When Sir Alex Ferguson decided to step down from his position at Manchester United, the news came across as a rude awakening for most of us fans worldwide. After having guided United from being a sluggish English club to one of the European powerhouses, Sir Alex had become synonymous with the club for most football followers around the globe. Even though every fan had been hoping for Ferguson to stay on the job forever, they knew secretly that the biggest managerial transition at the club was around the corner.
The appointment of David Moyes as Ferguson’s successor has been elaborately debated already. When Sir Alex addressed the home crowd in his farewell game at Old Trafford, he urged the supporters to ‘stand by’ their new manager, and so they have. It’s hard to imagine anyone as an outstanding candidate to take over from the ‘self-driven Scot’, and the support that Moyes has received from fans is more out of trust than confidence.
The massive change that Ferguson brought about at the club as United overtook their bitter north-western rivals in the race to the perch has become a classic case study for many football managers. The United faithful have placed him on an elevated pedestal and the amount of trust he has been bestowed with is perfectly justified. But to be candidly honest, there is some uneasiness among the supporters with Ferguson’s choice of Moyes.
“The search for a new manager has been very short. Alex was very clear with his recommendation,” Avi Glazer told the media following Moyes’s appointment.
It is quite obvious what inspired Sir Alex to choose Moyes ahead of other potential suitors for the job – his loyalty towards Everton FC and his ingeniousness to turn the Merseysiders into a formidable Premier League side. But the fact that Ferguson opted for someone lacking any European experience ahead of a possibly interested Jose Mourinho and a job-seeking Pep Guardiola does arouse suspicion.
Maybe it wasn’t Ferguson’s individual call the way it has been made to look like. Moyes is perhaps one of the best around when it comes to functioning with a low budget; it could well be a collective decision by the owners which was sold to the fans by associating Ferguson with it.
Ferguson’s rather vocal support for the club’s American owners has often been criticized strongly by supporters’ associations. The Glazers started working on the club’s takeover in the wake of the fall out between Ferguson and J. P. McManus (along with John Magnier), when the latter tried to remove the Scot from his managerial hot-seat to gain total control of the club. Glazers’ takeover bid, financed by loans from three American hedge funds, not only ensured that Fergie continued on as the manager but also riddled the club with a staggering £660m debt.
The Glazers takeover, amidst widespread resistance by the Manchester United Supporters’ Trust (MUST), proved to be a win-win situation for both Ferguson and the new owners. While the Scot was allowed to keep his job, the Glazers were often publicly endorsed as ‘great owners’ by the United boss. It has been evident that the American owners have rarely interfered with Ferguson’s decisions, giving him full authority over transfers, youth policies, scouting, backroom staff, training facilities, etc. Hence, it is only logical that the new Director of Football at the club had nothing to complain about the Glazers even though the debt kept spiralling upwards.
“The Glazer ownership is a particularly difficult issue for supporters; they can appreciate Sir Alex’s position as an employee and wanting to get on with his job, but many feel he goes too far in his praise and the most recent comments shocked even some of his staunchest, most loyal supporters.” – Duncan Drasdo, CEO of MUST, in response to Ferguson’s remarks back in 2012.
But Ferguson’s backing of the owners was not entirely misplaced. Manchester United have been placed at number 2 in the wealthiest football teams list by American magazine Forbes with a valuation of US$3.165bn, only behind Real Madrid. Arsenal are the only other English team in the top five with a net valuation of US$1.326bn.
That said, while the growth of MUFC as a global sports brand has been utilized effectively to refinance a significant percentage of the debts, the truth remains that close to $800mn were lost in doing so, which won’t ever come back to the club.
As opposed to the popular myth of Sir Alex being provided with a bank to break for transfers, a recent study by The Telegraph showed that Manchester United have spent a net amount of £11.4mn on transfers in the last decade. According to the survey, recently relegated West Ham as well as Bolton and Wolves have spent more during the same period.
David Moyes, having already worked with a tight budget at Everton, has all the experience to find optimal results with minimum funds. The fact that Moyes never stood up to Kenwright’s rather suspicious running of the club is incentive enough for the United owners to appoint him; he would not publicly chastise the owners for lack of funds nor would he quit on the biggest job in the football world for the same. Moyes has been appointed as manager for being the safest choice, not the best.
The club David Moyes takes charge of is vastly different to the one Ferguson took over back in 1986. Unlike his time at Everton, he would not have to worry about anything else but churning out results week in week out. With a state-of-the-art stadium, world class infrastructure and an intensive commercial strategy in place, Moyes needs to ensure that the club does not lose out on its brand worth by maintaining its competitiveness in England and beyond.
The business MUFC have done through lucrative sponsorship deals by tapping into various markets in different countries has gone a long way in recovering most of the debts. The official website of the club lists 34 sponsors from across countries like Japan, Cambodia, Azerbaijan, Bulgaria, Hong Kong, Middle East, Malaysia, Central Africa and others. Alexa lists the club’s official website in sixth position among football club sites with an average of 62 million views per month; notably higher than those of Liverpool, Arsenal, Chelsea, and the rest.
It is obvious that the global market is not static and if the club goes without a trophy for more than a couple of years, that might start to affect its revenues considerably. The huge population of United fans in Asia provides a huge market for the club in this continent. But prolonged periods without a trophy would only mean the newer fans shift their allegiance to the likes of City and Chelsea, thereby significantly denting United’s foothold in the Asian continent.
Following Ferguson’s retirement, the shares for the club initially suffered a dip from $18.77, but recovered back to $18.44. However, the transfer inactivity and the potential sale of Wayne Rooney seems to have affected them already, as a single share is now priced at $16.67 in the NYSE.
The Glazers face the possibility of losing what they have achieved so far if they adopt a pro-defensive stance in the transfer market. The current debt of the club has come down to £308.3m and the yearly interest to be paid is also not as high as it used to be. However, in an attempt to clear off the debts at the earliest, if the owners compromise their transfer budget, it could only affect their operating income and revenues.
These are testing times for the club; if Manchester United survive this and successfully repay the remaining debt amount, they would be a financial superpower in the world of football. On the other hand, there is an equal chance of things going horribly wrong and the club being forced to find a new set of investors.