But at what cost is this turnover being achieved JD? both to the long term ideas for the club and the ever spiraling cost to the fans (whether they are tossers or not!)
Reading through the article below (sorry if its long winded) fans now have compulsory! cup tickets added to their season ticket meaning an annual outlay of around a grand before a ball has been kicked!
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
Source:
http://www.rivals.net/News/pgArticle.aspx?artid=2483_3038480I know its from a Manc site but to be honest it gives us a rough idea of how "Cagney & Lacey" will carry on if as expected they told an "untruth" and far from us being taken over debt free the club will have a massive loan taken out against it with massive interest payments to be made....or else!
