ESPN - Why Manchester United are still a mess under INEOS ownership

[UnrelatedPsuedo]

Because success is creating profit. And more profit fuels more success.

On-field Success does not directly create profit for the most part. See: Manchester United post Sir Alex. We have had little to no success and generated shitloads of profit (if you adjust for the Glazers fcukery).

In the modern game, there’s actually been an inverse relationship between profit and performance. But that’s for a world of other reasons.

It is utterly bewildering to me that any fan wants their club to make a profit. Profit is a byproduct. If you spend to budgeted income/expenditure and that’s based on finishing fourth, and going to semi finals, Then you end up winning the league and a cup or two… of course you won’t have budgeted to spend that additional income. You’re going to be significantly in the black.

But maximising profit; being gleeful at ending a year with £200m in profit is directly oppositional to having as good as season as you can. It’s a bad thing.

 

[Pexbo]

No it doesn't, you can have both.

I don’t want to put words into UL’s mouth but the point they are making is that if United is making huge profit, we’re not putting enough money back into the club.


Profit for United means profit for Glazers, Jim and the rest of the shareholders. As fans we should want every penny of profit put back into the club.

 

[slyadams]

No it doesn't, you can have both.

If you're in a good condition you can. If your training ground is a dump, the roof is quite literally leaking and the team are performing abysmally then generating a profit is not ideal. Not least as well because you're taxed on profits.

 

[UnrelatedPsuedo]

Exactly. Profit and cash are 2 very different things, we should absolutely be making a profit (before tax) to enable future investment, in the stadium players etc. We're also a lot more attractive a brand if we're profitable from a commercial perspective which will help grow the club and its attractiveness to sponsors, thus allowing the club to reinvest further. WE've also lots of debt and (presumably) covenants to meet which will require the club to profitable.

The irony is we have been profitable in the past but its been ripped out in dividends, so profit but no cash!

No. Future investment should be baked in and budgeted for, with debt taken on and serviced. We don’t save our pocket money for growth.

And no again. Us making a profit does not make us more attractive to sponsors. On field success does, as their brand is carried further. A P&L does nothing for them. Adidas wouldn’t care if we lost £100m a year if they were selling double the amount of branded kit.

 

[M Bison]

No. Future investment should be baked in and budgeted for, with debt taken on and serviced. We don’t save our pocket money for growth.

And no again. Us making a profit does not make us more attractive to sponsors. On field success does, as their brand is carried further. A P&L does nothing for them. Adidas wouldn’t care if we lost £100m a year if they were selling double the amount of branded kit.

I think we'll have to agree to disagree!

Investment is outside of profit on the P&L, thats just fact im afraid, as is debt servicing and bank covenants, they're outside of "profit".

In my experience a profitable business is more attractive to other commercial organisations, if we're losing 100m a year regularly that doesnt look great to any customer or financial institution.

 

[Big Ben Foster]

I don’t want to put words into UL’s mouth but the point they are making is that if United is making huge profit, we’re not putting enough money back into the club.


Profit for United means profit for Glazers, Jim and the rest of the shareholders. As fans we should want every penny of profit put back into the club.

Nah, I already made that argument and OP pushed back on that too.

He literally means the club should manage its accounting in such a way that it never makes a profit or loss. Which is insanely unworkable - there is no organization that sets out to do such a thing.

And before people mention non-profits: they are allowed to, and often do, generate profits! They just aren't allowed to return these profits to shareholders (although some sketchy non-profits will still do so under the guise of management fees or their compensation structures, but that's another topic).

 

[HackeyC]

Cream shirt and chinos is such a strong look.

In a room of footballers wearing leggings and snoods he won't have been the worst dressed (yes I am wearing chinos )

 

[HackeyC]

Nah, I already made that argument and OP pushed back on that too.

He literally means the club should manage its accounting in such a way that it never makes a profit or loss. Which is insanely unworkable - there is no organization that sets out to do such a thing.

And before people mention non-profits: they are allowed to, and often do, generate profits! They just aren't allowed to return these profits to shareholders (although some sketchy non-profits will still do so under the guise of management fees or their compensation structures, but that's another topic).

There are businesses that operate precisely in that way, but on a very different principle. Re-invest to grow revenue and then sell the company to a larger organisation that can use their existing infrastructure to take substantial costs out. Granted it does not apply to football, but does apply to pharma which might explain some of the INEOS approach.

 

[Melville Red]

Is that what happened here, or did we get rid of experienced loyal staff?

The general direction these reorganizations take, is usually layoffs at lower levels and more management, leading to less efficiency and less quality.

Let’s hope that is not the case.

We will find out but Jim didn’t become successful by accident. I think he knows what he’s doing on the business front.
I also would like to think that we are actively looking to get rid of over paid footballers who are not living up to their contractual obligations and not putting in the effort a fine example was getting rid of Sancho, talking of which did he play against the scousers on Sunday? Or is he back to his usual self?

 

[Melville Red]

My point is : Don’t make a profit. Period.

Run the club well. Maximise revenues and generate as much cash as ethically/morally responsible.

Fund a stadium, training ground, playing staff, and all operational staff. Take on sensible debt levels for big ticket expenditure. Sign players to the value of headroom. And and and.

But no season should see a penny of profit. If you’re making one, you haven’t put enough effort into being a successful sports team.

What is this bollocks about? Ethically and morally responsible? Bloody hell I give up I really do.

 

[quadrant]

Nah, I already made that argument and OP pushed back on that too.

He literally means the club should manage its accounting in such a way that it never makes a profit or loss. Which is insanely unworkable - there is no organization that sets out to do such a thing.

And before people mention non-profits: they are allowed to, and often do, generate profits! They just aren't allowed to return these profits to shareholders (although some sketchy non-profits will still do so under the guise of management fees or their compensation structures, but that's another topic).

Hi, CEO of a not-for-profit here just disagreeing with this point. Almost every non-profit starts the financial year with a breakeven budget in mind as the primary target. Repeated true profits are actually problematic for various reasons, they're just less of a problem than a loss. (Ignoring restricted funds raised in one year to be spent in another, like saving up to buy a building)

Also, management fees are not remotely sketchy, please don't spread misinformation.

 

[Big Ben Foster]

Hi, CEO of a not-for-profit here just disagreeing with this point. Almost every non-profit starts the financial year with a breakeven budget in mind as the primary target. Repeated true profits are actually problematic for various reasons, they're just less of a problem than a loss. (Ignoring restricted funds raised in one year to be spent in another, like saving up to buy a building)

Also, management fees are not remotely sketchy, please don't spread misinformation.

I didn't say management fees are sketchy. I said sketchy non-profits (and for-profits, for that matter) often use management fees as a guise for distributing profits.

Anyway, you're referring to repeated profits which once again isn't the point I'm reacting to. The other poster said if a football club ever makes a profit, it's doing something wrong.

 

[Big Ben Foster]

There are businesses that operate precisely in that way, but on a very different principle. Re-invest to grow revenue and then sell the company to a larger organisation that can use their existing infrastructure to take substantial costs out. Granted it does not apply to football, but does apply to pharma which might explain some of the INEOS approach.

Reinvestment does not equate to "never earn a profit". Quite the opposite in fact: you often need healthy profits and strong cash flows in order to fund capital investments (in our case, player acquisitions).

 

[quadrant]

I didn't say management fees are sketchy. I said sketchy non-profits (and for-profits, for that matter) often use management fees as a guise for distributing profits.

I don't want to derail the thread with a conversation about the intricacies charity law and sorp but a) this is hard to get away with and b) doesn't change the earlier point about profits.

For what its worth, I think all football clubs should all be community interest companies, not private businesses. They straddle the line between true charities and businesses.

 

[Big Ben Foster]

I don't want to derail the thread with a conversation about the intricacies charity law and sorp but a) this is hard to get away with and b) doesn't change the earlier point about profits.

For what its worth, I think all football clubs should all be community interest companies, not private businesses. They straddle the line between true charities and businesses.

Sure, no argument from me there - I already made the point that restricting the distribution of profits is perfectly reasonable. But that doesn't mean a football club will never want to retain earnings to fund future reinvestment. "Never make a profit" is an extreme position to have, especially in a capital-intensive industry.

 

[UnrelatedPsuedo]

What is this bollocks about? Ethically and morally responsible? Bloody hell I give up I really do.

- Not freeze wages in times of growth
- Don’t press the ‘more money’ button on season tickets and exploit supporters.
- Don’t get into bed with gambling companies.

Just think a little. You’ll come up with dozens of things that fit the parameters.

But honestly, it wasn’t that deep.

 

[spwd]

You want a worse manager?

Sorry I didn't realise they'd managed utd already. And if that was to happen I'd guarantee he'd do better than this prat is just by getting back to basics.
Just because someone doesn't do great at Chelsea of all places doesn't make them shite. You should clearly understand this by looking at how our current prat is doing compared to how good he was supposed to be and it would only be interim unless he does extremely well.

 

[justsomebloke]

You have a very naive view of the world. Profit, is what pushes everything in business. Anyone who has run a business, owned a business or simply been a shareholder in a business, will tell you it only comes down to one thing...profit = money.

If you wind it back a bit, clean slate, ask yourself this: How did Sir Jim buy a stake in the club? The answer is, he did so because his other companies (mainly Ineos) makes a huge amount of money. It makes a huge amount of profit. Without that profit, he would never have been in a position to buy United.

You mentioned players are not attracted to profit. Of course they are, otherwise they would all be playing pub football, just for the love of the game. Take any player who plays professionally and you're looking at someone who is trying to maximise their profit. If said player had an option of either A: Playing for Leeds for £25k a week or playing for Real Madrid for £250k a week, do you think ANY player would turn down Madrid, based on your belief that no player does it for profit?

And lastly, sponsors. Are you suggesting that the likes of say, Nike or Adidas, sponsor a team like United for £20m a year, simply because they like having their logos on the shirt? They do it because they know they'll make more money (hence profit) from TV exposure, shirt sales etc. This in return, creates a bigger market share and more people spending money online and in their shops, not just on football kit, but everything else they produce, trainers, t-shirts etc

There's always a need to be profitable, its simply how the world runs, even a family home, with income, runs off of the basis of 'how much money have we got left this month' which is, in effect, profit.

What you're probably alluding to, is a moral compass. That you don't want the club to lose its soul and football perspective against the pursuit for money and thats a fair point and a worry for a lot of fans. There's always a tightrope to walk in football, especially at the top end where money, profit and success can often override the beauty of the game. But at United level, there's always going to be money, business and profit in the mix, if you don't like that side of it, you're probably better off moving down a few leagues and supporting a smaller club, where the focus is more on the football.

It's rather you who come across as naive.

What do you think matters more to the Glazers from a business perspective, the dividends they've taken out since buying the club, or the colossal appreciation in the value of the club as an asset?

What do you think matters more to that appreciation, what kind of profit the club turns, or the size of the clubs following?

What do you think matters more to the size of that following, how big a profit the club makes, or what it does on the pitch?

What do you think primarily attracts sponsors - the yearly accounts, or how successful the club is on the pitch and in terms of following?


In short - if you want to make football club a business success, your primary focus is on sporting success, not on the size of your profits this financial year. Because that's how you make money and that's what drives the value of the club as an asset. In which it is unlike most businesses.

 

[The holy trinity 68]

Every club looks like it's in a mess when results are not going very well, or expectations are not being met.

 

[lex talionis]

I do not understand what the principled objection to a football club earning a profit would be. Surely an informed opinion as to how well a club is managed is independent of whether or not the club books a profit. I would much rather see our club win trophies even if it means the club owners paying taxes on a profit earned than a club winning nothing and losing hundreds of millions of pounds, or even one pound, annually.

 

[RedOrange]

My main takeaway from this article is that there are still too many overpaid, underperforming, entitled players who need to be moved on. Imagine drastically underperforming in your job for 5 fecking years and then being offended when your new manager has something to say about your performance attitude. The clearout isn't finished.

I don't get the hate for INEOS. The transfer business this summer was a 9/10 for me.

 

[RedRocket9908]

 

[NZT-One]

On-field Success does not directly create profit for the most part. See: Manchester United post Sir Alex. We have had little to no success and generated shitloads of profit (if you adjust for the Glazers fcukery).

Which was my point. The only reason we are still able to group ourselves to the other European Top Clubs is because of money. And that money is getting in because we are doing a good job at commercialisation. But this is only possible, because we can live off past success. And I agree, profit and on-field-success aren't directly linked to each other but they come together more often than not.

In the modern game, there’s actually been an inverse relationship between profit and performance. But that’s for a world of other reasons.

No there is not. Come on, you can't just think of certain situations and conclude that there must be rules there. There are not. Look at Barcelona - So much money spent over the last years, success was not on par with that. Look at the 1st Galactico era, also big investments didn't lead to big success. And just a little later you can look at Real once again to see that approach work. Or look at Mancity and see it work. The factor of profit, as you said, is not directly linked with on-field-success but they are in relation to each other. Which is why I find it so suprising to see you having such an absolute stance. I mean, I agree, I would also like to see Footballclubs not being in the hands of individuals but we can't just choose what world we operate in.

It is utterly bewildering to me that any fan wants their club to make a profit. Profit is a byproduct. If you spend to budgeted income/expenditure and that’s based on finishing fourth, and going to semi finals, Then you end up winning the league and a cup or two… of course you won’t have budgeted to spend that additional income. You’re going to be significantly in the black.

I think, we would be on the same page on this one.

But maximising profit; being gleeful at ending a year with £200m in profit is directly oppositional to having as good as season as you can. It’s a bad thing.

But this is what I called the strawman earlier - who is advocating for maximizing profits? You entered the discussion with the polarizing hypothesis that all profit is bad and people argued against that statement, I haven't seen anybody asking for INEOS to make sure we are maximizing profits.

 

[Big Ben Foster]

But this is what I called the strawman earlier - who is advocating for maximizing profits? You entered the discussion with the polarizing hypothesis that all profit is bad and people argued against that statement, I haven't seen anybody asking for INEOS to make sure we are maximizing profits.

Agreed. To recap:

"Football clubs shouldn't seek to maximize profits" = reasonable statement

"Football clubs should reinvest profits back into the club" = reasonable statement

"Football clubs shouldn't distribute profits to billionaire owners" = reasonable statement

"Football clubs should never make a profit" = unreasonable and unfeasible statement

 

[UnrelatedPsuedo]

Which was my point. The only reason we are still able to group ourselves to the other European Top Clubs is because of money. And that money is getting in because we are doing a good job at commercialisation. But this is only possible, because we can live off past success. And I agree, profit and on-field-success aren't directly linked to each other but they come together more often than not.

No there is not. Come on, you can't just think of certain situations and conclude that there must be rules there. There are not. Look at Barcelona - So much money spent over the last years, success was not on par with that. Look at the 1st Galactico era, also big investments didn't lead to big success. And just a little later you can look at Real once again to see that approach work. Or look at Mancity and see it work. The factor of profit, as you said, is not directly linked with on-field-success but they are in relation to each other. Which is why I find it so suprising to see you having such an absolute stance. I mean, I agree, I would also like to see Footballclubs not being in the hands of individuals but we can't just choose what world we operate in.

I think, we would be on the same page on this one.

But this is what I called the strawman earlier - who is advocating for maximizing profits? You entered the discussion with the polarizing hypothesis that all profit is bad and people argued against that statement, I haven't seen anybody asking for INEOS to make sure we are maximizing profits.

It’s not a straw man. Easiest and simplest example…

You finish 3 points behind the league winners but finish £40m in profit. But you also bought a £50m centre back as you deemed the £80m best centre back in the world, too expensive for financial reasons.

That’s properly route 1 but it’s an example.

I googled for anything to support my viewpoint, obviously. But there’s loads out there.

This was a decent read : https://graphroots.co.uk/2021/02/08/why-football-clubs-shouldnt-be-used-to-make-money/

Less oppositionally to you… and less relevant to this discussion, this was a fun read while I was reading stuff. https://www.sciencedirect.com/science/article/pii/S2444883419301639

 

[CallyRed]

If Rambo believes in them then so do I.

 

[slyadams]

He literally means the club should manage its accounting in such a way that it never makes a profit or loss. Which is insanely unworkable - there is no organization that sets out to do such a thing.

Absolutely untrue. It’s entirely common for an organisation to purposely generate no profit to minimise tax burden and maximise growth. Happens all the time.

 

[Hammondo]

Agreed. To recap:

"Football clubs shouldn't seek to maximize profits" = reasonable statement

"Football clubs should reinvest profits back into the club" = reasonable statement

"Football clubs shouldn't distribute profits to billionaire owners" = reasonable statement

"Football clubs should never make a profit" = unreasonable and unfeasible statement

Why shouldn't football owners get money? Why shouldn't they focus on profit?

 

[Hammondo]

Absolutely untrue. It’s entirely common for an organisation to purposely generate no profit to minimise tax burden and maximise growth. Happens all the time.

Yes companies make a loss to improve branding and audience often.

 

[Big Ben Foster]

Why shouldn't football owners get money? Why shouldn't they focus on profit?

Didn't say I agree with it, I said it's a reasonable viewpoint

 

[Hammondo]

Didn't say I agree with it, I said it's a reasonable viewpoint

I'm not so sure it is.

 

[steffyr2]

It’s not a straw man. Easiest and simplest example…

You finish 3 points behind the league winners but finish £40m in profit. But you also bought a £50m centre back as you deemed the £80m best centre back in the world, too expensive for financial reasons.

That’s properly route 1 but it’s an example.

I googled for anything to support my viewpoint, obviously. But there’s loads out there.

This was a decent read : https://graphroots.co.uk/2021/02/08/why-football-clubs-shouldnt-be-used-to-make-money/

Less oppositionally to you… and less relevant to this discussion, this was a fun read while I was reading stuff. https://www.sciencedirect.com/science/article/pii/S2444883419301639

If you'd had £150m in profit, you would have bought the £80m centre back and maybe the £50m centre back as a backup. That's why turning a profit is good.

 

[Bright_Eyes]

If you'd had £150m in profit, you would have bought the £80m centre back and maybe the £50m centre back as a backup. That's why turning a profit is good.

I think all he's saying is that owners taking money out of club is bad and spend any income quickly. In your scenario he would see that as 0 profit, so would be good, because it's spent on the club. I think the vast majority agree with this tbh so I don't know why there's even a debate happening. Football success and money go hand in hand in the system we have and both affect the other. If you compare all the teams in England, there's obviously a positive correlation between football success and how much money is made/spent on the club (mostly spent). And regarding spending money quickly, there's gotta be some amount left for uncertainties etc, but too much shouldn't be sat on. That seems obvious too. "Clubs should aim for 0 profit" is a weird way of saying that though. I could make a club next week and have them make 0 profit (or at least a neglible loss). It doesn't mean they'll be good at football. Or have any footballers or anything else.

 

[Big Ben Foster]

I think all he's saying is that owners taking money out of club is bad. In your scenario he would see that as 0 profit, so would be good. I think the vast majority agree with this tbh so I don't know why there's even a debate happening.

That wouldn't be zero profit though. The player acquisitions are a capital investment, not a P&L expense.

 

[slyadams]

Yes companies make a loss to improve branding and audience often.

I’m not sure the point you’re trying to make. What I said above is objectively true. Making a loss doesn’t impact brand 1 iota.

 

[NZT-One]

I think all he's saying is that owners taking money out of club is bad. In your scenario he would see that as 0 profit, so would be good. I think the vast majority agree with this tbh so I don't know why there's even a debate happening.

You are registered since nearly 10 years and that is seriously puzzling you? I've seen debates on here where this thing here seems like the intro to a harvard lecture in comparison

 

[NZT-One]

It’s not a straw man. Easiest and simplest example…

You finish 3 points behind the league winners but finish £40m in profit. But you also bought a £50m centre back as you deemed the £80m best centre back in the world, too expensive for financial reasons.

But this is so simplified its borderline unrecognizable... I mean, there is no real world way to know that the expensive CB just hasn't been bought because the money was meant for the owners pocket. Could be also that DOF didn't like his skillset, considered him not as suitable, too old whatever. Also it is quite difficult to imagine a scenario where this one transfer is supposed to be worth 4 points on its own (the scenario is extremely unlikely alone, not even speaking about how to find a way to pinpoint that the scenario actually happened). It is a bit like assuming had we bought Kane and Bayern would have went for Hojlund that we would be better off by 44 more goals scored now because thats the amount he scored for Bayern.

I see your point - obviously nobody would want a scenario where a necessary investment into sport infrastructure (personel or material) wouldn't be made just because the owners wants to make sure he can get some cash. But to avoid such scenarios, we don't have to question the concept of profit. Why not go even further - question money alltogether I mean seriously so many people complain they have not enough, others complain that the wrong people have it. Just get rid and be free.

That’s properly route 1 but it’s an example.

I googled for anything to support my viewpoint, obviously. But there’s loads out there.

This was a decent read : https://graphroots.co.uk/2021/02/08/why-football-clubs-shouldnt-be-used-to-make-money/

Less oppositionally to you… and less relevant to this discussion, this was a fun read while I was reading stuff. https://www.sciencedirect.com/science/article/pii/S2444883419301639

Will have a look into it tomorrow

I'm not so sure it is.

It is. Doesn't have to be correct or legitimate to be reasonable. There are clubs out there that run without the focus of generating profit for their owners - this means, it is possible which means we can't just assume that every successful club has make profit for their owners.

Obviously being profitable has many advantages. But I guess, this is isn't something the other poster would argue against.

 

[Hammondo]

But this is so simplified its borderline unrecognizable... I mean, there is no real world way to know that the expensive CB just hasn't been bought because the money was meant for the owners pocket. Could be also that DOF didn't like his skillset, considered him not as suitable, too old whatever. Also it is quite difficult to imagine a scenario where this one transfer is supposed to be worth 4 points on its own (the scenario is extremely unlikely alone, not even speaking about how to find a way to pinpoint that the scenario actually happened). It is a bit like assuming had we bought Kane and Bayern would have went for Hojlund that we would be better off by 44 more goals scored now because thats the amount he scored for Bayern.

I see your point - obviously nobody would want a scenario where a necessary investment into sport infrastructure (personel or material) wouldn't be made just because the owners wants to make sure he can get some cash. But to avoid such scenarios, we don't have to question the concept of profit. Why not go even further - question money alltogether I mean seriously so many people complain they have not enough, others complain that the wrong people have it. Just get rid and be free.

Will have a look into it tomorrow

It is. Doesn't have to be correct or legitimate to be reasonable. There are clubs out there that run without the focus of generating profit for their owners - this means, it is possible which means we can't just assume that every successful club has make profit for their owners.

Obviously being profitable has many advantages. But I guess, this is isn't something the other poster would argue against.

This is a strawman as you have moved the goalposts, this is not what was originally said.

 

[Hammondo]

I’m not sure the point you’re trying to make. What I said above is objectively true. Making a loss doesn’t impact brand 1 iota.

I wasn't being sarcastic, I was agreeing.

 

[Bright_Eyes]

That wouldn't be zero profit though. The player acquisitions are a capital investment, not a P&L expense.

Yeah, I don't know what that means. My understanding of business is that is you pay x for this and receive x for that, you're at net zero.