Manchester United have started the summer transfer window by bidding for Everton’s Jarrad Branthwaite and opening talks with Bayern Munich over a deal for Matthijs de Ligt.
Although this suggests they are a club in the market looking to get their business done early — you could even argue it shows financial strength — their quarterly accounts highlight the challenges they are facing to comply with the Premier League’s profit and sustainability rules (PSR).
Pre-tax losses are the starting point for PSR calculations, and United posted a £71.4million ($92m) net loss for the three months ended March 31, 2024.
This has taken the club’s pre-tax loss total for 2023-24 to £89.2m ($114m) up until March, and there are another three months — the three months ended June 30, 2024 — to account for.
The Athletic has crunched the numbers on United’s latest set of financial results…
Should they be worried about breaching PSR?
The Premier League’s financial regulations allow clubs to incur a financial loss of £105million ($135m) over a three-year period, at an average of £35m ($45m) per year, and on the proviso that £90m (£115m) is covered by secure funding from the owners. Without the owner-secured funding, the three-year losses allowed are £15m ($19m).
It is important to note that for the PSR calculation, significant deductions will be made to United’s three-year loss figure — which stands at £271.4m ($348m) for the current cycle — as spending on infrastructure, women’s football, youth development, community work and Covid-19 are not included.
United will be hoping that the decisions they took in January, most notably sending Jadon Sancho and Donny van de Beek on loan, are going to create enough of a saving to see them avoid breaching the rules.
Still, United are sailing close to the wind, and while they will know exactly where they are at from a numbers perspective, the latest set of accounts show they could be facing a battle to comply. That said, they were not one of the teams scrambling around to sell players before June 30 — the new unofficial deadline day.
United always felt it would be tight and these figures may indicate why they were cautious over spending in January.
What happens if they breach the rules?
The most likely outcome will be a points deduction, with Everton and Nottingham Forest both being on the receiving end of this punishment last season.
Everton were docked 10 points in November for breaching the regulations, but had it reduced to six points following a successful appeal. They were deducted another two points in April for a further breach.
Nottingham Forest were given a four-point deduction for breaking the rules.
Jadon Sancho’s loan to Borussia Dortmund will have helped the accounts (Justin Setterfield/Getty Images)
Are United’s revenues in a healthy position?
Even though the quarterly results show that overall revenue (£136.7m; $176m) is down 20 per cent from the same period last year (£170m; $218m), United say they are still on track to post a record figure for the full financial year.
They attribute the decrease to fewer matches, including nine fewer games at Old Trafford, than during the same time last year.
Despite the fall in revenue for this period, overall revenue across the first nine months of the 2023-24 financial year is up by eight per cent. The reason for this is largely down to their participation in the Champions League, which they were knocked out of early after failing to qualify from their group.
United say they are forecast to reach a record £660m ($848m) over the full financial year. For the year ended June 30, 2023, it totalled £648m ($832m).
How much cash do they have in the bank?
It is important to note these accounts are a snapshot in time and the figure is only reflective of what United had in the bank specifically on March 31.
With that said, they had £67million ($86m) in the bank then, which is a slight decrease from the £73.7m ($95m) they posted this time last year.
What are their debt levels?
United’s principal debt remained at $650million, although, when converted from U.S. dollars to British pounds, there was a slight decrease in the total figure. It is now £511.3m compared to £521.5m in the same period last year.
Their current borrowings on their revolving credit facility — think of it as a credit card — totalled £143m ($184m), which is down £53.7m ($69m) on the prior year quarter (£203.7m; $262m).
They paid more than £1m ($1.3m) per week in interest to service the debt, which has been placed on the club as a result of the Glazers’ ownership, taking the overall interest charges to £960m ($1.2bn) since 2005.
Manchester United made pre tax losses of £83.7m in 3rd quarter due to lower revenue on back of no European matches. Wages still ⬆️7% & costs connected to Ineos part ownership were £30m. Interest costs over £1m a week, taking total interest since 2005 to £960m #Glazernomics pic.twitter.com/PNZody1pRD
— Kieran Maguire (@KieranMaguire) July 10, 2024
What they still owe in outstanding transfer fees is not detailed in this report, although that will be published imminently in the more detailed ‘interim report’.
At the end of the second quarter, the three months ended December 31, 2023, United owed £158m ($203m) to other clubs.
What else do the accounts tell us?
The accounting period covers the three months that saw Sir Jim Ratcliffe buy a £1.3billion stake (27.7 per cent) in the club, with his deal going through in February.
As reported by The Athletic in January, and now outlined in these accounts, United paid Raine Group, the merchant bank instructed to help the Glazers find a buyer, the best part of £30m (£39m) for their services.
It is United, rather than Glazers, that had to foot the bill. And the £30.3m figure in this set of accounts is on top of the £9.6m ($12m) spent in the prior quarter to help facilitate a sale.
United acknowledge that, for the remainder of the summer, their budget will remain tight and they will need to be disciplined in their transfer negotiations.
(Top photo: Avram Glazer and Sir Jim Ratcliffe; Richard Heathcote via Getty Images)
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