The Financial Pressure Facing Moyes At Man United


As a follow on to last weeks article looking at possible managerial replacements at Old Trafford article and ahead of tomorrows important match against their city rivals, I’ve decided to look at just why David Moyes is under so much pressure at Manchester United.

Sir Alex Ferguson was given time to turn things around when he first arrived at United back in the eighties. The Scot went three and a half years without winning a trophy with Man Utd but then his side won the FA Cup in 1990 and then he couldn’t stop winning silverware.

But eras change, not many current managers are afforded that time to turn things around. Football is a huge global business now and its driven by results!

Manchester Utd are a gigantic global brand. They are on various stock markets and in 2012 they were ranked first by Forbes magazine as the most valuable sports brand in the world.

Owned by American family the Glazers, United’s standing as a global brand is vitally important.

As I said previously football is a results driven business but its about the financial results as well as the results on the field. Both actually effect each other and that is why Moyes is under serious pressure.

In late February it was announced that Man Utd’s share price had plummeted by 21.5 % since Moyes took over at the club. The teams lack of sprit, inspiration and creativity has seen the side drop to seventh in the English Premier League (EPL). Combine that with disappointing exits in both  domestic cup competitions and wretched results against major rivals like Liverpool, Man City and Chelsea and you can see why potential investors may be put off from ploughing cash into the red side of Manchester.

Its not all been bad though. The club have still done remarkably well with their commercial arm of the business. They are set to announce a world record £600m deal with Nike that will last a decade. In the summer they will also embark on a seven year sponsorship deal with General Motors thought to be worth around £48m a year.

The size and length of these deals are very important for Man Utd at this troubling time. It shows that companies still see them as a good long term prospect. That was also the case when US investment company Baron Capital bought up 2.5% of the clubs shares in the earlier in the month.

Baron stated…

“Shares of Manchester United dropped… due to a delay in the signing of a new global merchandise deal with Nike and the team’s poor performance on the field.

“The Nike deal is still expected to be signed, but has been pushed out from this fiscal year. We remain positive on the company’s prospects going forward.”

That statement highlights that the commercial side of Manchester United is still proving to be a strong pull for potential investors. But Baron also mentions that shares have dropped and results on the field have been key to that.

Manchester United are a long term thinking football club and business. You can see that with their sponsorship deals. That’s why they have given Wayne Rooney a long term deal. They believe such stability is a huge plus for the stock market and for potential investors. Ironically its why the club crowed about giving David Moyes a six year deal back in the summer.

But can they see him remain for another season, let alone six years, if he can’t climb the table and keep on doing well in the Champions League?

Say the ‘Red Devils’ finish in their current position, their EPL prize money would dropped by around £5m. Live TV money for the league would also drop. Then you look ahead to next term and there would be no Champions League money or the exposure you gain from being in it. Last season Manchester United pocketed £35.5m from the Champions League, that would be gone for at least a year.

The squad needs to be rebuilt and that comes at a hefty price. Moyes has already bought two players (Juan Mata & Marouane Fellaini) and they came at a combined fee of £65m, so you can just imagine how much they will need to pay for a bigger group of newcomers. Players such as Nemanja Vidic, Rio Ferdinand and Patrice Evra also look set to depart for nothing as their contracts are set to expire in the summer.

No doubt the shares would then drop again.

Now if United and Moyes show signs of improvement between now and the end of the season then maybe just maybe the Glazers will give him time. But should league results not improve and they fall out of the Champions League in the Quarter Finals against Bayern Munich, then the share prices may continue to fall and the axe will loom for David as the American owners look to a new manager that represents a better long term financial future for Manchester United.

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