Financing Pogba move the slightest of concerns for Man Utd
A lot of discussion among football fans and pundits alike in the past few days has been about the ridiculous fee Manchester United are reportedly ready to pay for the services of a player who left them for free four years ago- Paul Pogba. Pogba, currently starring for France in the ongoing Euros in his motherland, has transformed from an extremely bright prospect to one of the best midfielders in the world in those four years - which explains why newly appointed Manchester United manager has supposedly made him his goal for the transfer window.
According to the notoriously accurate Italian journalist Gianluca di Marzio, United have tabled a bid of €120m(£103m). This transfer, if it goes through, will not only smash the previous record for highest transfer fees paid for a player, held by Gareth Bale, but will also be the first one to break the £100m barrier. We all knew that it was going to be broken, but it is still surprising that a 22-year old midfielder will be involved in it, as such transfers are normally reserved for players who are much more involved with the goals.
However, what the critics have to say about the transfer fee should be none of Manchester United’s concern. The Red Devils are in an extremely comfortable situation financially and only a few clubs can match their financial might. United’s grip on the commercial side of football is as strong as Francesco Totti’s loyalty to football and it’s results are reflected when you look at revenues from commercial activities like merchandise sale.
From 2005 to 2015, United’s total revenue has increased monstrously. After the 14/15 season, it was reported to be £395m, going down from the previous season because of an absence in any kind of European club competition. However, when the figure is announced again this year, revenue is expected by some to cross £500m as a result of participation in the Champions League, the deal with Adidas coming in place and the continuing trend of commercial revenue increasing every year.
The TV deal has been named by many as the major reason why EPL clubs have become so rich but for a club like United, it is not the major reason. The revenue from TV increased from £40m to £108m from 2005 to 2015. This is definitely a significant increase but it’s pretty far away from the growth in United’s commercial revenue which went up from £43m to £197m in the same time span.
These numbers just go to prove that if you remove the £103m Pogba will cost, the other transfer fees United have paid which is about £60m, the wage bill and other running costs which would not be a lot, United are still pretty much in the green. A lot of people question how United have been able to go on spending sprees even while under such huge debt. The answer is actually quite simple.
United have refinanced really well since the Glazer family took over. A refinance is basically when a business revises a payment schedule for repaying debt and renegotiates its yearly repayments. United used to pay £60m/year initially when the Glazers took over as repayment for the debt. At that time, the revenue also wasn’t as high as it is now.
This also explains why Sir Alex Ferguson didn’t spend money during his reign like it is being spent now. However, after refinancing as many as three times, United have brought their yearly repayment down to £20m, which is just around 5% of their total revenue. The debt figure is still high but it does not really matter.
Whether a deal for Pogba goes through or not will be seen in the coming days, but the fact that Manchester United are able to pay such fees despite not being in the Champions League and without any foreign investment shows that Ed Woodward must be given a lot of credit for maximizing the full potential of the club and exploiting the global market so well. Manchester United don’t look like stopping any time soon and other clubs must beware of how much stronger it will become once on field performances are back to the levels reached under Ferguson.