Some Manchester United supporters maybe watching the troubles at Liverpool with a grin, but the mess at Anfield is no smiling matter because the contagion could spread to Old Trafford much more easily than many are ready to admit.

1. Both Liverpool and Manchester United were bought by ownership groups who used a leveraged buy out, a transaction in which the target being acquired is used to fund its own purchase by taking out debt against its value.

2. Each of those ownership groups is the sole owner of the club.  Should external conditions render the owners financially unstable it would be disastrous for the club (see Sacha Gaydamak’s exit at Portsmouth). While many other clubs bear the risk of having a single owner, the consequences are magnified in a highly leveraged situation.  A debt laden balance sheet hinders the ability to find reasonably priced financing and quickly amplifies the damage an unstable owner can inflict.

3. The loss of Champions League football is a near mortal blow to both clubs in their current situations. Liverpool has already suffered it and the consequences are quite apparent, star players have been sold and financial instability resulted.  The loss of the Champions League is not a threat to Manchester United currently, but the looming retirement of Sir Alex Ferguson makes entrance to Europe’s elite competition less of a certainty, Red Devil supporters should hope that Sir Alex has many years of management ahead of him.

4. The Ratio of Interest Payments to Revenue. A larger percentage indicates more revenue going towards debt service. Liverpool 21.6% (40m /184.8m), Manchester United 14.0% (£40m /£286.4m).

5. The Ratio of Total Debt to Revenue is a basic measure (or should be) of the financial stability of a club.  A larger percentage indicates a higher debt level relative to the ability to repay.  Liverpool’s ratio based on the most recent revenue and debt figures is 128% (£237m/£184.8m), Manchester United’s is 262% (£750m/£286.4m), 183% if you want to be generous and say the Glazer’s PIK loans will not be repaid by the club.

So while Manchester United pays less on interest than Liverpool does, its debt load is significantly higher even when compared to its higher revenue.  Both clubs have similar ownership and financing structures and of course compete in the same league and for the same prize monies.    The Champions League and all the riches it brings is practically the only thing which differentiates the two English giants, without it the fortunes of the two would be much closer than anyone at Old Trafford would like to see.  Given the similarities, Manchester United supporters should contain any feelings of schadenfreude they might be feeling.