In 2010 Manchester United fans will live in a world of higher ticket prices and
A document seen by The Times gives an unprecedented insight into a five-year vision where corporate fans — the “prawn sandwich brigade” derided by United captain Roy Keane — will bear the bulk of the price increases to secure the best views of the pitch at Old Trafford over the five years. But regular seats will also cost more. Basic admission would be £36.50 in 2010, against £26.50 this season. The average cost of a ticket to watch United play at home in five years’ time is projected to be £46, rising from £29.90 this season. After 2007 the average annual season ticket price increase is less than £2.50 a game.
“Premium games”, such as the Champions League from the quarter-finals onwards, will be 25 per cent more expensive than normal domestic fixtures.
In return, fans can expect Sir Alex Ferguson, the manager, to have a £25 million net transfer fund at his disposal each year. This compares with United’s average spend per season of £19.4 million since 1998. An incremental £25 million available over the next five years will see the total pot to buy players to 2010 rise to £150 million.
However, Sir Alex’s ability to attract the best footballers will be limited by the banks who are lending £374 million to fund a takeover that could ultimately have an upfront cost of £831.3 million after advisory fees. The covenants on the loans mean a maximum spend on players of £27.3 million a season in 2006 and 2007 and £26.3 million a year from 2008 to 2014. Wayne Rooney, United’s teenage striker signed from Everton a year ago, cost a potential £27 million.
The Glazer business plan does not propose a radical divergence from the way United is currently run. There are no plans to sell and lease back Old Trafford or to break up the collective selling agreement of the Premier League. The document also dispels the notion that the Glazers borrowed to build up their 28.1 per cent stake in United. The equity was bought with “family cash”.
To service initial bank debt on £374 million, Mr Glazer is proposing to increase commercial revenues by 76 per cent from £48.7 million to £85.8 million over the next five years.
Interest payments of £22.8 million in 2006 fall to £11.8 million by 2010, according to the document. Net debt in 2006 will be £251.4 million.
The plan to transform the commercial side of United is based on the assumption that currently the club does not fully exploit money-making opportunities. By improving and expanding facilities at the stadium, which is scheduled to be increased to a capacity of 75,600 from 67,800 by the 2006-07 season, Mr Glazer expects to increase total matchday turnover from £67.3 million to £108.4 million. Catering income is to be doubled from £4.1 million to £8.7 million.
His plan is based on the assumption that Old Trafford will be sold out, and that he can keep inflation of staff costs to 2.5 per cent a year. Other cost savings are expected to be £4 million a year.
The Glazers are confident that they can increase club turnover to £245.6 million by 2010, a 52 per cent rise on this season. They also aim to lure four key sponsors, generating revenues of £4 million a year. These “4x4s”, once all on board, would contribute £17.6 million by 2010.
Existing platinum sponsors, such as Fuji Film, may not have their contracts renewed after 2007 but ten new promotional partners would sign contracts at an average of £750,000 each. These plans were already in motion before the takeover and are an example of Mr Glazer fine-tuning the business.
New sponsorship events, such as an annual
The proposal for the game involves United playing an overseas club or a club from the
On the main sponsorship deals, the name on the front of the United shirt will be expected to yield £10.8 million a year by 2010. The current deal with Vodaf0ne is worth £9 million a year and expires in 2008.
Mr Glazer believes that Vodaf0ne’s break clause next year — it said recently it was in discussions about continuing — is “very unlikely to be exercised”, according to the document. It also states that there is “no reason to believe” that N!ke, which has a £303 million merchandising deal with the club, will exercise its break clause in mid-2008.
Mr Glazer’s expectations for 2010 are relatively conservative, with total income of £51.4 million from the sale of TV and radio rights compared with £45.5 million in 2005. However, he is bullish about the next Premier League deal for domestic games with an expectation that the next contract from 2008 will be 10 per cent higher than the current one with Sky, which is worth £1 billion over three years.
The plan also budgets for an £800,000 increase in the value of United’s international rights from 2008.
Overall, the Glazer business plan takes a cautious view of United’s future onfield performance. It assumes no better than third place in the Premiership and the second round knock-out stage of the Champions League, although the team must make the quarter finals every third year. The team is projected to reach the quarter finals of both the Carling Cup and the FA Cup each season.
The cost of an average United ticket will jump from £29.90 this season to £33.40 next The United team will play one showcase match a year in Tampa, on top of an annual tour of Europe, Asia and the US Glazer hopes to boost total revenues by 52 per cent to £245.6 million by 2010 and treble operating profits to £114.3 million The business plan makes no mention of the rumoured sale-and-leaseback of the stadium