Soccer

Moyes hiring could cost Manchester United €243m

Two largest costs will be slump in revenues and rebuilding outlay demanded by new man

Manchester United executives Joel Glazer (second left) and Avram Glazer (centre) and Ed Woodward prepare to ring the Opening Bell at the New York Stock Exchange on August 10th, 2012 in New York City. Despite the club’s woes since, and the huge chunks of revenue that will be missing from next year’s accounts, the shares were exchanging hands at a one-year high on Wall Street yesterday. Photograph: Dario Cantatore/Getty Images
Manchester United executives Joel Glazer (second left) and Avram Glazer (centre) and Ed Woodward prepare to ring the Opening Bell at the New York Stock Exchange on August 10th, 2012 in New York City. Despite the club’s woes since, and the huge chunks of revenue that will be missing from next year’s accounts, the shares were exchanging hands at a one-year high on Wall Street yesterday. Photograph: Dario Cantatore/Getty Images
Simon Goodley
Tue Apr 22 2014 - 23:01

Hiring David Moyes last year will end up costing Manchester United more than €243 million, experts estimate, as the Premier League champions now attempt to re-establish themselves among European football's elite while wrestling with huge debts.

The two largest costs will be a slump in revenues caused by United's absence from next season's Champions League – which accountants Deloitte predict will be around €60 million – as well as an estimated €180 million-plus Moyes's replacement as manager will demand to rebuild the team.

Favourites
The favourites to succeed Moyes – including Netherlands manager Louis van Gaal, former United centre half and Paris Saint-Germain coach Laurent Blanc, and Real Madrid coach Carlo Ancelotti – are thought likely to command a salary of up to €6 million a year.

While the costs of United not appearing in Europe's premier club competition next season could be mitigated slightly if they qualify for the Europa League, the riches available to Champions League clubs will ensure the financial hit will be huge.

The estimated €60 million loss will consist of television rights, prize money and gate receipts – and as the cost of running the club will remain relatively constant, the operating profit will take a direct hit.

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The numbers are put into context by Manchester United’s last annual report, which showed an operating profit of €75 million, borrowings of €435 million and the interest on those borrowings totalling €86 million.

It is being speculated that United will have to spend over €180 million in transfer fees to rebuild the team.

Investing heavily
Bayern Munich failed to qualify for the 2007-08 Champions League. This led to the current European Cup holders investing heavily in the summer of 2007, assembling a new squad that immediately won the Bundesliga, with a net spend of around €75 million on seasoned internationals including France's Franck Ribéry, Miroslav Klose of Germany and the Italian World Cup winner Luca Toni.

That €75 million outlay equates to more than €120 million today.

Moyes will need to be compensated, moreover. While he signed what was widely reported as a six-year deal – it is understood that he agreed to a one-year severance package. Along with bonuses, his golden handshake will total around €5.5 million.

The support staff around Moyes also must be compensated, assuming they follow the manager out of Old Trafford. Moyes dispensed with the services of the coaches René Meulensteen, Eric Steele, and Mike Phelan who served his predecessor, Alex Ferguson, and there is a similar prospect for Moyes’ own inner team of Steve Round and Jimmy Lumsden. The total compensation for sacking all five could come to around €2 million.

Shares in Manchester United edged up in early trading on Wall Street yesterday after the club confirmed Moyes' departure. Despite the club's woes, and the huge chunks of revenue that will be missing from next year's accounts, the shares were exchanging hands at a one-year high.–
Guardian Service