Analyzing Manchester United’s accounts: Record revenue, £28.7m loss, interest payments up.

Analyzing Manchester United's accounts: Record revenue, £28.7m loss, interest payments up.

The fact that Manchester United made record revenues and still made losses says a lot about the club at the time.

United’s revenue-generating capacity of £648.4 million ($784 million) for the financial year ended June 30 is still remarkable, especially given their lack of success on the pitch over the past decade. But to still post a £28.7m loss, despite an improvement on last year’s £115.5m deficit, is a testament to the club’s incompetence at every level.

For business, they are brilliant. There are no problems changing tickets when it comes to filling Old Trafford. They are selling more soccer jerseys than ever before. Even in an era of limited success, United’s revenue-generating potential is often the envy of other clubs in England and across Europe.

However, debt and incompetence stemming from the Glazer family’s controversial ownership are holding them back.

If the deal to buy Sir Jim Ratcliffe’s minority 25 per cent stake in the Glazers goes through, the British billionaire is in no business to lose money – and will certainly be looking at ways to turn the loss-making club into a profitable one. one.

How he plans to do this, however, remains unclear.

The Athletic have broken down what United’s latest accounts have revealed about the club’s financial health…

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Loss before tax – £33m

Despite record revenues, United failed to turn a profit last season and instead posted a loss of £28.7m.

Commercial and matchday revenues were rising but the loss of Champions League football meant lower broadcast revenues and another season in the red – their fourth in a row.

United’s £28.7m loss was due to inflation, but investment in the playing squad followed Erik ten Haag’s first summer in charge.

But years of spending spree mean the club is now treading carefully under football’s Financial Fair Play (FFP) rules. Pre-tax loss is the appropriate measure for the Premier League’s profitability and sustainability (P&S) test, and on that side, there is good news and bad news.

The good news is that this year’s pre-tax loss of around £33m is huge, far less than the £150m recorded in the 2021-22 season. The bad news is there is still a total pre-tax loss of £183m over the last two years, which is not good for FFP margins.

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This year’s P&S challenge looks at United’s finances for 2021-22, 2022-23 and 2023-24. Allowances may be made for those early season costs for youth development, women’s soccer and community outreach projects, as well as losses related to Covid-19.

That could still leave a huge loss, however, if it exceeds £15m over those three years, United could be breaking the rules – hence why every deal this summer has had to do what one source, the so-called “financial sausage machine”, has to do on condition of anonymity to protect their position.

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Wages – £331m

In the year The biggest factor behind the massive loss on the books in 2021-22 was United’s spending on wages, which was £384.1m – a Premier League record.

That was always going to have to come down without the income from Champions League football and fell to a more manageable £331.4m last season.

The wage cut resulted in four top-flight finishes, but also saw the departure of top earners such as Paul Pogba, Edinson Cavani, Juan Mata, Nemanja Matic and Jesse Lingard, as well as mid-season exits. Their highest paid player is Cristiano Ronaldo.

Manchester United

The departures of Lingard (left) and Ronaldo have helped United’s finances (Ash Donnellon/Manchester United via Getty Images)

The £331m wage bill is lower than champions Manchester City and Liverpool’s £354m and £366m wage bills in their latest accounts.

Player sales – £20m

While their top league rivals have beaten their transfer spending through player sales, United have not been able to make much money in the market.

There were signs of improvement last summer, when Anthony Ilanga and Dean Henderson went for eight-figure sums, but both deals were too late to be included in this set of calculations.

Only Andreas Pereira, James Garner and Tahit Chong have left Old Trafford in the 2022-23 season, with United generating just £20.4m in sales, down from £21.9m last year.

Both those figures pale in comparison to Chelsea and Manchester City, who collected £123.2m and £67.7m respectively from player sales in 2021-22.

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Interest paid – £32m

The Glazer family Debt remains the biggest bugbear among many United fans, as it has been since they took over in 2005.

The amount of non-current debt United borrowed remained unchanged at $650m, but exchange rate fluctuations saw the sterling value of that debt fall to £507.3m, compared with £530.4m at the end of 2021-22.

United have drawn down £100m on their revolving credit facility to invest in their squad.

All this debt has to be serviced by interest payments and those payments have increased significantly – from £20.6m to £31.9m.

In the year 42.6 million in 2015. There are additional costs to the Glazers’ controversial, debt-laden ownership model.

(Top photo: Nick Potts/PA Images via Getty Images)