Tuesday, 20 July 2010

Warning, debt can seriously damage your core support

Yesterday, on the same day they announced the signing of Joe Cole (a “good day to bury bad news”?), Liverpool FC slipped out a juicy little press release about ticket prices for members (of which I understand there are around 15,000 available per game). The gist of the statement is that prices for 2010/11 are rising by a blended 10.6% for the Kop and 10.1% for the other three stands and that’s prior to the impact of the “progressive” VAT rise in January.

Having previously operated on a “Category A” and “Category B” system, LFC have now added “Category C” on the following basis:

Category A games for the 2010-11 season include: Arsenal, Chelsea, Everton, Manchester City, Manchester United and Tottenham Hotspur
Category B games for the 2010-11 season include: Aston Villa, Blackburn, Bolton Wanderers, Newcastle United and West Ham United
Category C games for the 2010-11 season include: Birmingham City, Blackpool, Fulham, Stoke City, Sunderland, West Bromwich Albion, Wigan Athletic and Wolverhampton Wanderers

Although the price rises vary by category, the message is clear, Liverpool are joining United in the debt driven game of pricing out their core working class support. The Kop now has the dubious privilege of being more expensive than the Stretford End which, when you consider the relative quality of football, is a true injustice.

LFC are in real financial trouble, something it actually gives me no pleasure in writing. In the last accounts (2008/09), the club reported EBITDA of £35m and interest of £40m. The dream of a new stadium was screwed the moment the credit crunch hit, leaving the business enormously overleveraged. Despite a valuable new shirt deal with Standard Chartered, the loss of Champions League income will inevitably impact the top line this season. That leaves Chelsea supporting Chairman Martin Broughton scrabbling around for other ways to boost revenues.

In 2008/09 LFC generated £42.5m of matchday revenue from 27 home games at an average attendance of 42,728. That’s £28.74 per occupied seat. The equivalent figure for Old Trafford is £39.58 per seat and for Chelsea £52.72. With the club up for sale and in dire need of new equity investment, yesterday’s announcement (plus the previously announced 4.6% increases in season ticket prices) look like being just the start....

So now we have the spectacle of both of England’s most famous and successful clubs screwing their core support to pay the debts of unwanted speculators. All the while the Premier League and Football Association stand around being “ownership neutral”. Is this truly the “Best League in the World”?



Anonymous said...

Naturally, of course, you will get loads of Glazerites pointing out tickets at both OT and Anfield are cheaper than Stamford Bridge, ignoring issues of available seats and core support income levels.

RFR said...

Sad times indeed.
I have a few mates who are life-long Liverpool supporters and they know we're in the same boat. A red, white and blue boat that's very close to sinking.

On another note, I love that you couldn't resist a jibe ;-)

"The Kop now has the dubious privilege of being more expensive than the Stretford End which, when you consider the relative quality of football, is a true injustice."

Patrick said...

Who are the Red Knights
Led by football financier Keith Harris, Red Knights have no chance of buying England's biggest club
But when it comes to pulling strings in takeovers, lifelong United fan Harris is almost always quoted.
QUOTED ... Keith Harris In fact, if you Google his name alongside football you will get 84,000 search results in under a second.

Jim O'Neill is head of global economic research at investment bank Goldman Sachs. A close friend of Alex Ferguson, he was briefly on the United board
Mark Rawlinson is a senior partner in law firm Freshfields Bruckhaus Deringer. He was an advisor to United during the Glazer takeover five years ago
Paul Marshall is co-founder of one of the City's most influential hedge funds. Then there's Richard Hytner, another high-flier, who is deputy chairman of Saatchi and Saatchi's global company.

Each of them have two things in common: They are United fans but don't have anywhere near enough money to buy out the Glazers.

Their grand plan: To find 40 rich United fans to chip in £20million each for a takeover.
Simply find, recruit and persuade JUST the 40 to spare that in the middle of the worst recession for 50 years.

Has the debt not dropped from £538.1m to £507.5m?

But that's OK, as long as Harris gets a chance to promote himself as the Svengali of football takeovers.

He was involved in Randy Lerner's Aston Villa buyout and Thaksin Shinawatra's at Manchester City. More recently, he failed to find buyers for Everton and Newcastle.

This is not the first time he has claimed an interest in United - it's the third.

So what are the chances of him leading the club out of the Glazer era to a promised land?

Well, let's just say the Red Knights are more likely to turn out to be Red Dwarves

patrick said...

Last summer, £20m went on Valencia and Gabriel Obertan, while the outlay 12 months on currently stands at £19m, for Hernández and Chris Smalling

So thats 39 Million spent on New Players in the last two transfer windows correct?
People i dont know think that 39million is a small sum of money maybe it is but to me thats a hell of a lot of money spent on People/players and then wages and agent fees on top no doubt
I am Prepared to wait see what happens this season with what seems to be club Policy of Using young players in the side instead of Million pound Transfer fees.Sure did we not do the same thing back in the the early 1990s?

UTID said...

@ Patrick
Let's forget the sales then so.

Even ignoring Ronaldo out for 80m, there was also Foster out for 6m, Tosic out for 7m, Campbell out for 6m.

Taking these into account there is very little net investment in the team.

Where are the much needed replacements for VDS, Giggs and Scholes?

Anonymous said...

Bravo Anders. Another amazingly well written article. Keep em' flowing and lets break this Glazer strangle hold.

Btw, are you keenly following the Man Utd pre-season games? In your humble opinion where do you think this squad rates compared to our past great teams, and will we win anything this coming season?

Anonymous said...

Sir Alex will be pulling out all the mind games books , not on opposing managers but on all these young lads to go out and learn as they go, no doubt the talent is there, they wouldnt be Manchester United players as it is.

And in the twisted world that is football, when nobody,really wanted Joe "best player in the world in his own mirror" Cole and he going for the coins at Anfield.

These two boys (http://www.guardian.co.uk/football/2010/jul/20/franck-ribery-karim-benzema-police) so heavily linked, Ferguson may by being forced or by his sheer knowledge and feeling of the market place have dodged 3 big bullets in two days.

Got to trust him dont we ?

UTID said...

"Has the debt not dropped from £538.1m to £507.5m?"

No, that is old information from the Q2 results.

As at March the debt (excl PIKs) stood at £520.9m,

The only reason it is down is because there was a drawdown of £25m on the revolving credit facility in 2009 (see p10 of Q3 report). This drawdown is not here in 2010.

Anonymous said...

So we are going the Liverpool way, that is what you are insinuating? Now that we are on par in terms of league's won, we will be bankrupt tomorrow and fold the day after. Btw I was at that opening pre-season game, so have to say one thing, the new shirts are a hit!

andersred said...

Hi Anonymous at 20:16,

Was that question aimed at me? If so I think you missed the point. We are not going the Liverpool way, Liverpool are going the United way (when it comes to ticket prices)...

Were you at the Celtic game? Not sure what point you're making about shirts to be honest. "People wearing new replica shirts at pre-season friendly shocker". Not much of a headline....


Patrick said...

Anders perhaps you could explain the world of football transfers for me/us.Take the Ronaldo transfer from us to madrid.Was that 80 million paid directly in one transaction or is it spread out over time.And what would the the normal Procedures be?When is the Q4 results out?

The Red Devil said...

@RFR -
"On another note, I love that you couldn't resist a jibe ;-)

'The Kop now has the dubious privilege of being more expensive than the Stretford End which, when you consider the relative quality of football, is a true injustice.'

Football is, in my opinion, overpriced across the board but I am glad that Anders has finally acknowledged that sides playing quality football and challenging for honours every season are perfectly justified when they charge their fans a higher price than the rest.

Anonymous said...

Were you at the Celtic game? Not sure what point you're making about shirts to be honest. "People wearing new replica shirts at pre-season friendly shocker". Not much of a headline....

Definitely a shocker seeing MUST's and many others call for a boycott of the new shirts. So the season ticket boycott didn't really work, and it looks like neither is the shirt boycott.

And basically, we should have low priced season tickets, no debt and the best players in the world. Anything else as this really looks like a feasible business model.

UTID said...

@ Patrick
It is well documented that the Ronaldo money was received in one go.

A simple google search would tell you that.

Of the £80m, £25m went to repaying the revolving facility talked about above, making it look like the debt is down £25m.

The rest went into cash.

Full Year results have to be out 60 days after year end - thus end August.

andersred said...

I take that to be a "yes" to being at the Celtic game. Lucky you.

United don't make anything from shirt sales, it goes to Nike so who cares anyway?

What does your last sentence mean?


Patrick said...

could you give me a link to the Glazers orignal Business plans from before or shortly after.

Patrick said...

could you give me a link to the Glazers orignal Business plans from before or shortly after takeover.

Anonymous said...

Anders previously gave you a link for the 2006 plan.

Nothing back from you on it since.

Why do you keep asking for the same stuff over and over?

fattmatt said...

'United don't make anything from shirt sales, it goes to Nike so who cares anyway?'

April 2001 from the BBC web site

'The club credited partnerships with firms such as Nike, which has signed a £303m sponsorship and merchandising deal with the club, as a model for securing future success on and off the pitch.'

November 2000 BBC web site
The agreement starts on 1 August 2002 and will run for 13 years, althought Nike will have the option to end the arrangements in 2008.

If it is still binding then the Glazers must be willing to wait for the next windfall, could pay off a huge chunk of debt.

Who would be willing to let go of a business if they know there is a pot of gold to be had in the next 18 months

patrick said...

Na sound Found it again on the laptop the plans projections seem to be on track give latest reports.Would you sell the only part of your family business that makes serious money and prevents other parts of it from going under.Think not and not if your only going to make 120 odd million when everything is paid.

Anonymous said...

@ PATRICK ...re:"when everything is paid".Paid by using whose money ? Manchester Uniteds own cash?!

patrick said...

Thats is what is left if the RKs takeover Happens and all theGlazers debts are paid.They walk away with around 120m for the troubles

patrick said...

Maybe I am wrong with the post above but open to correction from Finance Wiz kids

Anonymous said...

18 months? 13 year deal ends in aug 15. It is now jul 10. Please do the maths again on your 18 months.

Anonymous said...

United don't make anything from shirt sales, it goes to Nike so who cares anyway?

So why call for a boycott?

As it stands, if Man Utd keeps increasing seasonal ticket prices it should not matter, as most people will be heeding this boycott warning. If you do not require something, then whatever the pricing should not matter. This ticket pricing becomes an issue only when the boycott is deemed to have failed. The way it looks is the boycott has failed hence the hullabaloo regarding pricing.

fattmatt said...

Sorry I should have checked my maths. 2015 does seem a long way away to predict what the Glazers are upto in their accounting.
I seem to remember that 2015 is a significant point mentioned before, maybe the renewal of the Nike contract is part of their repayment plans.

Anonymous said...

Another thing, because one cannot support the current strategy of MUST and the RK's (which is laced with personal interests), why does one have to automatically be considered pro-Glazer?

When a feasible alternative to tackling the debt (and excluding all traces of personalized attacks and business destruction) is put forward, there is a very real likelihood many of us will support it. But to simply have a strategy of so many messages, with a singular theme of personalized attacks and business destruction is no way to go. Maybe those of us who sense this are in the minority and hence no reason to hear us.

andersred said...

Right, I've had enough. This is getting chaotic!

1. Enough "Anonymous" posting, I'm going to turn that off. Sorry if that's a pain but I can't possibly work out who is who. Anonymous at 00:26 starts off saying "Another thing" as if we all know what his/her first thing was....

2. Could I ask people not to go rambling over the same points again and again. It's not a forum, it's a blog. Comment on the blog post by all means but don't just turn up and start banging on about your own theories about the Red Knights. With all due respect it's unlikely there is much new to say that hasn't already been said.

3. I am not MUST, I'm not even an elected official. I advise them and (sensibly enough) they sometimes take my advice and sometimes don't. If people have a problem with something MUST have said about, for example, replica shirts (a subject about which I do not care one little bit), go and speak to them.

4. This is not some sort of civil war. People have different views, but we're all reds. Chill....

Right, I'm off to change the comment settings.


Anonymous said...


andersred said...

Nice one....

I'm giving up for the night!


Anonymous said...

Anders, man you should definitely take some more vacations. Your thinking is a bit more open-ended and it makes the conversation easier to debate on.

I'll say, some of the reader opinions get a bit to hooliganistic in nature.

I think it is going to be a good season at MU. We've seen quite an unfreezing in international business and credit markets, and some level of confidence returning overall. The problem is not MU increasing ticket prices. It is a mix of depressed wage-levels (esp in the West), and increasing inflation concerns. Would you think that had the very real concern of deflation set it we would be having a conversation on ticket prices today. MU's wage structure is just about to go up another notch within the next few weeks. When you think of it, an average of 40quid per head can equate to about 240 quid a month for two people (assuming attending an average of three games each a month and selling the remaining game tickets off). It is not that bad. Liverpool's trouble stem a lot deeper. First off the two clowns are eerily similar to our days with Cubic, however, we had it better. And besides look at the investments that have been going on at Liverpool in terms of the squad, what they have won in return, and the power struggles. We've invested less, built an amazing youth program, won more, brought some stability (ie Cubic days), and remain the biggest sports franchise. Baring another black swan event in the medium term, I'd rather focus on the debt then be in Liverpool's position.

Patrick said...

Have to agree with Anders
Its hard at times to know whoyou are talking too with all the Anonymous said stuff
Thankfully that has been resolved

Patrick said...

Another 1st team regular namely Nemanja Vidic signs what is being described by David Gill as a long term contract and silences any doubt over his future and gives the club and fans a real boost by holding onto another world class talent and with wayne also expected to sign another long term deal.Great News and fair play to Sir Alex,and Gill for there great work

Patrick said...

Manchester United are to place 4,000 season tickets on general sale, despite resisting a proposed supporters’ boycott by breaking the 50,000 mark earlier this week

Okay yes a small blow to the Glazers that 4000 season tickets went unsold however looks like 50000 season tickets have beeen sold so it dosnt appear to be any kind of big victory for the people who were calling for a boycott
50000 renew or new season ticket holders compared to 4000 which will now go on general sale and will more than likely be sold

Patrick said...

On the Topic of 50000 season tickets sold and 4000 going on general sale and which more than likely be sold we have this statement from MUST

MUST chief executive Duncan Drasdo said: 'This is great news for fans in terms of the balance of power shifting back towards them

Can someone tell Duncan how on earth the above represents good news for his side of the debate.50000 fans have shot down any talk of a boycott and he calls it great news,I would hate to see what his version of excellent news is then

Then we have news from Forbes saying that we are still the most valuable sporting club in the world valued at $1.84bn (£1.2bn)


UTID said...

@ Patrick
Try and spin it whichever way you want.

At the end of the day, 4k less season tickets have been sold and any waiting list no longer exists.

If you think that's good for business, then good for you.

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