The fact Manchester United posted record revenues and still made a loss sums up a lot about the club at the moment.
United’s ability to generate income, with £648.4million ($784m) coming into the club for the financial year ended June 30, remains something to be applauded, especially given their lack of on-field success over the past decade. But to still post a £28.7m loss, even if it is an improvement on the previous year’s £115.5m deficit, is indicative of the club’s inefficiency at almost every level.
Commercially, they are brilliant. When it comes to filling Old Trafford, there are no issues shifting tickets. They are even selling more football shirts than ever before. United’s ability to generate enormous revenues, even during an era with limited success, is so often the envy of other clubs in England and across Europe.
Yet debt and inefficiency, which stem from the Glazer family’s controversial ownership, are holding them back.
Should Sir Jim Ratcliffe’s deal to purchase a minority 25 per cent shareholding from the Glazers go through, the British billionaire is not in business to lose money — and will almost certainly be looking at ways to turn the loss-making club into a profit-turning one.
How he plans to do that, however, is yet to become clear.
The Athletic has broken down what United’s latest set of accounts reveal about the club’s state of financial health…
Loss before tax — £33m
Despite the headline-grabbing record revenues, United failed to make a profit last season, posting a £28.7m loss instead.
Commercial and matchday income was on the rise but missing out on Champions League football meant lower broadcasting revenues and another season in the red — their fourth in a row.
United attribute their £28.7m loss to rising costs from inflation but also their investment in the playing squad after backing Erik ten Hag substantially during his first summer in charge.
But years of heavy spending mean the club is now treading carefully when it comes to football’s financial fair play (FFP) regulations. Pre-tax loss is the relevant measure for the Premier League’s profitability and sustainability (P&S) test and on that front, there is good news and bad news.
The good news is that a pre-tax loss of around £33m this year is much, much less than the £150m loss recorded during the 2021-22 season. The bad news is that there is still a total pre-tax loss of £183m over the past two years, which does not help those FFP margins.
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This season’s P&S test will look at United’s finances from 2021-22, 2022-23 and 2023-24. Allowances can be made for spending on youth development, women’s football and community outreach projects, as well as COVID-19-related losses during the first of those seasons.
That could still leave a substantial loss, however, and if it is larger than £15m over those three years then United could be in breach of the rules — hence why every deal this summer had to go through what one source called a “financial sausage machine”.
Wage bill — £331m
A huge factor behind the massive loss in the accounts for 2021-22 was United’s spending on wages, which stood at £384.1m — a Premier League record.
That was always going to have to come down without revenues generated from Champions League football and it fell to a more manageable £331.4m last season.
Salary reductions due to the failure to secure a top-four finish had an effect, but so did the departures of high-earners such as Paul Pogba, Edinson Cavani, Juan Mata, Nemanja Matic and Jesse Lingard, and the mid-season exit of their highest-paid player, Cristiano Ronaldo.
The departures of Lingard (left) and Ronaldo have helped United’s finances (Ash Donelon/Manchester United via Getty Images)
A £331m wage bill is lower than champions Manchester City and Liverpool, who reported wage bills of £354m and £366m in their most recent set of accounts.
Player sales — £20m
While top-flight rivals have regularly funded their transfer spending through player sales, United have failed to make as much money in the market.
There were signs of improvement last summer, with Anthony Elanga and Dean Henderson departing for eight-figure sums, but both deals were concluded too late to be included in this set of accounts.
Only Andreas Pereira, James Garner and Tahith Chong left Old Trafford for a fee during the 2022-23 season, which is reflected in United generating just £20.4m in sales, down from £21.9m the previous year.
Both of those figures pale in comparison with Chelsea and Manchester City, who raised £123.2m and £67.7m from player sales during 2021-22.
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Interest paid — £32m
Debt continues to be the biggest bugbear among many United supporters, as it has been since the Glazer family’s leveraged buyout in 2005.
The principal amount of non-current debt that United owe remained unchanged at $650m but fluctuations in the exchange rate meant that the pound sterling value of that debt fell to £507.3m, compared to £530.4m at the end of 2021-22.
United also made a £100m drawdown on their revolving credit facility to support investment in the playing squad.
All this debt has to be serviced through interest payments and those payments went up significantly — from £20.6m to £31.9m.
It is the most the club has paid out in interest since a £42.6m payment in 2015. That was always expected in a world of rising rates, especially as some of United’s debt is subject to variable rates rather than fixed, but only underlines that there are added costs to the Glazers’ controversial, debt-laden ownership model.
(Top photo: Nick Potts/PA Images via Getty Images)
