By Paul Nicholson
February 1 – Manchester United have moved swiftly to deny reports that their majority American owners, the Glazer family, had demanded 15% cuts in budgets across the board at the club, with a particular focus on the club’s Academy.
The club said that there had been no such directive and that “we have the most transparent cost base in football because we publish quarterly accounts.”
The club, quoted on the New York Stock Exchange, has seen its share price plummet 20%, despite being on course to report record revenue of £500 million this year. But this price volatility has so far had limited bearing on club operations.
In September 2015 the board said it would pay its first shareholder dividend since launching on the market in 2012, with the first dividend of $0.045 per share payable on 15 October 2015, being made in the first quarter of fiscal year 2016.
The club’s Academy has been a shining light in the past but with the emergence of Manchester City as a powerhouse in the local market, so competition for the best young playing talent has increased. The logical question for the club will become how cost-effective attempting to develop talent becomes when it is predominantly relying on acquiring the world class players for its first team.
Any moves to emaciate the Academy via cost cuts would likely be met by a storm of protest from fans and local club interest and the club has been keen to emphasise this isn’t on the cards.
The club is, however, making contingency plans to protect its high-end match day customer base informing its suite and box holders that it has frozen prices for next season already, and if the club fails to qualify for the Champions League then those prices will be reduced by 15%.
It is estimated that this would cost the club £1 million in lost revenue but the positive effect it would have on customer loyalty is likely to significantly outweigh this in the longer term.
Man Utd’s 70,000+ capacity Old Trafford stadium has more than 150 boxes and 20 suites with costs ranging from £1,995 to £6,800 per-person. Its Centennial Club Suite packages (there are eight) cost £125,000 per year.
The club also said that if they qualify for the Europa League, then executive fans will get a 5% price cut.
The club, after a strong start to the Premier League season, has faltered in the league and are currently five points off a financially vital Champions League qualifying place. The club was knocked out the current Champions League competition in the group stages before Christmas.
The poor run of form since then has put pressure on manager Louis van Gaal to not only improve results but bring in a more attacking style of play. The storm of criticism even caused club sponsor Adidas’ chief executive Herbert Hainer to remark that they would ideally like to see a more attractive style of play. The Adidas deal, in its first season, is worth an estimated $750 million to the club over 11 yeas, though has just been trumped by a deal Adidas has concluded with Real Madrid which is reckoned to be worth $1 billion over 10 years.
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