Differing fortunes in Manchester

August 19, 2008
By Phil Holland
(Archive)

Nothing better illustrates the differing fortunes of Manchester rivals United and City than two pieces of financial news that have emerged over the last two days.

EmpicsShinawatra: Manchester City's controversial former owner.

While Manchester United announced a new multi-million pound deal with the biggest mobile telephone company in the Middle East which further underlined their global appeal, Manchester City were reported to have borrowed £30million secured against future television revenues in order to finance their summer transfer activity.

Manchester United's deal with Saudi Telecom, which is a five-year arrangement and worth as much as £10million, will entitle the phone company to use the club's logo in domestic marketing in Saudi Arabia as well as carry goals and highlights from United's matches on their handsets.

But while Manchester United are raking in the money by doing very, very little, Manchester City are reported by The Times to have put themselves in hock in order to fund manager Mark Hughes' transfer plans.

This latest worrying development at City follows last week's disturbing news that club owner Thaksin Shinawatra had skipped bail on corruption charges in his native Thailand, fleeing to the UK seeking political asylum.

The comeuppance of the former Thai Prime Minister's flight means his £800million fortune remains frozen in Thailand and it is this fact that appears to have led to Manchester City's decision to seek a £30million loan.

All of which means that for City fans the dream of being owned by a billionaire is rapidly turning into a nightmare; rather than having a blank chequebook to buy the most exciting players in the world, City appear to be seeking auxiliary funds.

If accurate, the development is all the more remarkable given that the 2008/09 season marks the second year of the Premier League's £2.7billion three-year television rights agreement which nets each Premier League club in region of £45million a season.

Manchester City really should have enough money to not be taking out loans, but reports over the weekend that the club had borrowed £2million from former chairman John Wardle in order to pay wages suggested otherwise. As did reports last week that Vedran Corluka and Stephen Ireland were being hawked to the highest bidder behind Hughes' back.

Such developments pose questions over the validity of Manchester City's much-vaunted approaches for Ronaldinho and Roque Santa Cruz - just how realistic those bids were is open to conjecture.

It must be galling for City fans, for so long in the shadow of United's success, that just as they thought things were turning in their favour, just as they felt they would have the wherewithal to compete with the Old Trafford outfit, the rug has been pulled out from under them.

Although Manchester United were plunged into debt when the Glazer family bought the club in 2005 the reigning Premier League and European Champions remain stable on and off the pitch, with established income streams in place including the £300million, 13-year deal with Nike (signed in 2000), AIG's record-breaking four-year £56million shirt sponsorship signed in 2006 and now a new telecommunications deal in the Middle East.

Despite defiant words of determination from Hughes, a season of uncertainty and frustrating appear to beckon for Manchester City and the club's fans.


Time is running out for the Premier League's summer transfer spending to continue its upward trajectory; after years of growth the £530million splashed out in 2007 looks unlikely to be surpassed this summer.

EmpicsAt £20.3m Robbie Keane is the biggest Premier League transfer of the summer.

Although large sums have been spent to acquire a handful of marquee names, such as Liverpool's £20.3million outlay on Robbie Keane and Tottenham Hotspur's £17million-spend on David Bentley, overall spending in the league is down around the £300million mark with just under two weeks of the transfer window remaining.

Despite billionaire owners and multi-billion pound media deals even the Premier League it seems is not immune to the financial pressures being experienced across the globe.

The main factor in this apparent slow down in spending is the spiralling cost of player wages, which have leapt from an extraordinary £785million in the 2004/05 season to a stratospheric figure in excess of £1billion last season, an average of over £50million per club.

A new report from PKF Accountants states that three quarters of Premier League sides are now applying performance-related criteria to between 10% and 25% of first team squad's salary in an attempt to incentivise their millionaire playing staff.


And it's not just the clubs that are feeling the pinch and altering their spending habits, pubs and bars across the UK are being forced to cancel their subscriptions to Sky, the country's dominant pay-television platform and the main carrier of live Premier League action, because of costs.

According to the Association of Licensed Multiple Retailers, 20% of pubs have dropped their subscription since 2003 with average prices for annual subscriptions have reached £15,000.

As the ALMR's chief executive Nick Bish points out: 'If the price of lager since 1996 had increased at the same rate as pub Sky subscriptions, we would currently be paying over £9 a pint.'

The organisation claim that Sky is exploiting its monopoly position at the expense of local pubs and their customers and point particularly to 765% year-on-year increase in the cost of adding the Setanta channel which shows 46 Premier League games per season.

In the 2007/08 season, Sky's charge for adding Setanta to a pub package was £2,650; ahead of the 2008/09 season the cost had gone up to £22,635.


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