Why Manchester United Must Ask Prudential for More Money to Replace AIG Sponsorship
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The club's AIG deal ends with the close of the 2009/2010 season, which means that some of the U.S. taxpayer bailout money has found its way into the pocket of Cristiano Ronaldo, the fearsome Portugese striker with an unfortunate tendency for falling over in the penalty area.
The news comes as Man Utd's parent company, Malcolm Glazer's Red Football Joint Venture, released its financials. They reveal that despite the club's blue-chip lineup of sponsors the club is a hair away from defaulting on its debts.
In addition to AIG, Man Utd's sponsors include Saudi Telecom, Diageo, and Seoul Metropolitan Government - and renewed deals with Budweiser, Travelcare, and GSK. The club made a pretax loss of $65 million, mainly due to its onerous debt payments. The club owes £650 million, mainly from leverage Glazer used to buy the club in 2005. Its annual debt payments are neary £70 million pounds.
Sales from game tickets were only £101 million, a revenue stream that is largely capped because Man Utd's games tend to be completely sold out.
That financial picture means Man Utd will likely be forced to ask Prudential for much more than the £56 million that AIG paid.
The consequences for Man Utd failing to balance its books could be severe: Any club that goes into administration is automatically docked 10 points in the league. For some clubs, that penalty can be fatal and league to relegation from the Premier League. That's not likely in Man Utd's case (they could still finish midtable even with that handicap), but it might well cost them a league championship.
* Disclosure: The author is a Liverpool FC fan who would be happy to see Man Utd enter bankruptcy.
- See also:
- Manchester United's Aon Deal Not Big Enough to Appease Bond Investors
- Manchester United in Talks With Aon for Shirt Sponsorship
- Manchester United to Swap AIG for Sahara Group as Shirt Sponsors
- For Manchester United, Sponsorship Deal Gets Complicated With Premier League Win, Ronaldo and Tevez Talks
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- Why Manchester United Must Ask Prudential for More Money to Replace AIG Sponsorship
- $28 Million in AIG Taxpayer Money Spent on Manchester United