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COMMENT

8/4/2010
Elimination from the Champions League at the quarter-final stage is likely to cost Manchester United a drop in income of around £15 million compared to last year.

UEFA distributes €4 million (£3.5m) to each semi-finalist of the Champions League and €5.2 million (£4.5m) to the beaten finalist (Manchester Utd's position last year). The club would also have earned a likely £3m plus from gate receipts and commercial revenues from hosting a semi-final.

On top of this, it is likely that sponsorship contracts would have included incentive clauses rewarding the club for reaching the final stages of the Champions League. These payments could easily have netted the club a further £2 - £3 million.

Reaching the final of the Champions League would have additional potential benefits such as helping to grow the club's international fan base and increasing merchandising revenues. The value to the club of such opportunities is expected to be in the region of £1- £2 million.

Aside from failing to reach the latter stages of the Champions League, Manchester United were knocked out of the F.A Cup in the third round by Leeds United, costing the club a potential revenue loss of at least £6 million had they had a good cup run. In 2009 the club reached the semi-final before being knocked out by Everton.

The figures will make depressing reading for the Glazers less than a week after estimates from JP Morgan stated that club matchday revenues in the next two years could drop by as much as £29 million. The club has also stated that ticket prices for next season will be frozen and it is understood that JP Morgan's figures reflect an expected fall in corporate hospitality revenue.

Fans will no doubt worry that the lower revenues will mean that there is less money in the transfer kitty at a time when the squad is looking increasingly vulnerable. With Giggs, Scholes, Van der Sar and Neville approaching the end of their careers, and the team seemingly reliant on the form and fitness of Rooney, many fans believe that significant investment is needed.

Sir Alex Ferguson has said that there will be no summer spending spree, and many will question that statement – is it a bluff? If not, where is the world beating team going to come from?. The problem that Man Utd have is that if they do enter the transfer market, they will be competing with both Chelsea, who are rumoured to have earmarked significant funds for the summer, and Manchester City, for whom money appears to be no object. On top of this, the big continental clubs have the advantage of the Euro being strong against the pound, effectively giving them a 10-20% benefit in the transfer of players within the Euro zone.

With the Glazers requiring the proceeds of Ronaldo's sale last season to keep the club in profit, it is now very difficult to see where a significant transfer kitty could be found. In what is thought to be a concession to pressure, the board has announced that ticket prices next season will be frozen, and there is unlikely to be any significant increase in commercial income as the club has pretty much taken this as far as possible for the time being.

The Glazers could, therefore, be reliant on Sir Alex Ferguson's ability to get the best out of, what for Man Utd, would be a relatively inexperienced team next season.

With fans already discontented and the Red Knights apparently waiting in the wings, this could be a huge gamble that will make or break the Glazers' future at Old Trafford.

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