Is Manchester United in Financial Trouble?

How does losing affect Manchester United’s bottom line?

Manchester United

Many expected Manchester United to struggle a little this season as newcomer David Moyes was brought in to take over the reigns as the legendary Sir Alex Ferguson walked off into the sunset. Despite a change in management, there is always an expectation to win, especially after winning the Premier League last season in Ferguson’s final year.

However, things on the field at Old Trafford have been worse than expected. United has stumbled and has yet to find any consistency as the boys in red try to adapt to Moyes new style of play, forgetting the old successful ways.

Besides their lack of on-field success, Manchester United currently (March 17, 2014) sit in seventh place, a near apocalyptic position in the table this late in the season for United due to their recent successes. If the season ended today, they would not qualify for either UEFA Europa or Champions League competitions next season. Not qualifying for either league (or both) could have major financial and other implications on the club.

In 2012-13, United took in £30 million in broadcast rights and prize money from UEFA just for making the final 16 in the Champions League tournament. On top of media rights and prize money, Old Trafford hosted a number of games in the tournament, which were sold out.  Combining ticket sales and revenue from those games, the total of Champions League revenue United received jumped to £42 million. If United made it to the finals of the tournament, they could have an estimated potential gain of £70 million extra.

Despite their horrendous Champions League start this year in group play, United advanced past the group stage but looks to be in trouble after a terrible opening leg against Greek opponent Olympiacos.

During the transfer window this season, United needed to make a move to drastically alter its struggling season, so it took on Juan Mata from Chelsea for a club record transfer fee for £37.1 million. This deal came as a surprise to most because it is not how Manchester United usually does business, but drastic times call for drastic measures.

Even with Mata pushed into the lineup, it has had little impact and United’s struggles are much bigger than just one player. Moyes will need to quickly stop the ship from sinking, as many players are considering jumping ship at the end of the season.

Players have started to become disappointed with the current state of the team and rumors have already started, adding fuel to the fire. Current Captain, Nemanja Vidic, has confirmed he will not return for another season at Old Trafford. Before Mata was put into the lineup, Shinji Kagawa was doing great things but has since be relegated to the bench and it doesn’t look like he’ll get off it. Another rumor is long time left back Patrice Evra, has been tied to heading back to his former team.

With all of these players possibly heading for greener pastures, United could be in trouble.

The timing might just be in the favour of United.  The upcoming off-season could be a blessing in disguise for United, who were season champs ago and currently hold two of the best strikers in the league and the game. Wayne Rooney signed an extension that essentially enables him to retire a red devil.

At the end of this season, automobile giant Chevrolet, owned by General Motors, will start its new deal to become the fifth Manchester United jersey sponsor in team history. Chevrolet signed a deal worth over $559 million over seven years. This will bring the club an extra $80 million a season, which is no chump change.

On top of the huge cash flow, Nike’s sponsorship of its massive 15 year shirt deal is set to expire in 2015 and the club recently struck another deal that is a world record in the range of £700 million for the partnership to continue.  The current deal with Nike pays United £23.5 million a season; in comparison Real Madrid currently owns the highest shirt deal at £31 million a season. With the new Nike deal, Madrid’s number is nowhere close with United’s deal in the £70 million a season range.

With all of the potential revenue, Moyes could rebuild United in his own vision. However, with United heading into a season without the Champions League, convincing world class players to commit at Old Trafford might be a hard sell.