An interesting statistic hit the internet a few days ago. It cost Manchester United £820 million to assemble their current squad. At the start of the previous decade, when the Red Devils were holders of the Premier League having won three on the bounce, the cost was £238 million. The announcement of these figures startled readers, but given how the economics of football have changed in these ten years, they should come as no surprise. The only reason why we are talking about it is because the club does not seem to have gotten its bang for the buck with the players currently at its disposal. There are parallels to be drawn with another team that dominated for two decades before seemingly falling off the cliff; the mid-nineties Liverpool side.
On the face of it, United are in sound financial health. They announced record annual revenues of £627 million in September and were the highest-ranked English team in Deloitte’s Football Money League for the 23rd year in a row. Dig a little deeper and the picture looks a bit different. A lot has been made of Ed Woodward’s commercial acumen but revenues from that stream have been flat for four years now. The financial results of 2015-16 in which United became the first British club to record revenues of £500 million with commercial income rising an astounding £71 million, were the biggest feather in his cap. This increase was primarily due to the commencement of a long-term deal with Adidas and money that came in from businesses previously owned by Nike, their erstwhile partner.
The needle has not moved since then, either commercially or with match-day revenue, which has stagnated for the best part of a decade. It was their participation in the Champions League that saved their hide last year. The new European TV deal and UEFA’s coefficient ranking system delivered almost all of United’s overall revenue increase. With only Europa League football on offer, the club has estimated revenue to dip to £560-580 million this year. This provides the likes of Manchester City and Liverpool the opportunity to threaten the club’s hegemony over the Money League when it is next announced in a year’s time. With Bayern Munich and PSG poised to capitalize as well, the club could find itself at its lowest ever position in the rankings.
More recently, United have also announced first quarter results for the current year, revealing a 55.5% increase in net debt on the balance sheet. A sharp drop in the club’s cash reserves contributed to this and while the club’s capacity to spend will not diminish substantially, its appetite might. With every large-scale blunder in the transfer market, United could sink deeper into the mire and panic stations should have set by now in the boardroom.
It explains the dithering over a few million quid in Bruno Fernades’ transfer from Sporting Lisbon. With bids for James Maddison and Jadon Sancho seemingly to follow in the summer, the club is apparently trying to ensure that their prices do not get inflated. The hierarchy feel that they have paid over the odds the past few years, with selling clubs placing a premium on players only because the buyer was Manchester United.
Liverpool were in a similar situation in the years after they last won the title in 1990. While it is said that the club were not in a position to capitalize when the Premier League started, they still spent more money than most. The British transfer record for a defender was broken in signing Mark Wright. This was in 1991, when Dean Saunders was acquired as well for a club record fee. Big money signings continued for a few years with Paul Stewart, Nigel Clough, Neil Ruddock, Phil Babb, Jason McAteer, John Scales and another English record transfer in Stan Collymore.
Increasingly though, like United lately, the value on these signings were declining and Liverpool fell into the mid-pack, both financially and in stature. In the glory years, the big money delivered players the calibre of John Toshack, Kenny Dalglish, Mark Lawrenson, Peter Beardsley and Ian Rush. In 2000, Liverpool paid an eight-figure sum for the first time and got Emile Heskey. That sum was surpassed in 2004 when Djibiril Cisse joined for £14.5 million. Perfectly serviceable players both, but there was no doubt that Liverpool weren’t dipping into the same talent pool anymore. Even after serving a six-year European ban following the Heysel disaster in 1985, Liverpool only qualified for the European Cup in 2001. The intervening years were spent in the UEFA Cup, the Cup Winners Cup or at times, without continental football at all.
With the benefit of the global brand that they have built over the past three decades, Manchester United still have a few years before they could fall to those levels, but the red zone has been breached. In May 2018, Woodward claimed that playing performances did not have a meaningful impact on what the club could do on the commercial side of the business. Liverpool’s travails in the nineties, however, indicate how much results are intertwined with revenues and transfer decisions. If Bruno Fernandes does not hit the ground running, the noose tightens just a little bit more and slowly but surely, temporary positions become the new accepted reality.