Manchester United Message Board
Firstly, congratulations for an excellent season. That stuck in the throat.
In all honesty no team stays top four forever. Utd and Liverpool owe 700 million plus.
What would happen if they dropped out of the top four one day, with all that debt?
Would the banks be prepared to lend more to get them back in?
Are Utd and Liverpool in a vicious circle of borrowing to maintain their position, for fear of the consequences otherwise?
Take this year, buy Tevez or buy a replacement, that's another 30 million. Liverpool may make one more push for glory and stretch those credit cards. What is the limit 1 billion pounds?
Utd or Liverpool bust it could never happen !!!???
Of course it could happen, but I just don't see it as being realistic, at least in the near term. Many on here would say its more likely to happen to Liverpool as we don't generate as much revenue (from stadium or overseas sales), but we also have smaller debt, so I'd say the clubs are about even on the so called risk.
Most always point to Leeds, or what might happen to Newcastle if they go down. Huge player costs, huge loan servicing costs, and a drastic reduction in revenue due to no European Money.
But lets get some facts out there. First how much is the TV money from CL? To be honest if it went away it would hurt, but could easily be covered by reducing cost elsewhere. Most likely its a reduction in the transfer budget. This might make the clubs less competitive, but realistically its not likely to spell relegation or even anything close.
Second, both Leeds, and Newcastle today have been badly miss managed. You might argue so have Utd and LFC which has led to the debts, but the fact is both clubs rightly or wrongly are run by sports businessmen who put business before football. Yes they've used debt to grow the clubs, but go find me a major business that does not use debt? Debt is a fact of life, and unless you've never used a credit card, never made payments on a car, or taken out a mortgage you'd understand that.
I don't like my club being in debt, and I doubt many mancs do either. But I don't see the debt as being dangerous if managed, and if its used to invest in the club, by financing stadiums, or other facilities, it can actually be a useful tool to help grow the long term future.
- 2 Replies to dsteer_lfc_68
The thing you leave out, Dave, is the onerous burden of player wages as a percentage of turnover. I know Gill has maintained that United must keep the wage bill at or below 50% of turnover. The upshot of this, taking the ever-increasing wage demands into account, is that key players like Vidic and Evra who presumably will be looking for parity with the likes of Rooney or Ferdinand maybe moved on to other clubs, and replaced by younger up-and-coming players on considerably less money in order to meet the 50% target.
United's investment in youth means they can probably make this model work, but it will be hard on fans having to see some of their favourite players on the move after a few seasons.
Is you credit card analogy valid? I presume you are paying off more than just the interest on yours, Dave?
The other factor is that utd and liverpool are big names and if their owners should go bust it shouldn`t be too difficult to find a buyer - even if they drop out of the top four. In a strange way if they dropped out of the top four it might actually be easier to find a buyer as there seems to be quite a few mega-rich people out there who are attracted to the idea of rebuilding a club rather than taking over an already successful one.
I hope this scenario never happens. But fans of Utd and Liverpool don't worry about things like that, they will always want more and more players whatever the cost.
Lets face it we hope it will never happen. Go on holiday and stick our heads in the sand.
Liverpool would be hit worse by a period of time out of the top four.
No going bust is not impossible. Lets say Chelski reinvest, City buy success, the Arsenal youth do the business, and another team gets a rich backer, suddenly the top four is not such a dead cert.
Out of the top four that debt would seem immense, and who would lend a club money to get back into the top four, who already were well in debt? I wouldn't.
I can see a scenario where it could happen.
At the moment the brand of both teams would protect them but that's only whilst the revenue from the TV is there. Take that away and your looking at organisations with huge debts and massively reduced incomes.
Utd are safer as they have the bigger gate receipts though.