This article was recently published on suite101.com
Manchester United's clash with Valencia in the Champions League last week looked on paper to be one of the games of the round. In the event it was a fairly tawdry affair with the visitors from the north of England picking up the three points thanks to a well taken late goal from Mexican wunderkind Javier Hernandez.
The game itself may not have lived up to the hype, but what this contest between two giants of the European stage provided was a fascinating look at two huge clubs coping with equally huge debts.
Valencia’s trophy haul of 6 La Liga titles and 7 triumphs the Copa del Rey has cemented their status as Spain’s third most successful club, behind the near mythical duo of Real Madrid and Barcelona, and earned them the reputation of one of the most formidable teams in Europe.
Ten years on from their sensational run in the Champions League that saw them reach the final in two consecutive seasons, Valencia retain their place amongst Europe’s glamour teams and continue to be extremely stubborn opponents. Chelsea’s victory in 2007 was the first for an English side at the Mestalla in 40 years.
With such a distinguished history it is little wonder that the club’s owners wanted to build a more fitting home for Los Ches. Designed to hold 73,000 fans, the Nou Mestalla, situated in the north west of the city was set to rival the great stadiums of their European rivals, until February 2009 when a sheepish looking board of owners announced that the plans were to be scrapped and production halted, citing the clubs mounting debts as the reason for the project being shelved. Now the stadium lies empty and only semi-complete, serving as a macabre monument to the ambition of a club and to the boom and bust nature of the modern game.
Until the summer of 2010 the debts that plagued the clubs owners had seemed to have little effect on the players’ performances on the pitch. A poor showing during the 07/08 La Liga season being the only major blip in recent years and even that lacklustre campaign was rewarded with the inclusion of a strong Valencia contingent in Spain’s victorious Euro ’08 team.
Then the transfer window opened and the opportunism began. The dawn of the new season finds Los Che’s with a considerably depleted squad. The golden duo of David Villa and David Silva have been sold, along with rangey striker Nicola Zigic and veteran defender Carlos Marchena, in a move that raised £74M for the ailing club. Despite these efforts reports suggest that Valencia’s debt remains in the region of £425M.
Club president Manolo Llorente defended the sales, saying “Our key objective is economic viability, and that means we are obliged to take responsible decisions. One of which is to sell our best players.”
Admirably, Valencia have rallied and at the beginning of October find themselves topping the Spanish league, and, along with Real Madrid, one of only two only undefeated sides in the division. It remains to be seen how long they can maintain this pressure on their title rivals but as it stands the Valencia side of ‘10/’11 have every right to call themselves contenders for the La Liga championship. The fans will keep on smiling as long as the goals and wins keep on coming, but this cannot hide the fact that Valencia is a club in crisis.
While the blue half of Manchester, who benefited from the fire-sale with the acquisition of silky winger David Silva, represent a club in the exact opposite financial situation to Valencia, their rivals in the red half may look upon the club’s predicament with a degree of anxiety.
As Manchester United prepared for their Champions league clash at the Estadio Mestalla last Wednesday, they would have harboured silent concerns that they were being offered a glimpse of their own future.
Manchester United’s debt problems are much more widely known. The storm of protests that met the takeover of the club by the Glazer brothers in 2005 have gathered pace again in 2010 with the “green and gold” movement. Green and gold being the colours of Newton Heath, the forerunners of Manchester United, and symbolic of a return to financial integrity and the purity of the that early side.
In January 2010 Manchester United’s debts had grown to £716M, a figure that continues to rise; the interest on this debt, previously fixed at 14.25% APR, grew to 16.25% in August 2010. It will take more than a yard-sale of big name players to dig themselves out of this hole.
Manchester United continue to keep their heads just above the water on the strength of their global brand; the Red Devils top the table for shirt sales every season between 1.2 and 1.5M shirts sold per season, only Real Madrid come close to matching this.
In addition to this, Manchester United have Old Trafford, a ground capable of holding 75,957 fans, compared to the 55,000 held by Estadio Mestalla. Even the Nou Mestalla’s projected capacity falls short of this mark by nearly three thousand seats. The fact that United play to a full house at most home game’s is a testament to the strength of this fan base.
Even with their huge global presence, Manchester United continues to struggle but the strength of the brand affords them a certain degree of breathing space and allows them to keep their head above the waterline. Valencia just cannot compete with this profile. Los Che’s do not have the level of income required to service a debt of this magnitude.
I do not intend to justify the position of Manchester United however, the practice of using a clubs income to service an ever increasing debt is not only unsustainable it is also grossly irresponsible, particularly when we have seen so many clubs without the luxury of global branding fold and disappear due to mismanagement and debt.
Clubs such as United have been walking a dangerous line with the international football federations for some time and should be wary of possible future sanctions. Uefa have been in talks for some time about barring hugely debt-ridden clubs from European competition.
This means fundemental changes must be made if United are to continue to keep their head above water and keep hold of their big names.
For now, both clubs live to fight another day in the Champions league and continue to challenge for domestic honours in their respective countries, but both clubs are surely aware that they must learn to operate sustainably if this success is to continue in coming years.
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