(1/22) A big topic lately is if #MUFC need an owner with ‘super wealth’, like Qatar, or if the club could get back to the top if owned (indirectly) by one of the wealthiest individuals in the UK, Sir Jim Ratcliffe. The answer is given in this 🧵.
(2/22) But wait a minute, some will say, we do not know what a SJR ownership will pertain. Some details about his bid are known, but it is true that others aren’t. However, looking at what we know and the context, filling in the blanks shouldn’t be impossible at this point.
(3/22) So we will start at looking at how much MUFC can spend today, we will then look at how much we could spend if we are bought by SJR, and lastly we will contextualize that by comparing it with our rivals.
(4/22) So, how much can we spend if the Glazers remain in charge? Any forecast must include that we sell players in the future. In this scenario, it is assumed that we sell Maguire, McTominay and Henderson for 60m. It is also assumed that we finish top 4 the coming two years.
(5/22) This gives us the below app. prediction. What does this mean? It means that we can incur additional – costs -- of £70m this summer, and another £65m next summer. What are the “costs” of buying a player?
(6/22) The cost of a signing is (a) the transfer fee / length of contract + (b) salary. A transfer fee of 100m for a player on a 5 year contract at 250k a week, costs £20m + £13m = £33m/year. This would mean that we could sign 2 expensive players per summer the coming two years.
(7/22) But wait, aren’t everyone saying that armageddon is near and that the Glazers must sell? The above scenario is assuming we finish top 4, and do fairly well, that is at least 60m xtra profit. It also assumes that we manage to sell Maguire, Henderson and McT.
(8/22) If we would -- not -- finish top 4, we would have to sell just to be licensed for the EL. And so far, we are not calculating on – any – infrastructure investments.
(9/22) Now we have established where we are at with ETH magic and no #GlazersOut. We could remain competitive, but not invest in the infrastructure. So what would happen if SJR buys us? A new owner would definitely have some positive effects by itself.
(10/22) In addition, we know that SJR would move Glazer’s debts to an Ineos entity. Hence, we assume that that sponsorship, commercial income and ticket price increase 10% the first year and 5% the second year after #GlazersOut.
(11/22) That gives us the below result. This would basically enable us to spend around 500m on transfers a couple of years in a row under the new FFP regulation. But, we are still not calculating on any of the necessary infrastructure investments.
(12/22) So what is the cost of building a new stadium and update Carrington? The cost for Tottenham Stadium was 1.5bn, but that also included the purchase of land in London. The numbers mentioned in the Glazers’ projection is 2bn for a new stadium and 1.5bn for renovation.
(13/22) Assuming that includes renovating Carrington, how could this be financed? A new stadium creates additional income, of which some can be ‘cashed in’ early in the project, like certain leases, naming rights, subsidies from the community (you create a lot of jobs) etc.
(14/22) Assuming this amounts to 200m, a remaining 1,800m must be loan financed. The cost for interest and amortization over 15-year loan is app. 175m per year. How much would the new stadium increase revenues? For Tottenham, the …
(15/22)…gain has been almost 150m per year. But they increased capacity with 25k and brings big income from hosting the biggest events in London. I think a truer number for #MUFC would be 75m per year.
(16/22) That leaves us with a yearly cost of 100m per year over 15 years. Since this does counts as a ‘Relevant Investment’ in relation to the FFP, it doesn’t impact our ability to spend in relation to those rules, but it of course impacts our cash-flow.
(17/22) A quick glance at our income and expenses, shows that this would mean that we could incur yearly costs of app. £50m per year, from a cash-flow perspective, which basically mean that we would have a £150m transfer budget yearly before any sale of players.
(18/22) With inflation back in society, and given the growth of the game world-wide, the biggest weight of the stadium debt is front-heavy. In 10 years, with 5% yearly growth, our revenue would be 1.15bn, resulting in the relative cost for the stadium going from 14 to 8.5%.
(19/22) In any event, it is clear that it would be a constraint on the club. But at the same time, if our squad cost could equate up towards 500m per year, we could still -- again -- have one of the top 3-4 most expensive squads in football.
(20/22) One ‘low hanging fruit’ is the potential of creating a multi-club ownership group and improve our Academy so that it provides income on the same level as City or CFC, i.e. closer to 50m on average per year. Ineos already own Nice and Lausane.
(21/22) Given that our non-stadium debt would be zero, we could easily build up a – still healthy – non-stadium debt of say 200-300m over the first 5 years after the stadium is built, to enable heavy spending on the squad for one or two windows.
(22/22) So could we compete if we are bought by SJR? There are no guarantees, but financially we would easily be one of the top 3-4 clubs in the world in terms of ability to spend on the squad.
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