Neville Wells- 24 November 2010

This has been a year of financial turmoil in English football, with Portsmouth going into administration and Liverpool no more than a day away from a similar fate.

However, what we have witnessed so far will pale into insignificance if the worst case scenario comes to pass. The financial situation at Manchester United is desperate and failure on the field could soon lead to failure off it.   

Leeds gave us a glimpse of the future when a huge overspend was not reflected in results and failure to qualify for the Champions League pushed them into financial meltdown. In just 6 years Leeds went from Champions League semi-finalists to the third tier of the English game playing the likes of Crewe Alexandra and Leyton Orient. One of the greatest teams in English football history had fallen to such depths that despite regular crowds of over 35,000 they are still far from favourites to win promotion back to the Premier League.

In years to come when historians start to reassess the current global economic crisis they may well decide that rather than the collapse of Merrill Lynch and Bear Sterns in October 2008, the crisis actually dated back to the Enron scandal of 2001. Enron was a warning that was not heeded. Self-regulation or regulation by interested parties simply does not work. In the same way historians of football economics may one day recognise what happened to Leeds United as the precursor of the 2010 Premier League crisis and that the Premier League’s Fit and Proper Person test was an equally lame form of self-regulation which basically allowed anybody who had lots of money, or perhaps more importantly anybody who could borrow lots of money, to own a football club.

On 26^th February 2010, with debts of 135m Portsmouth became the first Premier League club to go into administration just 15 months after winning the FA Cup and a place in the UEFA Cup for the first time in the clubs history. The 2009/10 season also witnessed an escalation in the protests of Manchester United and Liverpool supporters against the owners of their clubs. Both sets of supporters were protesting against the fact that their owners had actually used the clubs themselves as security when raising the money to buy the club. With the burden of huge interest payments it was clear that both clubs would begin to struggle in the transfer market and that this would affect their ability to compete. The Liverpool situation has at least been temporarily resolved by the sale of the club to new owners forced through by the major creditor the Royal Bank of Scotland. However, with Liverpool struggling to recapture their form of the 2008/9 season and currently struggling in mid table it remains to be seen if the drama on Merseyside is over. The new owners have paid off the debt but as yet it is unclear how much they will invest in the club. If immediate investment in the squad is not forthcoming it might take many more years for the club to re-establish itself as one of the giants of European football.

So that brings us to Manchester United. The club has dominated the Premier League since its inception in 1992/93 winning the title 12 times. During the same period they have won the English FA Cup 4 times and the Champions League twice. No team has done more to turn the English Premier League into the global phenomena it is today. So what could possibly go wrong? The sale of Ronaldo back in the summer of 2009 was a taste of things to come. At the time most people justified the sale because of the huge amount of money it brought in. It soon became clear however that the proceeds of the sale would not be reinvested in the squad.  With the club over 700m in debt and the owners’ other business interests suffering as a result of the recession the money was needed to help towards balancing the books. Since then the situation has gradually got worse. After three titles on the run in, 2008/9 United had to settle for second place behind a far more attractive Chelsea team. The old backbone of the squad, Scholes, Giggs and Neville, is still there but cannot be expected to go on much longer; it is a measure of United’s desperation that they are still relied upon so heavily. Although Liverpool have been in decline and are no longer in contention for a top four spot, Tottenham and Manchester City’s arrival on the scene has made competition for the four champions’ league positions fiercer than ever.  

Last month we witnessed the farce of Rooney’s transfer negotiations. It appeared for a while that he was set on leaving the club with Rooney citing United’s lack of high quality signings as a reason.  Then all of a sudden a new 5 year contract was being signed and Rooney had the pay raise he was demanding. Player power had won out and perhaps United’s situation was not as dire as we had supposed. But the new contract was as much for the club’s long-term financial security as it was for Rooney’s. With less than 18 month’s left on the old contract Rooney’s market value would continue to drop. The new contract assures the value of the club’s asset but doesn’t mean that they won’t sell it, after all Ronaldo was sold not long after he signed up for another 5 years.

For the last few years United fans have been taking the attitude that the ownership of the Glazers is a ‘problem waiting to happen’. Rooney’s exit when it happens will accelerate its manifestation. If Rooney were to leave, the club will lose the only really world class player they have left after the departure of Ronaldo and then Tevez. Despite his terrible form this season, Rooney’s presence is still vital if they wish to continue to attract first class talent and although he has so far failed to contribute anything to the team this season it seems that without him United are going to find it very difficult to get a place in the top four at the end of the season: Chelsea are still strong; Manchester City have spent too much money to fail, Arsenal don’t look great, but they do seem to have more edge than they did last season, and Tottenham have built on last year’s success and added Rafael van der Vaart to an already powerful squad.{jcomments on}

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