Manchester United were going ‘bust’ - so how will they build a £2bn stadium?

United’s plans to build a new stadium to replace Old Trafford, revealed by Sir Jim Ratcliffe on Tuesday, raise one key question

It’s the sort of bounding leap that Sir Jim Ratcliffe would probably prefer from his Manchester United players. On Monday evening, the billionaire was talking about how the club “goes bust at Christmas”. The next morning, he was announcing a new £2bn stadium. There was barely time for the headlines to breathe, such was the speed of it.

If nothing else, it’s quite the juxtaposition. One day, you’re discussing the necessity for punishing frugality, that Ratcliffe himself described as “brutal” and “unpleasant”. The next, you’re announcing the most ostentatious stadium project ever seen in British sport.

None of this is to say the finances can’t work, of course. That’s also where the big questions are.

Tuesday’s announcement was full of detail on the brighter lights of the project, the commercial opportunities, the fact the design is “inspired by the red devil's trident”.

There’s much less detail on the actual funding. Chief executive Omar Berrada did say “there are lots of potential investment opportunities.” More conspicuously, Ratcliffe himself mentioned how the timescale “depends how quickly the government get going with their regeneration”.

It does raise one key question - was this a pitch, as much as an announcement? Was it a PR move?

We await more substance, like construction. This could be magnificent, of course, but we can’t really say that with confidence yet because there are so many questions. The only certainty really came from what they’re going to do, as they finally announced they are going to build a new stadium rather than refurbish Old Trafford. There was very little on how, though.

It is also important in the wider context, as well as regards those comments that came on Monday.

Is the club’s situation as bad as stated? Some well-placed financial sources insist it’s “well wide of the mark” to say they could have gone bust, even if it’s clear they have huge issues.

The club still has impressive cash generation and the highest EBITDA (earnings before interest, taxes, depreciation, and amortization) in England. It should simultaneously be acknowledged that the cash balance at the half-year would have been only £15m without the £80m injected by Ratcliffe this season.

But, as one prominent political figure starkly put it, “he’s the billionaire”.

The question remains how much of this is going to come from public money, when the project eventually gets off the ground.

How much additional revenue will be generated? How much from corporates? What are the implications for ticket prices? What will be the events revenue? How much can naming rights possibly be? How much is needed from capital markets, in terms of debt or equity?

If there appears a disproportionate emphasis on finance here, it is only in-keeping with the announcement itself. As many United fans have already noticed, there’s a lot of focus on commercial opportunities, and the promo had many visualisations of retail space and giant screens.

A conceptual image of what the new Manchester United stadium and surrounding area could look like (Foster + Partners/PA Wire)

(Handout via REUTERS)

There was no visualisation of a new Munich tunnel, or where the Munich clock might go. These might be elements they look at later, and that’s fair, but it does potentially say something about priorities. This is the historic culture of the club. It matters.

Along the same lines, United fans have commented to the Independent that they don’t want any “New Trafford” to be at the expense of atmosphere or the matchday experience. These are points that were echoed by the Manchester United Supporters’ Trust (MUST), who said “fans remain anxious about what it means and what the consequences will be”.

A statement from the trust said: “Will it drive up ticket prices and force out local fans? Will it harm the atmosphere, which is consistently fans’ top priority in the ground? Will it add to the debt burden which has held back the club for the last two decades? Will it lead to reduced investment in the playing side at a time when it is so badly needed?”

As regards the most obvious, and what the new stadium actually looks like, that’s almost a matter of perspective. Once it’s explained, the idea of the devil’s trident in a structure that evokes Manchester’s architectural landmarks as well as its industrial history is nice, and fitting.

That’s if it’s explained, though. Without that context, you could be forgiven for thinking it looks like a circus top. Many will no doubt make their own leap there.