Deloitte Football Money League

therecklessone

Seven English clubs in the Top 20

Fenerbahce become first Turkish club to enter the Football Money League

Real Madrid remains the world’s largest revenue generating football club, according to the latest Football Money League from business advisory firm Deloitte. Manchester United and Barcelona finished second and third in the report, which ranks the 20 biggest football clubs in the world based on revenue. Each of the top three clubs generated revenues in excess of €300m. Analysis in the Football Money League is based on the latest financial information for the 2007/08 season.

Bayern Munich returns to the top five in the Money League for the first time in five years, climbing three places to fourth and is joined in the top five by Chelsea.

Dan Jones, Partner in the Sports Business Group at Deloitte, commented: “Whilst Real Madrid’s 4% revenue growth in 2007/08 is more modest than recent years, the club has now doubled its revenues since 2002 and enjoys a lead of €41m over Manchester United. With the club having announced that it is budgeting for revenues of €400m in 2008/09, it will be difficult for rivals to replace Real at the top of the Money League next year.”

“Manchester United’s on-pitch success in winning the Premier League and UEFA Champions League contributed to significantly increased revenue for 2007/08, although the depreciation of the Pound against the Euro means they remain in second position. All bar two of our Money League clubs generated increased revenue in 2007/08 and each club in the top 20 generated more than €100m in revenue in that season.”

Real Madrid increased revenue by €15m (4%) to take their total to €366m (£290m). Manchester United’s performances on the pitch in 2007/08 resulted in a £45m (21%) increase in revenue to £257m, which translates to €325m. Third placed Barcelona grew its revenue by €19m (6%) to €309m.

The impact of the exchange rate, and the depreciation of the Pound against the Euro has adversely impacted on the number and ranking of English clubs in the top 20. Jones added: “If the exchange rate value of the Pound had not depreciated, there would have been nine, rather than seven English clubs in the top 20 and Manchester United would have topped the Money League ahead of Real Madrid.”

The global top 20 is entirely populated by European clubs. In addition to the seven English clubs, Germany and Italy have four representatives each, Spain and France two clubs each, whilst Fenerbahce become the first Turkish club to feature in the top 20 since the creation of the Money League rankings in 1996/97.

Alan Switzer, Director in the Sports Business Group, says: “Bayern Munich is the biggest climber in this year’s top 10, moving up to fourth position. Despite not competing in the Champions League, revenues were boosted by the club acquiring 100% ownership of its home ground, the Allianz Arena.

“Fenerbahce and VfB Stuttgart, two of the three new entrants ‘promoted’ into the Money League, gain their top 20 position as a result of the significant revenue boost from competing in the Champions League. The other new entrant, Manchester City, secured 20th position largely due to the increase in broadcast monies received from the Premier League, in the season prior to the arrival of the club’s Abu Dhabi based owners.”

Football remains a growth sport, especially at the highest level. The top 20 clubs’ aggregate revenue grew by 6% (€220m) to €3.9 billion (£3.1 billion) in 2007/08. The top 20 clubs now generate more than three times the combined revenue of the clubs in the first Money League publication in 1996/97.

This year’s Money League is based on the latest available revenue figures in respect of the 2007/08 season, largely before the global economic downturn. Whilst next year’s Money League will show some early signs of how the changing economic environment is affecting the game’s top clubs (for the current 2008/09 season), it will not be until 2009/10 that there is a fuller picture of the impact.

Reflecting on the potential impact of the economic downturn on Money League clubs, Paul Rawnsley, Director in the Sports Business Group commented: “The unique nature of the football industry will enable major clubs to be relatively resistant to the economic downturn. Clubs’ match attendances are holding up well and clubs in each of England, Germany, France and Spain have TV deals secured well into the future at enhanced levels. However, the clubs are not complacent and will have to work hard to grow further matchday and commercial revenue streams for 2009/10.

“The English Premier League currently generates the highest level of broadcast rights value of any football league in the world. Despite the challenging economic environment, the Premier League has just secured a record value for live domestic broadcast rights for the seasons 2010/11 to 2012/13, up 4% to £1.782 billion. Given the worldwide popularity of the Premier League there is likely to be further uplift in value from overseas rights when they are marketed later this year.”

Ends

Note to editors
To review the full findings of the Deloitte Football Money League and to hear a podcast featuring Dan Jones, please visit www.deloitte.co.uk/sportsbusinessgroup

The Deloitte Football Money League – 2007/08 revenue



Position
(prior year
position) Club Revenue (£m) Revenue (£m)
1 (1) Real Madrid 289.6 365.8
2 (2) Manchester United 257.1 324.8
3 (3) FC Barcelona 244.4 308.8
4 (7) Bayern Munich 233.8 295.3
5 (4) Chelsea 212.9 268.9
6 (5) Arsenal 209.3 264.4
7 (8) Liverpool 167.0 210.9
8 (6) AC Milan 165.8 209.5
9 (11) AS Roma 138.9 175.4
10 (9) Internazionale 136.9 172.9
11 (12) Juventus 132.6 167.5
12 (13) Olympique Lyonnais 123.3 155.7
13 (16) Schalke 04 117.5 148.4
14 (10) Tottenham Hotspur 114.8 145.0
15 (15) Hamburger SV 101.3 127.9
16 (19) Olympique de Marseille 100.4 126.8
17 (14) Newcastle United 99.4 125.6
18 (n/a) VfB Stuttgart 88.3 111.5
19 (n/a) Fenerbahce 88.1 111.3
20 (n/a) Manchester City 82.3 104.0

Source: Deloitte Football Money League 2009

This press release is based on the Deloitte Football Money League published in February 2009. As explained more fully in the publication, the revenue figures are extracted from each club’s annual financial statements, or other direct sources, for the 2007/08 season.

The three clubs that have dropped out of the Money League for 2007/08 (compared to the top 20 clubs based on 2006/07 revenue) are Celtic, Valencia and Werder Bremen.

There are many ways of examining the relative size, wealth or value of football clubs. For the Money League, revenue has been used as the most easily available and comparable measure of financial performance.

Revenue excludes player transfer fees, value added tax and other sales related taxes. In a few cases adjustments have been made to total revenue figures to enable, in our view, a more meaningful comparison of the football business on a club by club basis. For instance, where information was available to us, significant non-football activities or capital transactions have been excluded from revenue. Some revenue differences between clubs, or over time, will arise due to different commercial arrangements and how the transactions are recorded in clubs’ financial statements; or due to different ways in which accounting practice is applied such that the same type of transaction might be recorded in different ways.

We have not performed any verification work or audited any of the information contained in the clubs’ financial statements or other sources for the purpose of the publication.

For the purpose of the international comparisons, all figures for the 2007/08 season have been translated at 30 June 2008 exchange rates (£1 = €1.2632). The exchange rate for Pound Sterling to the Euro fell by 15% between 30 June 2007 and 30 June 2008. Comparative figures have been extracted from previous editions of the Money League.

Later this year the Deloitte Annual Review of Football Finance will be published, providing a more detailed analysis of the English and European football finance landscape.

Interesting to note the FX rates and their affect on English clubs, and it highlights the increased cost of purchasing players from outside the UK. Despite the spending power that the current TV deals delivers to the PL, is that acting as a brake on the spending power of the 20 clubs?

LuckyLloyd

Cheers for that, always an interesting read.

anonymous_joe

Interesting to see the strength of the German clubs financially.

Would it be a massive surprise to see an increase in the quality of that league as others race towards financial crisis?

The Hustler

Leeds not on it?

SectionF

Speaks volumes.

iregk

anonymous_joe wrote: »

Interesting to see the strength of the German clubs financially.

Would it be a massive surprise to see an increase in the quality of that league as others race towards financial crisis?

German clubs are run in a very strict and regulated fashion. They are run as proper business and not allowed to exceed set percentages for wages etc...

In short, the bundesliga is probably the best run league in the world and it doesn't surprise me at all to see them there.

GLaDOS

iregk wrote: »

German clubs are run in a very strict and regulated fashion. They are run as proper business and not allowed to exceed set percentages for wages etc...

In short, the bundesliga is probably the best run league in the world and it doesn't surprise me at all to see them there.

Should ask them to run the LOI for a few seasons

therecklessone

SectionF wrote: »

Speaks volumes.

I might regret asking this, but how so?

SectionF

therecklessone wrote: »

I might regret asking this, but how so?

Without writing an essay about it, it illustrates the triumph of the chequebook over sporting competition, and the dead hand of the globalised market on football.

anonymous_joe

iregk wrote: »

German clubs are run in a very strict and regulated fashion. They are run as proper business and not allowed to exceed set percentages for wages etc...

In short, the bundesliga is probably the best run league in the world and it doesn't surprise me at all to see them there.

Could be interesting to see if there fiscal strength will lead to improved competitiveness of German teams in Europe. With a recession inevitably going to lead to falling transfer fees in the medium-term future they'd really be in a position to leap for the top.

redout

1 (1) REAL MADRID
2007/08 revenues: 365.8 (from 351.0)
Matchday: 101.0
Broadcasting: 135.8
Commercial: 129.0

2 (2) MANCHESTER UNITED
2007/08 revenues: 324.8 (from 315.2)
Matchday: 128.2
Broadcasting: 115.7
Commercial: 80.9


3 (3) FC BARCELONA
2007/08 revenues: 308.8 (from 290.1)
Matchday: 91.5
Broadcasting: 116.2
Commercial: 101.1


4 (7) BAYERN MUNICH
2007/08 revenues: 295.3 (from 223.3)
Matchday: 69.4
Broadcasting: 49.4
Commercial: 176.5


5 (4) CHELSEA
2007/08 revenues: 268.9 (from 283.0)
Matchday: 94.1
Broadcasting: 97.8
Commercial: 77.0


6 (5) ARSENAL
2007/08 revenues: 264.4 (from 263.9)
Matchday: 119.5
Broadcasting: 88.8
Commercial 56.1


7 (8) LIVERPOOL
2007/08 revenues: 210.9 (from 206.5)
Matchday: 49.5
Broadcasting: 96.4
Commercial: 65.0


8 (6) AC MILAN
2007/08 revenues: 209.5 (from 228.7)
Matchday: 26.7
Broadcasting: 122.5
Commercial: 60.3


9 (11) AS ROMA
2007/08 revenues: 175.4 (from 145.2)
Matchday: 23.4
Broadcasting: 105.7
Commercial: 46.3


10 (9) INTER MILAN
2007/08 revenues: 172.9 (from 176.7)
Matchday: 28.4
Broadcasting: 107.7
Commercial: 36.8



I think that the biggest talking point about this list is Bayern Munich commercial revenue. Just look at it, it dwarfs all the others by some way. Quite amazing the size of the gap in there revenue that.

themont85

SectionF wrote: »

Without writing an essay about it, it illustrates the triumph of the chequebook over sporting competition, and the dead hand of the globalised market on football.

*sigh*, Most of those clubs got there through sporting competition, the money follows and is an inevitable part of football.

Most of the English teams should be okay despite the Crunch with their biggest revenue stream tied up till 2013. Some may not be and the ones with rich sugar daddy owners will be the ones in trouble.

SectionF

themont85 wrote: »

Most of those clubs got there through sporting competition, the money follows and is an inevitable part of football.

The shape of the competition is not inevitable. The scale and distribution of the finance is not inevitable. The tedious lack of mobility, and lack of competition open to all, that characterises the EPL is not inevitable.
These are the result of ordained policies and structures: there is not some magic law ordaining that better policies and structures cannot be put in place.

themont85

SectionF wrote: »

The shape of the competition is not inevitable. The scale and distribution of the finance is not inevitable. The tedious lack of mobility, and lack of competition open to all, that characterises the EPL is not inevitable.
These are the result of ordained policies and structures: there is not some magic law ordaining that better policies and structures cannot be put in place.

The EPL distributes its wealth far more evenly through its tv deal than the likes of Italy or Spain.

What exactly is your problem with Man Utd ect having more money than the rest through good business practice. 20 years ago, people would have said Man Utd, Barca ect were the rich kids in football. Bigger crowds than the rest, is that those clubs problem that other clubs like Wigan can't fill their stadium and thus fall behind in the money stakes? The list largely reflects teams who have done well since the inception of their own respective domestic leagues and in Europe.

What exactly do you mean by this-'ordained policies and structures: there is not some magic law ordaining that better policies and structures cannot be put in place'.

Mr. Presentable

themont85 wrote: »

Most of the English teams should be okay despite the Crunch with their biggest revenue stream tied up till 2013. Some may not be and the ones with rich sugar daddy owners will be the ones in trouble.

More likely the ones which will be in trouble are the ones with the greatest levels of debt. A club like Man U who's debt is increasing year on year could find themselves in trouble very quickly if their banks decide to stop extending credit.

PHB

United's debt is entirely as a result of their takeover. Nothing else.

United are in serious trouble because of this debt.

United however are not like Chelsea. They earnt all of their money the old fashioned way, match tickets, good transfer policy, winning competitions and good merchandising. They are not where they are because of the debt they took on. They are where they are in spite of it.

themont85

PHB wrote: »

United's debt is entirely as a result of their takeover. Nothing else.

United are in serious trouble because of this debt.

United however are not like Chelsea. They earnt all of their money the old fashioned way, match tickets, good transfer policy, winning competitions and good merchandising. They are not where they are because of the debt they took on. They are where they are in spite of it.

I personally think United will be okay though. They have a really sound business model and continue to make operating profits. I doubt the banks will cut them of.

SectionF

themont85 wrote: »

The EPL distributes its wealth far more evenly through its tv deal than the likes of Italy or Spain.

What exactly is your problem with Man Utd ect having more money than the rest through good business practice. 20 years ago, people would have said Man Utd, Barca ect were the rich kids in football. Bigger crowds than the rest, is that those clubs problem that other clubs like Wigan can't fill their stadium and thus fall behind in the money stakes? The list largely reflects teams who have done well since the inception of their own respective domestic leagues and in Europe.

What exactly do you mean by this-'ordained policies and structures: there is not some magic law ordaining that better policies and structures cannot be put in place'.

I don't know about Italy and Spain, though I doubt it would be difficult to be more willing to share than anything in which Berlusconi has an influence. At least your argument accepts re-distribution as a good thing.

The American system of sporting socialism seems to be much fairer. One wouldn't expect ManU etc to fret about Wigan and the rest, but the reality is that the EPL is stuck in a top-heavy big four(ish) groove for quite some time, and the only way to break the deadlock is with gargantuan sums of money.

It's often claimed that the setup is as a result of some natural order that has mysteriously emerged through the quality and talent within each club, but the fact is that it is engineered, with access to money the main, if not the only, dynamic in success (Man City refreshingly being the hapless exception, at least in the short term). That is why the Platini reforms make sense, but don't expect much support for them from the British press.

Apart from the dullness of the EPL, the purely Darwinian media economics pulls most of the money and attention (via advertising and ratings competition) to the top, and starves the game at lower levels.

Yes, you get extraordinary quality and talent at the very top, drawn by the obscene rewards, but the sport as a whole suffers.

Headshot

PHB wrote: »

United's debt is entirely as a result of their takeover. Nothing else.

United are in serious trouble because of this debt.

United however are not like Chelsea. They earnt all of their money the old fashioned way, match tickets, good transfer policy, winning competitions and good merchandising. They are not where they are because of the debt they took on. They are where they are in spite of it.

2009-01-14

Macau - Manchester United chief executive David Gill on Wednesday said the club remained in a robust financial position despite worries over its huge debt and sponsorship deal with troubled insurance giant AIG.

Gill insisted the ongoing economic crisis had so far had little impact on the club's finances, and that its revenue streams remained consistent in the face of the global slowdown.

"We are not complacent and we understand the issues in the world are such that we cannot expect to be immune from them," Gill said during a trip to Macau to unveil details of this year's Asian tour.

"At the same time, we have a robust business plan," he said, adding "football is only going to get bigger."

Gill said United was paying around 43 million pounds a year to service its huge debt of 660 million pounds, which was created when US owner Malcolm Glazer moved to buy up the club in a controversial swoop in 2005.

Some analysts have worried that United could struggle to service its heavy debts as global credit markets contracted, but Gill said the annual payments were expected to remain consistent for the next few years as the financing was organised relatively recently, in 2006.

He added sales of season tickets and executive boxes had also stood up to the downturn, and that he was expecting improvements in the television income from the UEFA Champions' League which is currently being renegotiated.

Gill added there had been no moves from shirt sponsor American International Group (AIG) to pull its 56.5 million pound deal early, despite the US government having to rescue the ailing firm last year.

He conceded it was "more than likely" AIG would not renew the deal when it expires in 18 months' time, but said there were plenty of potential suitors.

"We think, given there is only one piece of real estate on the shirt, we think it is a very attractive proposition," he said.

"There are many companies around the world who would like to have that association."

Manchester United will head to Asia in July for a pre-season tour with games in China, South Korea, Malaysia and the club's first ever game in Indonesia, Gill said.

The tour, alongside a permanent Manchester United exhibition and store in the Venetian casino in Macau, showed the club's commitment to Asia, Gill said, and how important the region was for the growth of the Premier League.

Gill said there were an estimated 12 million fans in Indonesia, which had prompted the trip to Jakarta. United were last in Asia in December when they won the Club World Cup in Japan.

Gill said the thorny of issue of what happens when Alex Ferguson retires was not at the forefront of his mind, but that it was important to learn from the mistakes made by the club when legendary manager Matt Busby left.

"If you wind the clock back to when Matt retired... the team was on the wane. George (Best), Denis (Law), and Bobby (Charlton) were towards the latter part of their careers as opposed to the peak of their careers," he said, adding it was important to have young players to hand over to the next manager.

http://www.sport24.co.za/Content/Soccer/EnglishPremiership/381/9d287592eb63415f8788096418d05939//Utd_downplay_financial_woes

anonymous_joe

SectionF wrote: »

I don't know about Italy and Spain, though I doubt it would be difficult to be more willing to share than anything in which Berlusconi has an influence. At least your argument accepts re-distribution as a good thing.

The American system of sporting socialism seems to be much fairer. One wouldn't expect ManU etc to fret about Wigan and the rest, but the reality is that the EPL is stuck in a top-heavy big four(ish) groove for quite some time, and the only way to break the deadlock is with gargantuan sums of money.

It's often claimed that the setup is as a result of some natural order that has mysteriously emerged through the quality and talent within each club, but the fact is that it is engineered, with access to money the main, if not the only, dynamic in success (Man City refreshingly being the hapless exception, at least in the short term). That is why the Platini reforms make sense, but don't expect much support for them from the British press.

Apart from the dullness of the EPL, the purely Darwinian media economics pulls most of the money and attention (via advertising and ratings competition) to the top, and starves the game at lower levels.

Yes, you get extraordinary quality and talent at the very top, drawn by the obscene rewards, but the sport as a whole suffers.

American sports are also unbelievably tedious and make no allowances for youth development.

And in fairness, plenty of teams get around the rules, New England Patriots, the Yankees etc.

Mr. Presentable

PHB wrote: »

United's debt is entirely as a result of their takeover. Nothing else.

United are in serious trouble because of this debt.

Agreed.

SectionF

anonymous_joe wrote: »

American sports are also unbelievably tedious and make no allowances for youth development.

And in fairness, plenty of teams get around the rules, New England Patriots, the Yankees etc.

So don't play an inherently tedious* sport, and do make allowances for youth dev. And make sure people don't get around the rules.

*In which statistics seem to have a huge part, something which also is more and more apparent in televised football.

themont85

SectionF wrote: »

So don't play an inherently tedious* sport, and do make allowances for youth dev. And make sure people don't get around the rules.

*In which statistics seem to have a huge part, something which also is more and more apparent in televised football.

While i wish it could work for football, the American model will never work for football. Salary caps for one would be very difficult to get in because of EU law, also whilst a lot of clubs would favour such a cap because it would drive costs down, they would face competition from Asia, the US, south America-something US sports do not, thus reducing the chances they would accept it ultimately.

The beauty of American sports is in the fact that for example in the NFL each team owner wants the others to perform well commercially and with fans because the NFL is the product not just the team your with. Owners are in it to make money and make more monry if other teams are good, they operate within restrictions but are allowed to keep their profits.

But football particularly is a far different composition. Football in England has 20 top teams and 92+ proffesional to for example the NFL's 32 and the NFL operates in a far bigger population base than that of the UK. Also the NFL gives each team a specific market in which to work, ie New England has Boston and its surrounding area. In England you have the likes of Manchester United to Wigan, a completely different dynamic. Each respective city differs greatly in size where as in the Nfl, markets are divied up quite evenly.

The only way in which the US model would have a chance of suceeding is in a pan European model which would elimanate smaller clubs and create super teams. Thats a no no for everybody.

Also Baseball doesn't operate under the same salary restrictions as the NFL, that is why the NY Yankees spend hundreds of millions on salaries in comparision to the Tampa Bay Rays who spend only a fraction(yet this year went further than the Yankees). Also the NE Patriots are just very smart with the salary cap, they haven't been caught breaking rules there(although as any NFL fan knows they have been caught elsewhere breaking rules to garner an advantage:D)

eirebhoy

Celtic were regulars in this list. Probably won't ever be on it again.

SectionF

themont85 wrote: »

While i wish it could work for football, the American model will never work for football. Salary caps for one would be very difficult to get in because of EU law, also whilst a lot of clubs would favour such a cap because it would drive costs down, they would face competition from Asia, the US, south America-something US sports do not, thus reducing the chances they would accept it ultimately.

Those are fair points. But the primitive dogma of 'free' trade and competition has taken a hit of late, and could be especially resisted when it comes to social and cultural matters. Where there's a political will, there's a way.

OPENROAD

redout wrote: »

1 (1) REAL MADRID
2007/08 revenues: 365.8 (from 351.0)
Matchday: 101.0
Broadcasting: 135.8
Commercial: 129.0

2 (2) MANCHESTER UNITED
2007/08 revenues: 324.8 (from 315.2)
Matchday: 128.2
Broadcasting: 115.7
Commercial: 80.9


3 (3) FC BARCELONA
2007/08 revenues: 308.8 (from 290.1)
Matchday: 91.5
Broadcasting: 116.2
Commercial: 101.1


4 (7) BAYERN MUNICH
2007/08 revenues: 295.3 (from 223.3)
Matchday: 69.4
Broadcasting: 49.4
Commercial: 176.5


5 (4) CHELSEA
2007/08 revenues: 268.9 (from 283.0)
Matchday: 94.1
Broadcasting: 97.8
Commercial: 77.0


6 (5) ARSENAL
2007/08 revenues: 264.4 (from 263.9)
Matchday: 119.5
Broadcasting: 88.8
Commercial 56.1


7 (8) LIVERPOOL
2007/08 revenues: 210.9 (from 206.5)
Matchday: 49.5
Broadcasting: 96.4
Commercial: 65.0


8 (6) AC MILAN
2007/08 revenues: 209.5 (from 228.7)
Matchday: 26.7
Broadcasting: 122.5
Commercial: 60.3


9 (11) AS ROMA
2007/08 revenues: 175.4 (from 145.2)
Matchday: 23.4
Broadcasting: 105.7
Commercial: 46.3


10 (9) INTER MILAN
2007/08 revenues: 172.9 (from 176.7)
Matchday: 28.4
Broadcasting: 107.7
Commercial: 36.8



I think that the biggest talking point about this list is Bayern Munich commercial revenue. Just look at it, it dwarfs all the others by some way. Quite amazing the size of the gap in there revenue that.

Arsenal have some work to do on the commercial side of things imo, it is an area we have been weak in for a number of years.

everdead.ie

nipplenuts wrote: »

More likely the ones which will be in trouble are the ones with the greatest levels of debt. A club like Man U who's debt is increasing year on year could find themselves in trouble very quickly if their banks decide to stop extending credit.

I was under the impression that man U have been servicing there debt and
reducing it every year since the glazers took over while still making profits!!!

TBH the bankers probably see them as a cash cow as they always pay there debt on time. I can't see them having there credit withdrawn.

anonymous_joe

everdead.ie wrote: »

I was under the impression that man U have been servicing there debt and
reducing it every year since the glazers took over while still making profits!!!

TBH the bankers probably see them as a cash cow as they always pay there debt on time. I can't see them having there credit withdrawn.

Demand for entertainment producsts can be extraordinarily elastic - given a likely fall in average income, spending on Old Trafford will see less demand, but in all likelihood still guarenteed full attendances, whereas the Sky Sports money could drop when contracts are renewed. In such a situation, depending on the extent of the fiscal overextension that would be bequeathed to the club, we would be, to put it simply - fúcked.

Daemonic

redout wrote: »

2 (2) MANCHESTER UNITED
2007/08 revenues: 324.8 (from 315.2)
Matchday: 128.2
Broadcasting: 115.7
Commercial: 80.9

5 (4) CHELSEA
2007/08 revenues: 268.9 (from 283.0)
Matchday: 94.1
Broadcasting: 97.8
Commercial: 77.0

6 (5) ARSENAL
2007/08 revenues: 264.4 (from 263.9)
Matchday: 119.5
Broadcasting: 88.8
Commercial 56.1

7 (8) LIVERPOOL
2007/08 revenues: 210.9 (from 206.5)
Matchday: 49.5
Broadcasting: 96.4
Commercial: 65.0

Liverpool really need that bigger stadium sooner rather than later

redout

Daemonic wrote: »

Liverpool really need that bigger stadium sooner rather than later

Not really. They have a bigger one than Chelsea but the only difference is that Chelsea charge extortionate prices !

Mitch Connor

everdead.ie wrote: »

I was under the impression that man U have been servicing there debt and
reducing it every year since the glazers took over while still making profits!!!

TBH the bankers probably see them as a cash cow as they always pay there debt on time. I can't see them having there credit withdrawn.

No, the club accounts show a profit, but when put together with the holding company accounts, the results look a lot worse. Also, some of the interest payable is not getting paid at all at the moment, and is simply being rolled up, to be paid off in a series of rather large lump sums quite soon. How United are going to pay them off is a mystery to me (and to the Glazers imo - i think they want to refinance them, but haven't been able to in the current climate)
Here is an article referencing information from mid 2007.
http://soccerlens.com/manchester-uniteds-debt-analysed/7356/

The article uses last available financial disclosures of the club as at 30th June, 2007 (download document (PDF) here). The words “current/currently” reflect opinion/fact with the same timeline in backdrop. All figures are in million pounds.

The author is a financial analyst.

It has been some time that people have been talking about a financial crisis in-the-making at Old Trafford. There are also those who insist we are already seeing one. The team, however, is doing extremely well on the pitch. That suggests, at least from a financial point of view (perhaps not conclusively though), that players are happy with their wages. After all, the club spent 74m on wages and salaries in 2006-07 (majority of which must have gone to players).

Even football clubs like Manchester United can hardly rely on money from T-shirts, posters or footballs – they really have to sell football – in the ground and on the TV. For Manchester United that makes up ¾ of their revenue which is showing excellent growth (30% year-on-year). Compared to previous year, the administration has done a great job in keeping a lid on operating expenses (despite the widespread belief that Manchester United uses a Russian cheque book too). The club has grown from a position of gross loss (persistent gross loss is an outright indicator of a failed business model) to a modest gross profit.

This is all good. But here comes a mighty financial challenge (note: I do not want to carelessly use the word “crisis”). The club incurred financial costs of 81m. That is more than what the club has paid the people who make this club – the ground staff, administration and of course players. This is, at least in an academic sense, a highly inefficient and unsustainable cost structure. But there are worse and more practical issues here.

Despite closing the acquisition transaction in the preceding year, the club incurred more debt and re-profiled existing loans this year. Pricing that Manchester United has received from financiers is not going to make things any easier. And given the deteriorating financial health of the club, overall credit tightening and the very nature of the risk financial institutions have taken on red devil’s football, finance costs will only increase.

If you doubt that then there is one simple explanation I can give.

The collateral offered to financial institutions is 425m of “first fixed and floating charge over fixed assets”. A charge is a piece of paper that gives legal claim to bankers over collateral in an event of default. But Manchester United only has 252m of tangible assets, the rest are largely intangible. In other words, this acquisition exposes banks more than Glazers themselves. The Glazers simply bought the club on bankers’ wallet, and if push comes to shove, they will handover the “soccer club” to banks, endure manageable loss, swim back home and watch “football clubs” play in America. Now wouldn’t a bank squeeze every penny out of Manchester United after taking such a risk on it?

Let us say, my view so far has been very subjective. Then let us look at some crisp objective facts. Financial institutions do not like to keep their credit lines evergreen for corporate customers unless the business model is one of low risk (e.g. a heavily regulated power utility). One day all banks will ask Manchester United to repay the principal amount which currently stands at 666m.

A very dirty (read: conservative) multiple of debt-to-free cash flow (using current figures for both debt and free cash flow) stands easily above 25x! This is too high, even with all the grace period in debt maturity schedule. Going forward, this multiple must come down or the club will be at mercy of financial institutions (whether or not they agree to rollover). What are the possible ways of doing it?

* Stop piling more debt - not possible until the club makes enough operating income to at least repay its finance costs i.e. interest cover above 1x. Currently, this ratio stands at 0.23x.
* Continue to post solid revenue growth e.g. at least at least 15-odd % each year. Keep up the branding. Media money is all about that. There is a reason why TV in Malaysia will not pay 2 cents for covering a Derby match.
* Win competitions. Duh!
* Become more efficient i.e. increase its operating margin. The current 9-odd % is not going to work.
* Buy like Wenger, not like Abramovich. The club does not have financial liberty as many would think.

A 194m accumulated loss on the balance sheet has reduced Glazer’s equity to only 80m (year-on-year 42% decline). This is alarming. Imagine, if loss in financial year 2008 is going to be anything above 80m (2006 loss: 135m; and let us say, Glazers don’t bring in more money from America), the club will have negative equity. In English that means bankruptcy for Manchester United where banks are involved. For clubs where no banks are involved, and Russians are involved, negative equity does not matter because the owner pays for his hobby, not the banks.

Even in the beginning of the article I clearly said, this is a challenge and not a crisis. One has to understand the buyout of Manchester United. These leveraged acquisitions, a couple of years back when things were not as bad, were in fashion. Financial institutions make good money in these. Where time is merciful enough to pan things out more or less the same way as those Excel sheets suggested in investment banks when the deals are struck, the equity investors (like Glazers) in these deals make money for their generations to come.

But huge risks are involved. There are too many assumptions, from the club itself to the economy at large. If you ask me in a nutshell if Manchester United is heading for a serious financial crisis – I will say it is not so certain at the moment. Glazers should really kneel down and thank the outstanding team and some great fans who continue to buy season tickets despite $120+ crude oil and a terribly confused Brown-Darling-King tripod.

The greatest positive surrounding all of this is the debt profile – the club does not really repay any principal in the next 5 years. That is a good breathing space. But even then, for this Glazer deal to let Manchester United live, this club needs to grow really badly. Did not we all think Manchester United is an enormous club? Size is relative. You are only as big as your debt makes you look.

Another more recent analysis of the debt, from MUST, based on the results given in January 2008:

http://www.manutdtalk.com/forums/archive/index.php/t-5948.html

MUST response to Manchester United Financial Results

United have announced record turnover and profits but the question is - is this
good news for supporters? On the face of it record profits might appear to be
something that supporters would welcome and certainly if United was a
supporter owned club with all the profits being reinvested then this would be
fantastic news.


However, under private ownership, the Glazers will be keen to extract every
penny of profit for themselves and so the extra revenue contributed by
supporters through the huge ticket price rises will be flowing straight back out of
the club with no benefit for the club or its loyal support.

From a supporter viewpoint increased profit is actually bad news if that increase
in profit has been achieved through either reducing expenditure on the playing
squad (both transfers and wages) or through massive hikes in ticket prices. Both
of these factors have contributed significantly to these profit figures.

As ever, supporters have questions that are not answered by these results or by
the Glazers directly: What is the debt situation? Where is the profit going? Why
are ticket prices still shooting up if profits are so high?

The Glazers will no doubt be paying themselves a juicy dividend out of these
profits - after all there is a large debt to service and they won't want to be
paying that themselves when they can get Manchester United supporters to do it
for them.

It is about time the Glazers stopped thinking only about their own pockets and
started to look at the long term damage they are doing to the Manchester United
support with more loyal fans being priced out every season. These profits should
be reinvested in the club, putting ticket prices back to the pre-takeover levels
and removing the compulsory element of the automatic cup scheme would be a
good start.

Government has already taken an interest in the abusive ticket prices at Premier
League clubs and these figures can only serve as further evidence that they
need to take action now to protect the ordinary supporter from having their
loyalty exploited for the benefit of already wealthy owners.


Analysis of the headlines in the MUL statement:

Group turnover increased 27% to £210m (2006 - £165m) This increased turnover
figure is attributed by MUL to stadium expansion, increased sponsorship and on
-field success. Interestingly, the substantial ticket price increases in April 2007 are
not mentioned. The new TV deal does not kick in until next year, so further
increases in turnover can be projected next year, especially if ticket prices rise
again (as expected).

Gross turnover (including sales from Nike merchandise and MUTV not consolidated
in these results) rose 21% to £245m (2006 - £202m)

It is not technically correct to include 'sales' from the Nike deal and from MUTV in
the gross turnover figure as neither of these companies are included in the MUL
group in accounting terms - Nike is a profit share arising from a contract and
United's minority stake in MUTV was loss-making again this year (as in every year
since its launch). EBITDA rose 72% to £79.8m (2006 - £46.3m) This number
exceeds the Glazers EBITDA target in their refinancing business plan of £73.8m
by less than the amount raised by the ticket price rises and the compulsory
Automatic Cup Scheme membership for all season ticket holders. Why continue to
make it painful for loyal supporters when you have already met your target?
Profit before tax jumped 93% to £59.6m (2006 - £30.8m) The net profit number
was boosted by a couple of exceptional items - an £11m profit on player disposal
and the fact that no interest was payable on the £575m Senior Secured debt
which was transferred into MUL in August 2006, according to a Note to the 2005
-6 Accounts. The Accounts show no sign of that debt still being a liability of MUL.
From what David Gill has been telling journalists recently, it appears that this
debt and the outstanding hedge fund PiK (which stood at some £155m at the
2007 year end) has been transferred back to Red Football.

Matchday revenue up 30% to £92.6m, (2006 - £71.3m) reflecting successful
expansion of Old Trafford, increasing capacity to over 76,000 The stadium
expansion was largely completed and operational in the 2005-6 financial year, so
for the year 2006-7 the matchday revenue increase can largely be attributed to
price increases across the board at Old Trafford (parking, pies & pints etc) and
particularly the ticket price rises which caused such pain to loyal fans on top of
two consecutive huge rises in previous years.

Media revenue up 35% to £61.5m (2006 - £45.5m) due to semi-final appearance
in the UEFA Champions League, finalists in the FA Cup and winning the Barclays
Premier League This number will undoubtedly increase next year as the new Sky
deal kicks in.

Commercial revenues up 15% to £56.0m (2006 - £48.6m) due to the first year of
the world record AIG shirt and accompanying financial services sponsorship
deals, increase in the Nike contract and new platinum sponsors, Kumho Tires,
Betfred and Hestiun Who?

So where is the debt? If the Glazers have taken the debt back into the books of
their own company Red Football, then this is good news for MU supporters in
that the debt becomes the direct liability of the Glazers' company and is not
hanging over the club, weighing its finances down - the effects of this can be
seen from the results. The reason for doing this is not clear - it may be for tax
reasons, but more likely is the explanation that the Glazers wanted to clear the
debt from MUL in preparation for a securitisation of United's matchday and
stadium revenues, and banks would look askance at adding a potential £400m
bond liability to a company which already had up to £700m of existing debt. Of
course the securitisation plan was put on hold last year because of the credit
crunch and the resulting inability to do a deal on attractive terms.

It also needs to be said that even though the debt seems no longer to a liability
of the club, the Glazers will have had to pledge their shares in MUL to the banks
providing the debt finance to Red Football, so any failure to repay that debt could
result in the banks taking ownership and control of United through the shares.
There is still a debt risk hanging over the club, but it is certainly less dangerous
than before.

So where is the profit going? What is clear is that the increase in net profits from
not having to service the debt will result in a large dividend (up to £40m cash)
which is payable to the owners, and which they can use to service the £660m
debt which is now in Red Football. The question is - will there be enough to both
service the debt and make enough cash available to strengthen the squad if Sir
Alex needs to? The credit crunch has made the debt more expensive than ever.

So why are ticket prices still shooting up if profits are so high? Fans are paying
ever higher ticket and matchday prices at Old Trafford, normal practice for the
Glazers just as fans of the Tampa Bay Bucs have experienced, and just as
tenants of the Glazers' trailer parks found to their cost. Last year's increase was
an astronomical 12% (the third such rise in a row) despite the Glazers saying in
their refinancing documents that the price rise would be 2.5%. The reason for
this would be that the cost of servicing the £660m debt for the Glazers has risen
substantially because of the current credit crunch - we estimate that the debt
interest bill could run to £52m this year, as against £42m last year. They may
well have to extract more cash from fans just to keep up payments on the debt.


Clearly the higher revenues are mainly driven by the cash being generated from
fans at the stadium. While everyone welcomes the success that the club is
achieving on the pitch and the performances of the team, the effect on many fans
has been substantial. Thousands have now been priced out of Old Trafford, and
for those that continue to struggle to pay for their season tickets, it is no
consolation to see that the hard-earned money they pay for higher ticket prices
is going back to the owners to pay off huge debts they took on to buy the club.
It's time for the Glazers to consider the many thousands of Manchester United
season ticket holders who were priced out and unable afford their season tickets
this season, some of whom had supported the club for over forty years. MUST is
calling for a ticket price reduction so that the growing exodus of fans from Old
Trafford is stemmed, with the resultant reduction in atmosphere currently being
experienced. The Glazers also compounded supporters' hardship by
implementing the hugely unpopular Compulsory ACS (Automatic Cup Scheme)
which takes the potential cost of a season ticket to over £1000 for many. MUST is
also calling for the ACS to be returned to its voluntary status.

If prices go up next season, thousands more traditional supporters will be on the
edge of being 'priced out' of following the club at Old Trafford.

iregk

redout wrote: »

Not really. They have a bigger one than Chelsea but the only difference is that Chelsea charge extortionate prices !

Thats exactly correct. Its to do with geographic location as well. A lot of Chelsea fans are well to do so they can and will pay 45-50 for the cheapest seat. Liverpool fans largely couldn't and wouldn't afford that price for a game.

Also Chelsea hightest season ticket is 6,000 and they sell thousands of them every season.

*before anyone jumps on me I'm talking about liverpool fans from there, not day trippers from here.