Manchester United revealed figures on Monday which show that the club has accumulated an extra £140m in debt over the past financial year.
To be clear, this is an increase of around 50 per cent of United’s total debt, which now stands proudly at £384.5m.
At first, this looks bad, and from a supporter’s perspective it certainly is, but for the owning Glazer family this amount of debt is, in a way, an illustration of growth.
Outlined below in a succession of tweets, Sam gives more detail on the exact way in which the Glazers run the club.
Man United's latest financial report was released yesterday and the most important aspect of it related to our debt. Our net debt is now £384.5m which is up £137.3m from 12 months earlier. Our gross debt remains unchanged but the club's cash reserves have dropped over £100m… pic.twitter.com/ssLnIXuYwe
— United Peoples TV (@UnitedPeoplesTV) November 19, 2019
Put in a different way, the Glazers are able to distance themselves from this debt because, as is the stock market way, they aren’t “owners” of United in the same way that a man in the 18th century “owned” a horse and cart, which was his entire business.
In 2005, the Glazers became “majority shareholders”, not “owners”, of United, which effectively means that their role at the club is not architectural – predicated on agency, design, direction (like most businesses) – but more like a self-regulating process whereby an adequate level of market share yields a corresponding amount of windfall, occurring independently of the club’s everyday finances.
As no expert of economics, the way I simplify it is through imagining the Glazers as owners of a Bangladeshi or Chinese factory employing child labour: an organisation, ruled but not invested in by its owners, that exports to all over the world, that makes endless amounts of money through lining the pockets of important people, while on the inside of that factory there is misery and squalor.
Although this method works for cold blooded capitalists whose first concern is profit (the Glazers belong in this category), it is not the most effective way to run a football club – something that requires investment and a long-term plan to have a tangible effect on not just share prices but the actual people involved.
A parallel for this example often used is the Mansour family, the ruling dynasty of Abu Dhabi, who took over Manchester City in 2008. Since then, they have invested £1bn of their own money into the club, while in the same period the Glazers have taken £1bn out of the club as a result of their majority shareholder status.
The weirdest thing is that this £1bn accumulated by the Glazers is not in some big room, with each member of the family taking turns to dive into whilst wearing speedos. This money is all ones and zeros behind a screen. It just sits there, growing, accruing interest. Saucy, saucy interest, making those shares worth more in the long-term.
For a club seemingly in stasis, it must be remembered that the financial model on which it is built is… deliberately static – a self-regulating mode of production whose key strength is its ability to avoid marked devaluation through total allegiance to the stock market, thereby following certain rules about the directness and the extent of investment being made.
With all of this in mind, it is hard to be surprised to hear that, over the next few years, City’s overall net worth will begin to exceed that of United.
In other words, the model being pursued by the Glazers is not the most efficient one, and harks back to a Wall Street mindset that is now lagging behind the Asian markets in terms of dynamism and scope for growth.
Even from a capitalist’s perspective, what the Glazers are doing does not make sense.
Exclusive: Manchester City expect revenues of around £560m in 19-20 – which could put them level with United for first time in decades https://t.co/kevitb0HpR via @MailSport
— Mike Keegan (@MikeKeegan_DM) November 18, 2019
So, when you next wonder why United are in the state that they are in, remember that it is largely because of a conscious, deliberate financial policy.