Frank Christian
Supporters may naturally have concerns regarding Manchester United’s most recent financial report, which was made public on September 11, 2024.
The club recorded a net loss of £113.2 million ($147.3 million) for the fiscal year ending June 30, adding to a staggering total loss exceeding £370 million ($483 million) over the last five years.
When considering longstanding debts amounting to £496.5 million ($650 million) and an additional £65 million ($84.8 million) in borrowings and credit obligations, the financial outlook for this acclaimed sports organization isn’t very encouraging.
Compounding the issue are regulatory requirements that Manchester United must comply with. Both UEFA’s Financial Fair Play (FFP) regulations and the Premier League’s Profitability and Sustainability Rules (PSR) pose challenges that teams have failed to meet, such as Everton and Nottingham Forest, which faced point deductions last season.
However, United expresses confidence that they will not encounter similar penalties, even with their significant losses and recent efforts to cut costs. What gives them this assurance?
Will Manchester United face a points deduction?
Despite the negative financial figures reported for the year ending June 30, 2024, United is optimistic about avoiding penalties like a points deduction from the Premier League.
This belief stems from the fact that not all club losses automatically contribute to calculations under PSR.
Even though their reported losses appear to surpass the permitted threshold over three years, a considerable portion of those expenses was directed toward areas such as club infrastructure, youth initiatives, women’s sports, and community projects—spending viewed as acceptable within PSR guidelines.
Since Manchester United was acquired in 2005, the Club has incurred cumulative pre-tax losses of £483m and paid net interest costs on loans of £969 million. pic.twitter.com/XRDfaKarbP
— Kieran Maguire (@KieranMaguire) September 11, 2024
Premier League clubs are permitted to include pandemic-related losses from the 2021/22 season in their accounts from the previous season—this includes the decline in revenue from match attendance and postponed broadcast payments—which also aids in minimizing reported losses.
In essence, United believes they have sufficient mitigating factors to evade the potential for point deductions from the Premier League, despite their major investments in player signings and salaries. Moreover, it’s significant to note that the club recorded its highest total revenue at £661.8 million ($862.4 million), with expectations for further growth next year, indicating their financial situation isn’t entirely dire.
“The club is dedicated to adhering to both the Premier League’s Profit and Sustainability Rules and UEFA’s Financial Fair Play standards,” stated United chief executive Omar Berrada, who assumed his position this year amid extensive reforms spearheaded by new minority owner Sir Jim Ratcliffe.
What are the PSR loss limits for clubs?
According to PSR regulations, clubs are allowed to incur losses no greater than £105 million ($136.8 million) over a three-year span.
Specifically, United faced a loss of £113.2 million ($147.3 million) last year, in addition to previous losses of £28.7 million ($37.4 million) in 2022/23 and £115.5 million ($150.5 million) in 2021/22. These figures suggest they would violate PSR guidelines.
Nonetheless, the nature of their expenditures gives the club confidence of compliance with these regulations.
Why were Everton and Nottingham Forest penalized with point deductions?
Everton received a 10-point deduction in November 2023 for violating PSR by £19.5 million for the period concluding in 2021/22. This penalty was later reduced to six points upon appeal.
Additionally, the club faced a two-point deduction for a similar breach in the 2022/23 period.
In both scenarios, the club was informed of its significant violations beyond the PSR limits. An independent commission assigned to review the first case noted: “Everton’s financial circumstances are of their own making, and the responsibility to comply falls squarely on their shoulders. The excess beyond the threshold is notable, warranting serious consequences.”
Nottingham Forest incurred a four-point deduction after exceeding PSR thresholds due to losses reported for the 2022/23 season. Both clubs contested their penalties—Everton eventually dropped their appeal regarding the second offense—but neither was successful in completely overturning the outcomes.
The financial figures publicly shared by these clubs led to their penalties, as per Premier League regulations, and did not include the mitigating factors on which Manchester United is relying.
What were Manchester United’s summer 2024 transfer expenditures?
United is navigating a careful strategy regarding transfer spending during the latest window, contrasting with their prior more reckless methods. Their approach focused on ‘one in, one out’ to balance expenditures, resulting in new acquisitions such as Leny Yoro, Joshua Zirkzee, Noussair Mazraoui, Matthijs de Ligt, and Manuel Ugarte, offset by player sales including Donny van de Beek, Alvaro Fernandez, Facundo Pellistri, Hannibal Mejbri, Willy Kambwala, Aaron Wan-Bissaka, Mason Greenwood, and Scott McTominay. Additionally, the exits of Raphael Varane and Anthony Martial further reduced their wage expenses.
While this did not yield a profit—quite the opposite—the net transfer outlay for the summer of 2024 was about £100 million ($130 million), a figure the club appears to feel confident about managing without breaching regulations.
“This off-season has been quite active for the club with effective training camps for both our men’s and women’s squads,” remarked Berrada. “We have bolstered our men’s roster with five promising players while establishing a new football leadership to enhance support for our manager, Erik ten Hag.”
“Dan Ashworth is here as sporting director, while Jason Wilcox has joined as technical director, both seasoned professionals who will significantly contribute to our organization. Furthermore, we have added six players to our women’s team and are investing to ensure that all our squads have state-of-the-art training facilities at a fully revamped Carrington.”
“As I step into my new role as CEO of this historic club, we are singularly focused on collaboratively building a promising future that prioritizes success on the field.”
“We are committed to achieving greater financial sustainability and are refining our operations to enhance efficiency, ensuring our resources are well-directed towards improving our performance on the pitch.”
