So, seems Manchester United - the great money machine, are losing money repeatedly, year on year, and only passed this June's PSR calc by £2m (estimated) - this included a £40m covid write off that was ratified by the PL, despite being the largest claim in the PL by some distance...
Premier League – Profitability & Sustainability
There have been legitimate concerns about United’s compliance with the Premier League’s Profitability and Sustainability Regulations (PSR), especially in light of the points deductions imposed on Everton and Nottingham Forest.
Indeed, during the January transfer window, Erik ten Hag said, “There is no space with FFP to do something about this lack of quality in the striker position.”
Based on my estimate for 2023/24, I think United were just about OK for the most recent 3-year assessment period, though it would have been very tight. This opinion also relies on a couple of sizeable deductions being accepted by the Premier League.
A full year forecast for United is more straightforward than other clubs, as the quarterly accounts provided guidance for both £660m revenue and £140m EBITDA.
However, we still need to estimate player trading:
These assumptions would give a pre-tax loss for 2023/24 of £126m.
Therefore, the reported loss for the 3-year monitoring period would be a hefty £309m, which is significantly higher than the £105m maximum allowed loss. United can use the upper limit here, as “secure funding” is available, especially after Ratcliffe’s capital injection.
However, the reported numbers can be reduced by allowable deductions for “healthy” expenditure (infrastructure, academy, community and women’s football), which I have assumed as £131m.
It should be stressed that these are only estimates, as the figures for these deductions are not divulged in the accounts (except depreciation and goodwill amortisation), so super confident pronouncements on United’s PSR position by numerous football finance experts (and plagiarists) should be treated with a degree of caution.
So far, so good, but now it gets a little trickier, as United have also claimed £40m for COVID losses in 2021/22, which would have comfortably been the largest deduction in the Premier League that season.
After UEFA fined the club €300k for a “minor break-even deficit” for the monitoring period up to 2021/22, United explained, “This reflected a change in the way that UEFA adjusted for COVID-19 losses during the 2022 reporting period”, implying that the Premier League had in contrast allowed the £40m COVID loss.
I’ve also taken a bit of a punt on United being allowed to excluded the £34m exceptional charges linked to the share sale (but not the £6m for loss of office).
It is also possible that United have been able to exclude the FX impact on interest payable, though I have not considered that in my model.
Putting all those assumptions together, I reckon that United complied with PSR in 2023/24 by the skin of their teeth, as their £103m adjusted loss ended up being only £2m within the target.
My assessment is reinforced by the lack of any player sales before the 30th June PSR deadline. If United had genuinely faced a challenge to comply with PSR, then they would surely have been active in the transfer market (as we saw with Villa and Newcastle), but that was not the case.
However, any United fans expecting a spending spree this summer are likely to be disappointed, as the club’s budget is likely to still be restricted, unless they can realise decent money from player sales.
Premier League – Profitability & Sustainability
There have been legitimate concerns about United’s compliance with the Premier League’s Profitability and Sustainability Regulations (PSR), especially in light of the points deductions imposed on Everton and Nottingham Forest.
Indeed, during the January transfer window, Erik ten Hag said, “There is no space with FFP to do something about this lack of quality in the striker position.”
Based on my estimate for 2023/24, I think United were just about OK for the most recent 3-year assessment period, though it would have been very tight. This opinion also relies on a couple of sizeable deductions being accepted by the Premier League.
A full year forecast for United is more straightforward than other clubs, as the quarterly accounts provided guidance for both £660m revenue and £140m EBITDA.
However, we still need to estimate player trading:
- Player amortisation - I have simply annualised the figures for the first 9 months.
- Profit from player sales - after the first 9 months this was £31m, which I have increased by £10m for Q4, including the sale of Alvaro Carreras to Benfica plus loan fees for Sancho and Van de Beek.
These assumptions would give a pre-tax loss for 2023/24 of £126m.
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Therefore, the reported loss for the 3-year monitoring period would be a hefty £309m, which is significantly higher than the £105m maximum allowed loss. United can use the upper limit here, as “secure funding” is available, especially after Ratcliffe’s capital injection.
However, the reported numbers can be reduced by allowable deductions for “healthy” expenditure (infrastructure, academy, community and women’s football), which I have assumed as £131m.
It should be stressed that these are only estimates, as the figures for these deductions are not divulged in the accounts (except depreciation and goodwill amortisation), so super confident pronouncements on United’s PSR position by numerous football finance experts (and plagiarists) should be treated with a degree of caution.
So far, so good, but now it gets a little trickier, as United have also claimed £40m for COVID losses in 2021/22, which would have comfortably been the largest deduction in the Premier League that season.
After UEFA fined the club €300k for a “minor break-even deficit” for the monitoring period up to 2021/22, United explained, “This reflected a change in the way that UEFA adjusted for COVID-19 losses during the 2022 reporting period”, implying that the Premier League had in contrast allowed the £40m COVID loss.
I’ve also taken a bit of a punt on United being allowed to excluded the £34m exceptional charges linked to the share sale (but not the £6m for loss of office).
It is also possible that United have been able to exclude the FX impact on interest payable, though I have not considered that in my model.
Putting all those assumptions together, I reckon that United complied with PSR in 2023/24 by the skin of their teeth, as their £103m adjusted loss ended up being only £2m within the target.
You must log in or register to see images
My assessment is reinforced by the lack of any player sales before the 30th June PSR deadline. If United had genuinely faced a challenge to comply with PSR, then they would surely have been active in the transfer market (as we saw with Villa and Newcastle), but that was not the case.
However, any United fans expecting a spending spree this summer are likely to be disappointed, as the club’s budget is likely to still be restricted, unless they can realise decent money from player sales.
