Friday, 22 January 2010

More on Carrington

A good source tells me that the building work on United's Carrington Training Ground (including landscaping, access roads etc) came to over £5m (we're talking late 1990s, early 2000s). It made me wonder whether the value I estimated for a sale and leaseback of £15m in my debt analysis is too low.

I dug around a bit and found the Manchester United plc presentation to the City on 1 October 2001 (full year results for the year to July 2001) which you can download here for a trip to a more innocent time.

On page 31, the club show all the capital expenditure since the club floated. The cost of building and fitting out Carrington (which will include land purchased etc) was stated as £15.8m. On page 17, the club showed its estimate of the projected costs for the year to July 2002 (£5.7m). I assume that was the final year of work.

So that's a total spend of £21.5m on Carrington. This tallies quite well with a build cost £5.2m on the actual structures.

So my estimate of £15m was far too low. It seems likely that £30m+ would now (8 years on) be a more sensible figure, perhaps even more.

Why does this matter?

Because this is a new fixed cost being dumped onto the club. They'll be rent of £2-3m to pay every year (that's half a Serbian wunderkind). To which we have to add the £45m of bond interest. And the management fees. And the "expenses". And the dividends to the parent companies.

Final point: when someone says "oh the plc was just the same", remember this, the plc built Carrington. Yes I'm sure it made good financial sense to develop the training ground but fundamentally they did it for footballing reasons because the football club needed state of the art facilities. What have the Glazers ever built for our football club?