Payback Time...

Manchester United: Fans start to pay back their debt to Glazer
Antony Melvin

From Square Football:

When the Glazer family bought Manchester United in 2005 the fans protested loud and at length about the implications. But many football fans from other clubs just could not see what the problem was – new owner, new money, where’s the beef?

But news of the new double-digit ticket price rises in most areas of the ground is a pointer for the way things will go.

The majority of the 46,000 Manchester United season ticket holders sit in £30 seats. These fans would probably have hoped for an inflationary £1 per match rise, but probably expected another £2 or £3 rise (in line with last season's jump) - and they will have been dismayed at a £5 hike. £5 represents a staggering 17% rise.

There is little point in the United Finance Director, Nick Humby, stating that the rise only takes United into the top half of the table in cost terms. Most of the clubs above are based in London and have entirely different costs, but in any event United will now be charging somewhere equivalent to Chelsea for the vast majority of fans.

United compare their prices favourably to Chelsea and Spurs (the most expensive clubs to watch), suggesting that they cost double. But Chelsea have already printed their ticket price freeze for next season, and although their top price ticket (West Upper) equates to £60.50 per match, this is the only area of the ground (executive boxes notwithstanding) that will cost more than £45. The vast majority of fans will be paying £40 - £45. Which with a nominal London weighting is largely equivalent to the mode price at Old Trafford of £35.

The large price increase in 2004/5 (around 10%) was sold on the basis that it would stop any takeover – by reducing revenue raising opportunities for any buyer. Obviously this was an incorrect assumption. The majority of fans at Old Trafford will pay 25% more for 2006/7 than for 2004/5.

In simple terms the Glazers’ need to raise revenues by £30m - £35m per season within three seasons – or the debt associated with the takeover will start to get out of hand. If all this extra revenue is allocated to debt repayment it will at least allow the club to compete with clubs with similar transfer budgets like Newcastle, Liverpool, Tottenham and Arsenal. Chelsea are obviously a different matter.

This price rise should increase matchday revenues by £8m, with the extra 9,000 capacity available per match next season bringing in a similar amount. Add on £5m per season for the change of shirt sponsors from Vodafone to AIG, and a couple of million from other sponorship, retailing and high value added packages and United have quickly added £23m a season.

Which in business terms is pretty special – but not yet enough.

If selling the ground or its name are ruled out then the only way for the sums to work is to raise ticket prices or to cut transfer expenditure.

The club has made no promises on ticket prices and as a result it would appear that it will expect the fans to pick up the cost of funding the continuing shortfall in debt cover. The average ticket price will probably rise to £40 in 2007/8, £45 in 2008/9 and £50 in 2009/10 to take the average price to the targeted £900 plus per person (the figure leaked during the aggressive takeover). £50 seats will adequately realign Manchester United’s finances and allow the fans to pay off the Glazers’ takeover debt.

Already this season there has been the unusual sight of thousands of tickets being available on several matchdays – tickets for the league match this Friday are again freely available. With the increase in capacity and ticket prices the unusual sight of empty seats at Old Trafford will be a regular feature from next season on.

Perhaps you believe the fallacy that fans are sheep who will keep paying and paying? Well the facts are clear. Manchester United fans are struggling to pay for their season tickets now – as a result the matches that aren’t covered by the season ticket, the cup matches, are already being undersubscribed – only the Villarreal match was close to being a sell-out.

League matches average attendance 2005/6: 68,217 (after 16 matches)
Cup matches average attendance 2005/6: 56,713 (7 matches)

League matches average attendance 2004/5: 67,871 (19 matches)
Cup matches average attendance 2004/5: 64,359 (9 matches)

So there were over 70,000 unsold cup seats in 2005/6 compared to just 30,000 seats (from two more games) unsold the season before. Obviously the increase in ticket prices covered the empty seats but factor in the lost programme, food and merchandise sales and perhaps the price rises are not as lucrative as they first appear.

If the trend continues then there will be 100,000 – 150,000 empty seats for cup matches at Old Trafford next season – unless United are knocked out very early or get a series of plum ties.

As the new owners seek to squeeze fans to pay for their debts there will be a fine balancing act to play. Either the Glazers’ could announce that future price rises might be pegged at a reasonable level – say 5% - or the fans will vote with their feet. And given the abject lack of comment from the Glazers to date it seems pointless waiting for them to say anything positive.

The cup matches attendances were sliding before this rise and the next to go will be season ticket holders who will be priced out in their thousands if the cost continues to rise by £100 per season.

Indeed as more matches fail to sell out perhaps fans will abandon the season ticket in the hope of saving money by going to a handful of high profile games. From there it is a short step to buying a Sky Sports subscription and a comfy chair.

One of best boasts of United fans has always been that they are the best supported club in England – if the Glazers take away even that will anyone still think that the takeover meant business as usual? Does anyone think that the Glazers would rather have a full stadium of people paying £30 a game or one that is half empty, with the disruptive plebs priced out and those that are left paying £100 per seat?

Add up the numbers – which makes more money?

Antony Melvin
10 April 2006