Manchester United have kicked off the summer transfer window by making a bid for Everton’s Jarrad Branthwaite and opening talks with Bayern Munich for Matthijs de Ligt.
This suggests they are a club looking to get ahead in the market and could be seen as a sign of financial strength, but the quarterly results also highlight the challenges they face in complying with the Premier League’s Profit and Sustainability Rules (PSR).
Pre-tax losses are the starting point for calculating the PSR, and United posted a net loss of 71.4 million pounds ($92 million) for the three months to March 31, 2024.
This brings the club’s total pre-tax loss for 2023-24 to 89.2 million pounds ($114 million) by March, with a further calculation required for the three months to June 30, 2024.
The Athletic has analysed the figures from United’s latest financial statements…
Should I be worried about violating the PSR?
Premier League financial rules allow clubs to incur losses of 105 million pounds ($135 million) over three years, averaging 35 million pounds ($45 million) per year, with 90 million pounds ($115 million) covered by guaranteed funding from owners. Without owner funding, the allowed losses over three years are 15 million pounds ($19 million).
It’s important to note that the PSR calculation does not include spending on infrastructure, women’s football, youth development, community activities or COVID-19 response, and therefore represents a significant deduction from United’s three-year losses, which stand at £271.4 million ($348 million) in the current cycle.
United will be hoping that their decisions in January, particularly the loan signings of Jadon Sancho and Donny van de Beek, will generate enough savings to avoid breaching any rules.
Yet United find themselves in a precarious position and, although they know exactly where they stand numbers-wise and their latest accounts suggest they may struggle to comply with the regulations, they are not one of the teams scrambling to sell players before the new unofficial deadline of June 30, though.
It always felt like things were going to be tough for United, and these numbers may explain why the airline was cautious about spending in January.
Going deeper
How the PSR deadline affected June deals: £323m sales, question marks and young players on the move
What happens if I break the rules?
The most likely outcome will be a points deduction, something that both Everton and Nottingham Forest received last season.
Everton were deducted 10 points for rule violations in November but their appeal was successful and the points were reduced to six, and then in April they were docked a further two points for rule violations.
Nottingham Forest were deducted four points for breaking the rules.
Jadon Sancho’s loan move to Borussia Dortmund would have been beneficial for the club’s financial situation (Justin Setterfield/Getty Images)
Are United’s revenues in a healthy state?
Although the quarterly results showed total revenue (£136.7 million, $176 million) was 20 percent down on the same period last year (£170 million, $218 million), United said it still expected to post a record figure for the full year.
They believe the drop is down to a smaller number of games being played, including nine fewer at Old Trafford than at this time last year.
Despite the decline in revenue for this period, total revenue for the first nine months of the 2023-24 financial year is up 8% – mainly due to their participation in the Champions League, where they failed to qualify for the group stage and were eliminated early.
United expects full-year revenue to reach a record high of 660 million pounds ($848 million), compared with a total of 648 million pounds ($832 million) for the year to June 30, 2023.
How much cash do they have in the bank?
It’s important to note that these accounts are a snapshot in time, and the figures only reflect what United had in its bank accounts as of March 31st.
That said, its bank balance at the time was £67 million ($86 million), slightly down from the £73.7 million ($95 million) recorded at the same time last year.
What is their debt amount?
United’s principal debt remains at $650 million, but when converted from US dollars to British pounds the total has fallen slightly – it now stands at £511.3 million compared to £521.5 million at the same time last year.
The company’s current borrowings under revolving credit facilities (similar to credit cards) total £143 million ($184 million), down £53.7 million ($69 million) from a year ago (£203.7 million, $262 million).
The club is paying more than £1 million ($1.3 million) per week in interest to service the debts imposed on the club by the Glazer family’s ownership, totalling £960 million ($1.2 billion) since 2005.
Manchester United made a pre-tax loss of £83.7m in the third quarter due to lower revenue from no European games, wages were still below 7% and costs relating to partial ownership of Ineos were £30m. Interest was over £1m a week, taking the club’s total interest bill since 2005 to £960m. #Glazernomics pic.twitter.com/PNZody1pRD
— Kieran Maguire (@KieranMaguire) July 10, 2024
The report did not detail the amount of unpaid transfer fees, but a more detailed ‘interim report’ is due to be published shortly.
At the end of the second quarter, the three months ending Dec. 31, 2023, United owed other clubs £158 million ($203 million).
What else can the records tell us?
The accounting period covers the three months following Sir Jim Ratcliffe’s purchase of a £1.3bn (27.7%) stake in the club, with the deal completing in February.
As reported by The Athletic in January and now revealed in the latest report, United paid Raine Group, the commercial bank instructed to help the Glazers find a buyer, the bulk of £30m ($39m) for their services.
It was United, not the Glazers, that had to foot the bill, and the £30.3 million figure in the statement was on top of the £9.6 million ($12 million) spent in the previous quarter to facilitate the sale.
United know they need to be disciplined in their transfer negotiations as budgets remain tight for the rest of the summer.
Going deeper
Explained: Manchester United plans to cut 250 players
(Top photo: Abram Glaser with Sir Jim Ratcliffe and Richard Heathcote via Getty Images)
