Failure 'not an option' for United

Red Devils' American owners warn they won't be able to keep their best players or sponsors if they don't qualify for the Champions League again

PUBLISHED : Thursday, 31 July, 2014, 10:56pm
UPDATED : Friday, 01 August, 2014, 12:43am

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Manchester United's American owners warned investors the club may struggle to keep their best players if they miss out on Champions League qualification for a second consecutive season.

The warning came as the Glazer family announced it was set to raise around US$150 million by selling more of their shares in the club on the New York Stock Exchange.

"Because of the prestige associated with participating in the European competitions, particularly the Champions League, failure to qualify for any European competition, particularly for consecutive seasons, would negatively affect our ability to attract and retain talented players and coaching staff, as well as supporters, sponsors and other commercial partners," the owners said in the club's prospectus.

The Glazers are selling eight million shares with reduced voting rights, equating to 5 per cent of the business. The Glazers, who maintain control of the club, previously sold 10 per cent of their holding via a stock listing in 2012.

The announcement comes two months after Malcolm Glazer, who led the family takeover of United in 2005, died. His six grown children control the club.

The latest share sale was announced on a day when United shares closed at US$19.31, with the Glazers cashing in at a time of renewed confidence at the club.

Former Netherlands and Barcelona coach Louis van Gaal has taken charge following a dismal first season of the post-Alex Ferguson era under David Moyes that saw the team finish seventh and fail to qualify for the Champions League.

United also signed a 10-year kit sponsorship deal earlier last month with Adidas, announcing that it would be worth an overall £750 million (HK$9.8 billion) from 2015.

But United has disclosed to potential investors in the new share prospectus that failure to play in the Champions League for two or more consecutive seasons would see the annual Adidas payments drop from that second year by 30 per cent from £75 million to £52.5 million.

If United are relegated, Adidas can cut their payments in half during seasons out of the Premier League, and give a season's notice to terminate the sponsorship. Conversely the fee could rise by up to £4 million each year if the team win the Premier League, Champions League or FA Cup.

Ferguson left after 26 years as manager, winning 13 Premier League titles and the Champions League twice during an unprecedented period of domination. A loss of Champions League revenue from Uefa is already set to cost the club around £35.5 million next season.

"Our success and many achievements over the last 20 years does not necessarily mean that we will continue to be successful in the future, whether as a result of changes in player personnel, coaching staff or otherwise," United said in the share prospectus.

"A downturn in the performance of our first team could adversely affect our ability to attract and retain coaches and players."

United said success on the pitch is key to "the value and strength of our brand and reputation," with a global array of sponsorship deals helping the club generate an estimated revenue of around £430 million for the year to June 30.

Claiming to have 659 million followers around the world has helped to drive up turnover in recent years, but United have conceded that "our popularity in certain countries or regions may depend, at least in part, on fielding certain players from those countries or regions".

Agence France-Presse, Associated Press