Manchester United's owners the Glazer family have never denied Sir Alex Ferguson transfer funds, says vice-chairman Ed Woodward
Manchester United did not miss out on signing the Brazilian midfielder Lucas Moura because of a lack of transfer funds and the Glazer family have never denied Sir Alex Ferguson the resources to sign a player, the club’s vice-chairman Ed Woodward said today.
In a wide-ranging interview on the club’s ownership structure two months after the Glazer family floated ten per cent of the club on the New York Stock Exchange, Woodward, who runs the club’s London-based commercial operation, said that servicing the owners’ debt had no impact on United’s transfer policy.
The battle-lines over the Glazer ownership, now in its eighth year, are well established, with fierce opposition from sections of the United support and despair among fans’ groups at the estimated £500m that has gone on servicing the debt, as well as legal fees connected to the 2005 takeover.
United’s relatively low impact in the transfer market in recent years - a trend which changed to a degree in the summer with the signing of Robin van Persie and Shinji Kagawa among others - has also raised suspicions that the servicing of the Glazers’ debts have restricted Ferguson in the transfer market. Moura, 20, eventually signed a deal that will see him join the Qatari-funded Paris Saint-Germain in January.
Woodward said: “The Glazers have never said ‘No’ to Sir Alex’s request for a player. There is no difference between staying as a plc [the corporate structure of the club pre-May 2005] or the Glazer takeover in terms of the team on the pitch.”
Woodward said that capacity crowds at Old Trafford were an indication that the majority of supporters were happy with the club and the considerable successes of the last seven years. “We do have a majority of very happy set of fans because of what happens on the pitch,” he said. “The purchase of Robin van Persie was an example of Sir Alex buying players and always being allowed to buy players he wants.
“There was no secret about bidding for Lucas and three years ago trying to buy [Karim] Benzema. The money has always been made available to him. That is the disconnect [with the supporters]. There is a thought that if ‘X money’ has gone out the door - ignoring the extra money that has come in [through increased commercial revenues] which you should argue should be counted – it would have been spent on players. But it wouldn’t.”
He added that despite opposition to the Glazer takeover, which was financed with £525m of debt loaded directly into the club, the current level of debt – around £360m – was sustainable.
Woodward said that there was a need to “communicate” better with fans. The Glazer family have so far done one interview – Joel Glazer, with MUTV, on the day of the takeover.
The club’s aggressive new approach to sponsorship has landed them the most lucrative shirt sponsorship deal in football history with Chevrolet – £350m over seven years, starting in the 2014-2015 season – as well as a number of deals based on “segmentation” of territories and products. Recent deals include a Japanese soft drinks manufacturer and an Azerbaijan telecoms company.
As a result, Woodward said, annual commercial revenues have grown by £100m since the Glazer takeover. Ferguson himself has argued in recent years that there has been “no value” in the transfer market. Woodward said that he would not discuss why certain potential transfer targets had not joined the club but denied that funds had never been an issue.
He said: “I’m not the person who manages the football team. Sir Alex and David [Gill, chief executive] have their own views as to the players they want to go after and who Plan B might be if they are not comfortable with certain levels ... that is all discussed with Joel [Glazer, chairman] and signed off with the three of them on the phone in a quick manner.
“It can be a whole raft of reasons [that a player does not sign]. It can be the change in the players’ attitude through the negotiations. It can be an agent getting involved in a certain way that changes things. Or someone turning their head for a different reason, and all these things can happens.”
The price of the United shares listed in New York has fallen from $14 (£8.7) to $12.30 (£7.60) currently, despite initial plans to list at as much as $18 (£11). Woodward said that he had no fears about the share price in the long-term as long as United continued expanding their business plan which includes pursuit of new sponsorship deals through a newly-opened Hong Kong office and another in New York.
He dismissed comparisons between United’s falling share price and Facebook’s disappointing stock market debut. The strenuous opposition among fans to the Glazer’s leveraged buy-out, which has included the establishment by disaffected supporters of breakaway club FC United, and the ‘Green and Gold’ campaign that was at its height around three years ago, had not, he said, materially affected the club’s popularity with sponsors.
“We have continued to sell sponsorship deals, or MUTV deals or mobile deals, whatever it may be, all the way through the last seven years. A great deal has happened in the last seven years, particularly in the last five. We even did all these deals through 2010 when things were perhaps at their most choppy because of the bond [the major refinancing of the takeover debt]. That should answer it. Our shirt sales go from strength to strength.”
“The debt is tiny compared to the value of the business. The coverage of the interest payments is small. Communicating that is not easy. I try to do the best I can to explain we are completely relaxed. It is like having a tiny mortgage on your house and the person in the house has got richer and richer through income and the mortgage is going down.
“I really hope that we can continue to communicate and get fans comfortable and demonstrate that we are financially strong by buying players. Obviously that helps so that they don’t feel concerned. They really shouldn’t be concerned.”
The levels of the club’s debt were sustainable, Woodward said, on the key indicators such as ratio of Ebitda (earnings before interest, taxes, deprecation and amortisation) - which was £109m in the last accounts - to total debt. He also denied that the match-attending supporters had been forced to bear the cost of the Glazers’ ownership through disproportionately steep rises in ticket prices.
“The previous seven years up to the takeover in 2005 it was 5.5 per cent increase [in ticket prices] year on year. The average now is four per cent. I would argue that four per cent is not much relative to inflation. When the Glazers bought the club it was the 19 most expensive ticket in the league out of 20 for the best product and we are now 7 or 8 [on a recent survey United’s cheapest ticket was the 12 least expensive]”
“If you look at the Kop prices they are about 25 per cent more than the Stretford End [Liverpool’s cheapest season ticket is £193 more than United’s]. We should be sensitive for ticket price increases, but hopefully you have seen in the last few years as we have developed commercial business, ticket prices have pretty much been flat.
“The blended average growth is four per cent. Two years ago when Liverpool put their prices up ten per cent, we were zero. I think they are fair prices. We sell out every Premier League game.”
United will benefit from the new Premier League television deal next season, which is pnds3bn over three years, and the sale of digital media rights. They will also begin renegotiating their kit supplier deal with Nike who have a six-month exclusivity period starting in February. Given that the original deal was done in 2001, it is expected there will be a significant improvement.
The club believe that there is much more scope to do sponsorship deals in the current market, to the extent that all that is holding them back is the speed at which they can train staff and open new offices. “I don’t feel like we are anywhere near base-camp,” Woodward said. “This [London] office is now full. We are ‘half-populated’ in Hong Kong. There is so much to do, it’s ridiculous.”
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