, which in turn helped secure more success and so on and so on until they were the richest club in the world.
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But that advantage seemed to have been squandered even before lockdown.
Finance experts Deloitte were even predicting Liverpool and/or City would this season depose United as the top earners in the Premier League.
United’s latest figures suggest the pandemic will make it even harder for them to regain their position as top dogs, on and off the pitch.