Gary Neville Must Lead His Revolution To Stop Manchester United’s Dividends

Last year, former Manchester United defender Gary Neville revealed to the world he believes the U.K. “needs a revolution.”

The television pundit did clarify that any overhaul of the systems that govern the country should be “peaceful,” but it certainly came as a surprise.

This year the suggestion Neville is making is a little more modest and closer to home.

He’d like Manchester United’s American owners, the Glazer family, not to take their annual dividend.

“The Glazer Family should NOT be taking [$13.5 million] in dividends this Friday. It isn’t right with the investment needed in the team, stadium and training ground,” he wrote on Twitter.

“The club’s cash position is low compared to previous years. An announcement is needed to halt it for the next 3 years minimum.”

Neville made a wise choice by zeroing in on the cash position, the flow of money is a far better judge of how a business is performing compared to, for example, net debt, which is normally where discussions about the Glazer ownership of Manchester United lead.

The former right-back is correct that the money in United’s purse is lower than in previous years. But the counter-argument is the club has just emerged from two years of unprecedented cash flow challenges.

Or as the new chief executive officer, Richard Arnold, wrote in the club’s latest financial statement “Off the pitch, our revenues have continued to recover from the pandemic, reflecting the enduring strength of our commercial operations, which in turn support our ability to continue to invest in the Club.”

Neville’s suggestion should maybe be filled next to his desire for revolution because, whether he likes it or not, the health of Manchester United plc is reliant on its ability to pay dividends.

As of October last year, just under a third of the club is owned by investors on the New York Stock Exchange, where United is listed.

They would certainly be alarmed by any sign the company can’t afford to pay out.

The Glazers who own the majority of the club could forgo their share, but that would still cause problems with the institutions they need to borrow money from and commercial partners their making deals with.

Manchester United would argue that commercially speaking it weathered the Covid-19 storm relatively well. If anything things are looking up, the addition of Cristiano Ronaldo at the start of the 2021/22 didn’t deliver results on the pitch, but it seriously boosted the share price.

Maybe it’s unfair to scrutinize Neville’s dividend freeze suggestion to this extent because what it is a demonstration of is the ever-growing gap between what a business deems success and how a soccer fan sees it.

New CEO fronts up to the fans

There have been some substantial changes within Manchester United over the past year.

Finally, after years of resistance a director of football has been appointed and, of course, there is a new manager in the form of Erik Ten Hag.

Arguably the most significant change of all has been the appointment of a chief executive officer to take over the day-to-day running of the club from executive vice-chairman Ed Woodward.

The chosen appointee, Richard Arnold, may not have been a household name as far as soccer CEOs go, but he’s already made a splash with the fans.

The new boss reportedly decided to meet with a group of supporters who’d planned to protest outside his house for a chat in the pub.

Videos of the encounter quickly emerged on social media in which Arnold was pretty candid.

Amongst the revelations that emerged was Arnold’s view on Manchester United’s past expenditure.

“We spent a billion pounds on players. We have spent more than anyone in Europe. I’m not thrilled where we are,” he told supporters.

“It doesn’t sit easy with me and I worry how we get this sorted for the future. What’s happened is we have f***ing burned through cash.

“You can’t go to our training ground and say ‘show me where the [$1.2billion] is because we haven’t spent money well historically. I’m not here to defend [chairman] Joel [Glazer]. He must speak for himself.”

Arnold is not wrong, when it comes to spending money United hasn’t been shy.

They’ve had the highest net spend on transfers in Europe over the past decade and a wage bill that is on a par with Premier
League ‘big spenders’ Chelsea and Manchester City.

Yet performances on the pitch have not reflected that expenditure.

United pays around $40 million less in wages than rivals City, but the performances show a squad underperforming their value by a long way.

There was a 35-point difference between the two Manchester sides last season and the sixth-place finish United managed was beneath teams with a fraction of the Red Devils’ budget.

Dividends or debt aside, if United is to start to have any type of success it needs to get better value for the money it spends.

The ‘commercial club’ reputation

Despite the increasing number of clubs across Europe owned by American business people, none has more of a reputation for commercialism than Manchester United.

The transformation into a global corporate behemoth started long before the Glazers pitched up at Old Trafford, but their ratcheting up of the money-making machine has only cemented the idea that it’s business first.

As success has been harder to come by in recent years, financial strength has become an explanation for poor on-field performance.

The focus, the accusation goes, is not on the pitch, but in the boardroom.

Former Manchester United Louis Van Gaal coach did little to dispel this notion when he offered incoming manager Erik ten Hag the advice to “choose a football club and not a commercial club.”

The response from ten Hag was that he was convinced he was joining a side that prioritized soccer.

“I spoke with the directors about it. Football is one, two and three at this club and every club these days is commercial,” he said.

“Every club needs it, needs the revenues to be at the top, to do it is necessary.”

This is the key point, modern soccer is business. There is no hiding from the need for revenue and it is crucial to sporting success.

Although Manchester United’s financial strength amidst diminishing on-field fortunes has proved that it’s possible to continue growing without winning ideally you want both.

Whether ten Hag and Arnold are the men to deliver that remains to be seen.

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