Ferguson faces budget cap - reports

Alex Ferguson’s plans to challenge Barclays Premiership champions Chelsea could be hampered by financial restrictions at Old Trafford in the wake of the Malcolm Glazer takeover.

Major sponsors Nike have already warned Manchester United a continued lack of success could cost them dear while there are reports a limit of £25million has been put on Ferguson’s annual transfer budget.

With money no object for Chelsea, who are bankrolled by Russian oil billionaire Roman Abramovich, the gap between the two clubs could well grow.

Sportswear manufacturers Nike began a 13-year kit deal with the Red Devils in August 2002 worth up to £303million, but it is reported a get-out clause will allow the company to decide in July next year whether to continue that agreement past the 2007-08 season.

And vice-president of sports marketing Ian Todd has admitted they will be monitoring United’s progress following their failure to win a trophy last season.

Todd told The Sunday Telegraph: “We don’t know what is going to happen next year. All options are open.

“Chelsea won the league this year, Arsenal won the FA Cup and Liverpool won the Champions League. So you could argue that Manchester United is only the fourth-best club in England at the moment.

“If, for example, Manchester United failed to qualify for the Champions League next season, that might be a problem. We will look very carefully at this situation, as we do with all our sponsorship agreements.”

The Independent on Sunday also claims to have seen documents outlining the restrictions which will be placed on Ferguson’s spending on players.

It is suggested there is a schedule in place which states net expenditure on players cannot exceed £26m per annum in the next two seasons, with the limit dropping to £25m in subsequent years to 2014.

The paper reports a cap on the absolute amount available to spend rises from £31m to £34m with an additional £25m to be spent over the nine years.