What Manchester United’s financial losses mean for their PSR situation

What Manchester United’s financial losses mean for their PSR situation

Manchester United have started the summer transfer window by making a bid for Everton’s Jarrad Branthwaite and opening talks with Bayern Munich over a deal for Matthijs de Ligt.

While this suggests they are a club in the market looking to close deals as quickly as possible – you could even argue it demonstrates financial strength – their quarterly accounts highlight the challenges they are facing in complying with the Premier League’s profit and sustainability rules (PSR).

Pre-tax losses are the starting point for PSR calculations, and United reported a net loss of £71.4 million ($92 million) in the three months ended March 31, 2024.

That took the club’s total pre-tax loss for 2023-24 to £89.2m ($114m) through March, with three more months – the three months ending June 30, 2024 – to account for.

The Athletic analyzed the numbers from United’s latest set of financial results…

Should they be worried about violating the PSR?

Premier League financial regulations allow clubs to incur a financial loss of £105 million ($135 million) over a three-year period, at an average of £35 million ($45 million) per year, and on the condition that £90 million (£115 million) is covered by secured owner financing. Without owner-secured financing, the permitted three-year losses are £15 million ($19 million).

It is important to note that in calculating the PSR, significant deductions will be made from 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 is not included.

United will be hoping that decisions made in January, particularly the loaning of Jadon Sancho and Donny van de Beek, will create enough savings to avoid falling foul of the rules.

Still, United are sailing close to the wind, and while they know exactly where they stand from a numbers perspective, the latest set of accounts show they could be facing a battle to deliver. That said, they were not one of the teams struggling to sell players before June 30 – the new unofficial deadline.

United always felt the situation would be tough and these figures may indicate why they were cautious about spending in January.


How the PSR deadline impacted June’s business: £323m in sales, question marks and young players on the move

What happens if they break the rules?

The most likely outcome will be a points deduction, with Everton and Nottingham Forest both suffering such a penalty last season.

Everton were docked 10 points in November for breaching regulations but had the penalty reduced to six points after a successful appeal. They were deducted a further two points in April for a further breach.

Nottingham Forest were deducted four points for breaking the rules.

Jadon Sancho’s loan to Borussia Dortmund will have helped with the accounts (Justin Setterfield/Getty Images)

Are United’s revenues in a healthy position?

Although quarterly results show overall revenue (£136.7m; $176m) was down 20% on the same period last year (£170m; $218m), United says it is still on track to post a record figure for the full financial year.

They attribute the drop to fewer matches, including nine fewer at Old Trafford, than in the same period last year.

Despite the drop in revenue for this period, overall revenue for the first nine months of the 2023-24 financial year is up eight per cent. The reason for this is largely due to their participation in the Champions League, from which they were eliminated early after failing to qualify from their group.

United says it is forecast to make a record £660 million ($848 million) for the full financial year. For the year ended June 30, 2023, it totaled £648 million ($832 million).

How much money do they have in the bank?

It’s important to note that these accounts are a snapshot in time and the value only reflects what United had in the bank specifically on March 31.

That said, they had £67 million ($86 million) in the bank at that time, which is a slight drop from the £73.7 million ($95 million) recorded at the same time last year.

What are your debt levels?

United’s senior debt remained at $650 million, although when converted from US dollars to pounds sterling there was a slight decrease in the total amount. It now stands at £511.3 million, compared with £521.5 million at the same time last year.

Its current borrowings on its revolving credit facility — think of it as a credit card — totaled £143 million ($184 million), down £53.7 million ($69 million) from the year-ago quarter (£203.7 million; $262 million).

They have paid more than £1 million ($1.3 million) a week in interest to service the debt, which was placed on the club as a result of the Glazers’ ownership, taking the total interest charges to £960 million ($1.2 billion) since 2005.

What they still owe in outstanding transfer fees is not detailed in this report, although this will be published shortly in the more detailed “interim report”.

At the end of the second quarter, the three months ending December 31, 2023, United owed £158 million ($203 million) to other clubs.

What else do the reports tell us?

The accounting period covers the three months in which Sir Jim Ratcliffe bought a £1.3bn (27.7%) stake in the club, with his deal being completed in February.

As reported by The Athletic in January, and now outlined in these accounts, United paid the Raine Group, the merchant bank tasked with helping the Glazers find a buyer, the best part of £30m (£39m) for its services.

It was United, not the Glazers, that had to foot the bill. And the £30.3 million in this set of accounts is on top of the £9.6 million ($12 million) spent in the previous quarter to help facilitate a sale.

United recognise that for the rest of the summer their budget will remain tight and they will need to be disciplined in their transfer dealings.


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(Top photo: Avram Glazer and Sir Jim Ratcliffe; Richard Heathcote via Getty Images)