Fans would be forgiven for being a little concerned about Manchester United’s latest financial statements, published on September 11, 2024.
The Red Devils recorded a net loss of £113.2 million ($147.3 million) for the year ending June 30. That means they have now lost more than £370 million ($483 million) over the past five years.
Factoring in long-standing debts of £496.5 million ($650 million), plus around £65 million ($84.8 million) combined in borrowings and a credit bill, it doesn’t paint a rosy picture of the finances of one of the world’s most famous and successful sporting entities.
There is also the question of the rules United must adhere to. UEFA has Financial Fair Play (FFP) in place, while the Premier League has its Profitability and Sustainability Rules (PSR) – rules that were breached by Everton and Nottingham Forest, leading to points deductions last season.
Yet despite their heavy losses and recent drastic budget cuts, United do not believe they will suffer the same fate. So why are they confident?
Will Manchester United be deducted points?
Despite their reported losses for the year ending June 30, 2024, United appear to believe they will not face any potential sanction, such as a points deduction, from the Premier League.
Essentially, this is because not all of a club’s losses are automatically factored into the calculations around PSR.
Although United’s published accounts appear to show they have exceeded the losses over a three-year period allowed by the PSR, much of their spending was focused on areas such as club infrastructure, youth development, women’s football and community projects – investments that are considered allowable losses under a PSR cycle.
Since acquiring Manchester United in 2005, the club has made cumulative pre-tax losses of £483m and paid net interest on loans of £969m. pic.twitter.com/XRDfaKarbP
— Kieran Maguire (@KieranMaguire) September 11, 2024
Premier League clubs can also add losses related to the COVID-19 pandemic during the 2021/22 season into last season’s accounts – a reduction in revenue from fans attending matches, delayed payments to broadcasters etc – which also helps to reduce the level of those losses.
In short, United appear to believe they have enough mitigating factors in their favour to avoid the risk of a Premier League points deduction despite their substantial investment in signings and wages. It is also worth pointing out that United have a record total turnover of £661.8 million ($862.4 million), which is set to increase next year, so the club’s finances are far from a total mess.
“The club remains committed to and compliant with the Premier League’s profit and sustainability rules and UEFA’s Financial Fair Play regulations,” said United chief executive Omar Berrada, who took over this year as part of sweeping changes implemented by new minority owner Sir Jim Ratcliffe.
How much are clubs allowed to lose under PSR rules?
The PSR allows clubs to lose no more than £105 million ($136.8 million) over a three-year period.
United lost £113.2 million ($147.3 million) last year, £28.7 million ($37.4 million) in 2022/23 and £115.5 million ($150.5 million) in 2021/22. Clearly, just looking at those numbers, they would be in breach of the PSR.
However, mitigating factors such as where and how much of this money was spent mean the club believes it has complied with the regulations.
Why did Everton and Nottingham Forest receive a points deduction?
In November 2023, Everton were deducted 10 points after being found guilty of a £19.5m PSR breach for the period ending 2021/22. This sanction was reduced to six points on appeal.
They were then deducted two points for a similar breach of the regulations for the period ending in 2022/23.
In both cases, the club was told it had exceeded the PSR limit “significantly”. An independent commission that looked into the first case said: “The situation Everton finds itself in is of its own making. It is Everton’s responsibility to ensure that it complies with the PSR regime. The breach of the threshold is significant. The implication is that Everton’s culpability is great.”
Nottingham Forest were penalised four points for exceeding the PSR limit after defeats ending at the end of the 2022/23 season. They and Everton appealed their sanctions (the Toffees withdrew their appeal against their second sanction) but were unable to overturn the decisions entirely.
In each club’s case, the sanctions were handed down based on the financial figures they themselves published. Under Premier League rules, Everton and Forest had both exceeded the PSR limits based on the losses they had incurred, which were not covered by the same mitigating circumstances that Manchester United are relying on.
How much did Manchester United spend in the 2024 summer transfer window?
United are in the midst of a delicate balancing act, which explains the increased caution they have shown in their transfer spending in the last transfer window. Manchester United’s policy has been more of a ‘one in, one out’ approach, rather than the ‘scatter gun’ approach of other transfer periods. The signings of Leny Yoro, Joshua Zirkzee, Noussair Mazraoui, Matthijs de Ligt and Manuel Ugarte have been offset by the sales of Donny van de Beek, Alvaro Fernandez, Facundo Pellistri, Hannibal Mejbri, Willy Kambwala, Aaron Wan-Bissaka, Mason Greenwood and Scott McTominay. The departures of Raphael Varane and Anthony Martial have also reduced the wage bill.
While that wasn’t enough to turn a profit – far from it – it means their net transfer spend for the 2024 summer window was around £100m ($130m), which is obviously a figure the club are confident they can absorb without breaking the rules.
“It has been a busy off-season for the club, with successful training camps for both our men’s and women’s teams,” said Berrada. “We have strengthened our men’s first team with five exciting players and implemented a new football leadership structure to provide better support to our manager, Erik ten Hag.
“Dan Ashworth has been appointed as Sporting Director and Jason Wilcox has joined us as Technical Director, two hugely experienced and highly respected professionals who will add great depth to our squad. We have added six players to our women’s squad and are investing to ensure all our teams have access to world-class training facilities at a fully refurbished Carrington.
“As I embark on my new role as Chief Executive of this historic club, we are all extremely focused on working collectively to create a bright future, with football success at its heart.
“We are working towards greater financial sustainability and making changes to our operations to make them more efficient, to ensure we are focusing our resources on improving performance on the ground.”
