Manchester United Lose Millions on Irish Property Deal
Manchester United are still paying the price for one of the worst financial deals in the club's history. The Red Devils' are still paying rent on their Dublin Megastore in Ireland—11 years after the store closed its doors for the last time.
According to Jack Fagan of The Irish Times, United have spent €520,000 per year on rent since they first bought the store in 1999—the year they famously won the Treble.
Considering that the failed venture closed in 2002, just over two years after first opening its doors, this, in the fullness of time, can be seen as nothing but a dreadful deal gone wrong. So confident were United in 1999 when agreeing to rent the landmark Lafayette building, that they agreed to a 15-year lease of €520,000 per year.
Add their rent together since 1999 and you come up with a cool €7.8 million. On top of which the Red Devils must pay a further €390,000 penalty fee to finally end the leasing arrangements. The total sum United will have paid out by August 15, 2015, when the lease finally ends, will be a whopping €8.2 million.
The famous six-storey landmark building, on the corner of Westmoreland Street and D'Olier Street, will go on sale next week for just €3.5 million.
The Dublin Megastore opened to huge fanfare in November 1999, with Roy Keane, Sir Alex Ferguson, Gary Neville and Mark Bosnich all coming over to Ireland for the grand opening. At the time, a United spokesman described the shop as the "closest experience you can get to actually going to a game" for United fans. Time would prove how wrong he was.
Part of the enticement to get fans to shop in the store was live Premier League Manchester United matches. Fans would also get the chance to buy the official match program, which would be flown in especially for matchdays.
However, the store proved to be an unmitigated disaster despite the club having a rich and long history with Irish players and coaches. Former Ireland and Manchester United legend Roy Keane was captain of the side when the Irish store opened in '99.
Somewhat embarrassingly, the much-vaunted 15,000 square foot Megastore closed in February 2002 amidst poor sales and the club's plummeting stock price. Since then the famous building has been used as a clothing store, cafe and in 2011, as lease holders, United helped renovate part of the old shop into the Lafayette cafe and bar.
The backdrop to this failed property venture began in September 1998 when BSkyB tried to buy the club for £623 million.
United, on the verge of an unprecedented treble, saw how the potential deal could send the club into the stratosphere and began to expand rapidly across the world. They opened over 20 stores across Europe and Asia and announced a further 150 such ventures. It is worth noting that Dublin was the first such Megastore outside the Old Trafford HQ.
The proposed sale to BSkyB was eventually turned down by the Monopolies and Mergers Commission.
The government-based body found that a merger between the Premier League broadcaster and United would give the club an unfair advantage when negotiating broadcasting rights.
Upon being turned down by the MMC, BSkyB immediately lobbied the government for approval.
However, on April 9, 1999, just two days after United drew 1-1 with Juventus in the first leg of the semifinal of the Champions League, the Department of Trade and Industry followed the MMC's recommendation and barred Rupert Murdoch and BSkyB from buying the club.
The end result was seen by many fans as a major victory against corporate football. The government's decision, however, cost Manchester United an estimated £85 million. Fifteen percent was wiped off their stock value after the DTI's announcement.
The off-the-pitch announcement did little to deter the team on the field of play. Led from the front by Keane, United stormed to the Premier League title, the FA Cup and Champions League and went unbeaten for 33 games after Christmas.
The 1999 team is still hailed today as one of the greatest English teams of all time. They set the precedent for all the United players and teams that followed. They also put the club back on the map as a world power instead of just being a massive club.
Today, Manchester United is owned by Malcolm Glazer after the American tycoon won control of the club in 2005 with a £790 million takeover.
On the field, the club could not be more different.
Sir Alex Ferguson has departed and has been replaced by ex-Everton boss David Moyes. The club also took a huge stock market hit when the Scot announced his decision to retire. United lost almost five percent of its value in the first 10 minutes of trading on the New York stock exchange on May 8.
Most of that money was recouped when Moyes was announced as his successor, however.
Moyes will find that he is now under an unscrupulous microscope. His every move and decision will be analyzed to the nth degree like never before—especially his transfer dealings.
One thing is almost for sure: He won't make a deal that will still haunt the club in 15 years—or will he?
Statistics from PremierLeague.com
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