The BookKeeper – Exploring Manchester United’s finances and how they ended up in this mess

The Athletic has appointed Chris Weatherspoon as its first dedicated football finance writer. Chris is a chartered accountant who will be using his financial acumen as The BookKeeper to explore the money behind the game. He is starting with a series this week analysing the financial health of some of the Premier League’s biggest clubs. You can read more about Chris and pitch him your ideas here.

On February 20, 2024, almost two months after an initial announcement and 15 after the Glazer family confirmed their willingness to a partial or full sale, Sir Jim Ratcliffe’s Trawlers Limited completed its purchase of 27.7 per cent of Manchester United. It was not the clean break from the Glazers most United fans craved but it was, in the eyes of many, a clear step forward. After a decade of regression, the club could finally look forward.

A little over a year on, the gloom is stalking their attempts to make progress.

The Premier League table alone illustrates how things are at their worst since United were sold to the Glazers in 2005. United are 13th, buoyed by recent progress in the Europa League and a 3-0 win against hapless Leicester City, but the bigger picture is an epidemic of home defeats, a new coach hampered by injuries and lacking the players he needs for his system, and a concern that Ratcliffe, much like those he bought his shares from, might not know how to return the club to sporting glory.

United remain a publicly listed entity, so more than any other English club, we can check in regularly on the state of things off the field.

One year minus a day into Ratcliffe’s reign, United published their second quarter (Q2) results for this season, covering July 1 to December 31, 2024. The results were simultaneously expected and surprising. United held steady to their revenue projections, even as broadcast income tumbles without Champions League football and any hope of a top-four finish. On the other hand, debt remains huge, interest payments continue to hit the bottom line and, for all the talk of cost-cutting, the club remains loss-making.

United, like any business engaging in a spot of continued loss-making, have taken to espousing the benefits of metrics other than the bottom line, with last month’s Q2 update continuing the theme. United’s preferred yardstick is ‘adjusted EBITDA’ — earnings before interest, tax, depreciation and amortisation, adjusted to remove player sale profits and any exceptional items in a given period. Last month saw the club talking up a projected adjusted EBITDA result as being “at the high end of (the) previously issued range of £145million to £160million ($188.4m to $207.9m)” come the year-end, but there was little to be enthused about in the rest of the figures.

Talk of positive financial metrics jars with news coming out of the club recently, principally another round of staff redundancies and the club conceding to fan group The 1958 there’s a risk United will fall foul of profit and sustainability rules (PSR).

How do we reconcile all of this with United boosting their EBITDA? Perhaps Berkshire Hathaway chairman and world-renowned investor Warren Buffett said it best: “References to EBITDA make us shudder — does management think the tooth fairy pays for capital expenditure?”

How much PSR trouble are Manchester United in? 

It’s a sign of the largesse and wastage at Old Trafford in recent years that the world’s fourth-highest-earning football club is worrying again about PSR. United have continued to spend like a Champions League club even as they have missed out on the competition in five of the past 11 seasons.

How close United are to a PSR breach comes down to educated guesswork (like almost every club, United don’t publish their PSR calculation), but looking at last season’s financials is enough to see why there was concern in the corridors of Old Trafford. According to The Athletic’s estimate, United had about £16m of headroom in PSR — yet that was only if £34.6m of costs relating to Ratcliffe’s share purchase could be deducted from the club’s losses. Neither Manchester United nor the Premier League confirmed they were, but it’s a struggle to see how United were PSR-compliant otherwise.

United ran up combined pre-tax losses of £312.9m in the three-year assessment period to the end of last season. The good news for this season is that 2021-22’s £149.6m loss drops off the club’s current calculation, so we estimate the club could lose in the region of £133m this year and remain compliant with Premier League PSR.

The story is somewhat different when it comes to UEFA. To compete in European competition, United must comply with a couple of different rules, principally ones surrounding squad costs and, again, loss limits. While we project United’s squad cost ratio will land at around 63 per cent this season, well below the 80 per cent limit, the losses side looks rather tighter, which may explain the club’s response to The 1958 fan group.

UEFA’s ‘football earnings’ rule didn’t apply last season, but it limits three-year losses to €60m (£50.5m; $65.6m), potentially increased by €10m per year if a club is deemed to be ‘in good financial health’. It is unclear whether United’s finances would count as being in good health, with their borrowings potentially meaning the sustainable debt ratio condition isn’t met. If it isn’t, they won’t receive additional discretion and will be subject to that €60m limit, albeit transitional arrangements mean that sum covers only the last two seasons rather than three.

The Athletic’s estimate suggests United’s PSR loss in 2023-24 was around £43m. At today’s exchange rate, that would allow them to make a maximum £8m PSR loss to avoid breaching the €60m limit. The £35m cost of last season’s share purchase won’t be present this year, the removal of which would leave United bang on the UEFA limit, but it’s easy to see why there’s concern. United fell foul of UEFA’s breakeven requirements, which preceded the football earnings rule, in 2023, copping a €300,000 fine.

Meanwhile, as the club continue to ready investors for positive adjusted EBITDA of around £160m, 2023-24’s full-year results show just how little resemblance that metric bears to the club’s bottom line. Last season United recorded £147.7m in adjusted EBITDA, yet the club’s pre-tax loss was £130.7m — a £278.4m difference.

Adjusted EBITDA strips out amortisation, which might be fine in other sectors, but when you’re a club like United on course for a £200m-plus player-amortisation bill this year, it’s a bit like valuing a house while not bothering to check upstairs. Yes, it looked lovely last I remember. No, I don’t need to see the gaping hole in the roof, I’m sure it’s fine.

What do Manchester United’s recent finances look like? 

United have been grossly underachieving on the field for years, but for a long while even after Sir Alex Ferguson’s departure in 2013, there was little immediate cause for concern off the pitch. Across six years from 2014 to 2019, United only made a loss in one season, racking up a combined pre-tax profit of £197m even as the prospect of a meaningful title challenge disappeared into the rearview mirror. Sure, Premier League clubs were generally profitable at that time — rapid growth in TV rights deals had not yet been caught up, and then trampled over, by the unremitting surge in player wages — but only Tottenham Hotspur and Liverpool booked a bigger surplus over those six years than United.

United’s fortunes turned as the Covid-19 pandemic shuttered much of the planet, though it wouldn’t be right to hold that up as the sole reason for the club’s financial nosedive ever since. United lost £20.8m in 2019-20 and a further £24.0m in 2020-21, but it wasn’t until a season later that the numbers fell off the proverbial cliff. The £149.6m loss booked in 2021-22 was the worst financial result in club history, and the third-worst pre-tax loss ever in English football, only trailing Manchester City’s £194.8m in 2011 and Chelsea’s £155.9m in 2021. Years of overspending, compounded by the pandemic, finally caught up.

Manchester United’s revenue hit a club record last season, with £661.8m representing a £13.4m and two per cent increase on a year prior. That would sound fine in isolation but recent years show how United’s income generation is not as revered as it once was. Between 1996 and 2004, United boasted world football’s highest revenues. In the 28 seasons following the inception of the Premier League, spanning 1992 to 2020, United were England’s highest earners; the two excepted years, 2009 and 2010, only saw them shifted through Arsenal’s property sales on the site of their former Highbury home.

United have been dislodged from England’s top spot since the 2020-21 season, with neighbours Manchester City racing ahead. Last season, City’s revenue advantage sat at £53.2m — and that was with United earning Champions League money. City’s commercial income advantage sits at over £40m — a stark turnaround from the £48m lead United held as recently as 2019.

City’s commercial revenues are a discussion topic all of their own, but United’s income growth here has been tepid. While the Q2 results promoted commercial growth, the club’s poor footballing performance is finally having a big impact. The kit supplier deal with Adidas sees the German manufacturer reduce its annual payment by £10m for each season United fail to make the Champions League from 2025-26 onwards.

United have consistently projected revenues to land between £650m and £670m this season, echoed in that Q2 announcement, though how exactly is unclear. United’s broadcast revenues will fall comfortably short of last season’s £221.7m, and to the end of December, they were already £52.9m down on a year ago. Both matchday and commercial income have shown improvements, but whether they can offset that broadcast fall remains to be seen.

The club are confident. One glimmer of light in the Q2 results was commercial income improving even in a down year on the field, with United citing August’s $75m per year front-of-shirt deal with Snapdragon as a driver. Unlike the agreement with Adidas, the Snapdragon deal includes no penalties if United fail to qualify for the Champions League.

Manchester United captain Bruno Fernandes (Carl Recine/Getty Images)

Noticeably missing from celebrations of the deal has been the fact key members of the sponsorship team that brokered it, including Victoria Timpson, United’s CEO of alliances and partnerships, have been let go. The change in the department hasn’t ended there. Commercial director Florence Lafaye and chief commercial development officer James Holroyd are out too.

United’s broadcast income this season would have dipped further were it not for the club’s enduring appeal. Premier League TV facility fees, distributed based on how many times a club appears in live televised games each season, account for 12.5 per cent of the total annual distributions made by the league, and were in the 16-17 per cent range during the 2016-19 TV rights cycle.

From the commencement of that cycle through the 2023-24 season, excluding the Covid-induced mess that was 2019-20, 194 of United’s 266 league games were screened live, a tally only topped by Liverpool (201). Correspondingly, United earned the second-most income from the facility fees pot, with their £194.4m reflecting the roughly £1m per match each club receives for being televised. The same pot is helping raise United’s earnings floor — even in their current tumult, up to April 28, United games will have been televised 26 times this season, the joint-most of any club (alongside Arsenal and Liverpool).

United’s domestic prize money has lagged, but the real gulf has come abroad. To the end of last season, United earned €504m from their campaigns in the Champions League and the Europa League over the previous decade. By contrast, Manchester City earned €904m, while both Liverpool and Chelsea out-earned United on the European stage. In all, 10 clubs earned more from UEFA competitions over that period.

Even if United win the Europa League this season, the club’s prize money would fail to hit £40m. Such a triumph would, however, bring a financial boon that won’t be happening via United’s league finish this season: a return to the Champions League. From a financial perspective, winning the Europa League should take primary importance this season.

Ratcliffe has courted much controversy by bumping up ticket prices — but on a nakedly financial basis, the positive effects are already evident. United’s 15 home games this season to the end of December — 10 Premier League matches, three in the Europa League and two in the Carabao Cup — generated £78.5m of matchday income, an annual rise of £3.5m (five per cent). The revenue per home match was also higher, rising from £5m in Q2 of 2023-24 to £5.2m this season, despite none of last season’s Champions League fixtures. Expect even greater growth in 2025-26: as revealed by The Athletic, United’s season ticket prices will rise by a further five per cent next season.

Champions League-level spending catches up with reality

A significant problem at Old Trafford has been a simple one: a lack of cold, hard cash. Manchester United have long been strong cash generators, and though they continue to boast significant inflows from operations (£121.1m last season), their transfer spending is causing problems. United’s free cash flow (FCF) has tumbled in recent years. FCF is, in effect, the amount of money they have left over after paying for capital expenditure — which, in United’s case, primarily comprises transfer fees.

United’s FCF in 2023-24 tumbled £90m into the red. Other than during the pandemic, that’s the worst it has ever been at Old Trafford, and is a significant reason behind the ongoing push to cut costs under Ratcliffe. In simple terms, despite being hugely cash-generative from the day-to-day, United’s enormous transfer outlay outstrips the club’s day-to-day cash inflows. Their net cash expenditure on transfer dealings last season was £153.7m, and the figure in the first half of this season was even higher at £164.3m.

Even after that, at the end of December, United still owed other clubs a net £300.1m in transfer fees, with £167.9m of that due by the end of 2025. Other than Chelsea (who don’t disclose transfer creditors specifically, but whose hefty liabilities point to big fees owed to other clubs), no other Premier League club owes more on transfers.

Ratcliffe recently highlighted the impact of those liabilities, stating, “These are all things from the past, whether we like it or not, we’ve inherited those things and have to sort that out.” A straight line can be drawn between these ongoing costs — which United can’t get out of — and the decision to slash staff numbers at Old Trafford.

Yet United’s transfer spending has hardly slowed under a new minority owner. The summer of 2024 saw the club commit another £219.0m on new players, and though spending in January was limited to £37.7m, this is the third season running United have spent more than £200m on new players.

Transfer spending isn’t indicative of successes (wages are a much more reliable gauge), but spending as much as United have to be as bad as they are speaks to years of mismanagement. Unfortunately for Ratcliffe and INEOS, there have been few signs in their first year that the club’s wasteful transfer dealings will end any time soon.

Speaking of wages, United’s rose again last season, though their £364.7m bill was shy of 2022’s record £384.2m. That’s of scant comfort though given the club significantly under-performed, finishing only eighth in the Premier League (and tumbling out of the Champions League at the first hurdle) despite boasting the division’s third-highest wage bill. It is the second time in three seasons United have finished five places worse than their wage bill ranking.

That does exclude a key point around staff costs. United are one of the biggest employers in world football. Last season, United had, on average, 811 full-time non-football staff, a league-high, with only Liverpool (782) coming anywhere close. 

Few English clubs disclose their split of player to non-player wages, but a page from a 2024 UEFA report that appeared upon initial publication but was then withdrawn detailed United’s player wages in 2022-23 were just 33 per cent of revenue, suggesting their non-player wages that season totalled around £115m — slightly higher than Brentford’s total wage bill last season.

Bad optics or not, there’s a reason Ratcliffe has cut 400 to 450 jobs at United. United’s dreadful transfer dealings in recent years have driven the club into the mire but, unable to renege on player wages or outstanding transfer fees, the club has instead gone after those costs it can cut immediately — however unpalatable that may be.

Little dent in debt – despite significant equity injections

One of the conditions of Ratcliffe’s share purchase was him injecting £238.5m in shares to boost club coffers in his first year. In some quarters, the expectation was that it would go towards paying down United’s significant debt burden, yet the club’s gross debt has scarcely budged during his first year at the helm. United’s Q2 debt tends to be higher in December than June, with the club drawing down on their revolving credit facility (RCF) to aid mid-season cash flow, but the longer-term debt — first incurred through that Glazer takeover, and less subject to frequent fluctuations — shows no sign of reducing.

Financing that debt continues to hit United’s pocket, with net interest payments of £35.5m last season and a further £17m paid out in the first six months of 2024-25. Those amounts look pretty minimal compared to the whopping transfer spend, but that makes them no less impactful on the day-to-day. Where other clubs, including Tottenham and Everton, have incurred huge debts in return for impressive new stadiums, United have almost nothing to show for the continued cost of funding debt that only appeared on their books to enable the Glazer family’s takeover.

United have held their RCF for a while, but didn’t first draw down on it until Q2 in the 2020-21 season. At the time, the club stated the facility “provides financial flexibility to support (United) through the disruption caused by Covid-19”. That was true, but four years on, the club’s reliance on the facility has actually increased. At the end of 2024, United had used £210m of their £300m facility — combined with the existing debt, it left gross borrowings at £731.5m.

That level of debt is hardly the fault of Ratcliffe and INEOS. The deal done to sell the club to the Glazer family in 2005 continues to cast one of football’s longest shadows. To the end of December 2024, 19 and a half years of their ownership has cost United £835.0m in cash interest payments, £169.7m in dividends (£128.7m of which went to the Glazers), at least £27.4m in management and consultancy fees and £24.6m in net loan repayments. That’s without knowing how much, if any, of the £148.6m paid out to directors and key management in the last two decades wound up in Glazer hands.

Even if we add back the £25.1m positive cash impact of exchange rate changes — only brought about because of that U.S. dollar-denominated debt — and the £21.6m interest United have received since 2005, as well as excluding those director payments, a staggering £1.010billion has flowed out of the club since the day the takeover went through.

United’s debt is £180m higher than the initial £550m borrowed against the club to enable the Glazers’ purchase. Meanwhile, the family have pocketed £1.202bn from share sales over the years. Combine those with their dividend and management fee receipts to determine that total benefit to the Glazers of owning Manchester United and you arrive at £1.358bn, and they still own 67.92 per cent of a club that Ratcliffe’s purchase last year valued at around £4.3bn.

What happens next?

For all United’s ongoing travails, the Europa League offers a glimmer of hope on the horizon. Winning it would return Champions League football to Old Trafford next season, a competition from which they banked £53.8m last year despite bowing out bottom of their group. With a swelling prize pot, United could expect even greater rewards if they qualify for next year’s iteration.

As signs of improvement continue to be thin on the ground, Manchester United might be considering themselves grateful the gulf in English football between the haves and have-nots has never been greater. For the second year running, it seems likely the three promoted clubs will be instantly relegated. Were they not, this article would have taken on a decidedly different tenor. It is not unfair to say that in a sport where mismanagement is properly punished, United would be ripe for relegation this season.

Alas, this is football, where the richest are inherently insured against disaster. Manchester United have spent billions to be bad.

There’s an argument Ratcliffe’s arrival has, paradoxically, extended United’s capacity for bad decision-making. The club’s figures would look even more dire had he not arrived and injected over £200m in equity inside a year. Yet that money has scarcely made a dent in the debt, and chunks of it have been wasted on yet more shoddy decision-making. As of the end of 2024, the squad has cost over £1bn, one of the most expensive in world football, yet it appears light years from meaningful success. Managerial and sporting director missteps have cost the club £15m this season alone, and that’s before adding in the £11m it cost to extract Ruben Amorim and his staff from Sporting CP.

That’s without even mentioning the fate of Old Trafford. As announced last week, mere hours after Ratcliffe was lamenting the club’s parlous finances, United are now planning to build a new, 100,000-capacity stadium, in a project expected to cost £2bn.

How it will be paid for is anyone’s guess. Plainly, United’s cash flow couldn’t fund such a venture and no club could fund it without backing from owners or external lenders. A mix of the two appears more likely. For their part, United have been entirely coy about where the money would come from. “As a PLC we can’t speculate too much about the funding,” was the official line from chief executive Omar Berrada.

Underlying all of this, alongside the debt, is United’s awful transfer record. From Ferguson’s retirement to the end of 2024, United spent £1.7bn on new players and recouped just £389m on sales, a net spend of £1.308bn. Cost-cutting might be the club’s recourse this season but the finances won’t be fixed unless they can improve those transfer dealings. A look at recent profits from player sales shows how poorly United have performed, not just relative to those at the top of the Premier League but well below them too.

Rome wasn’t built in a day and Manchester United weren’t broken overnight. The leveraged takeover of nearly two decades ago transformed the club’s balance sheet instantly, but it has taken years of mismanagement to batter United into their sorry state of today. Job cuts and ticket rises are unpopular and, when accompanied by yet more football-related wastage, feel like others paying the price for ownership folly. In many ways, it’s exactly that. Yet with huge debts, static revenues and £2bn to be found for a new stadium, unless United can turn around their footballing fortunes in double-quick time, more hard decisions await. Ratcliffe’s recent chunterings about the club going “bust at Christmas” were sensationalist, but the financial peril at the club is still very real.

This was never going to be a quick fix, and while United have clearly rigged their mast in a new direction, early waters have been choppier than anyone envisaged. Fans and new decision-makers alike could do with the tide turning soon.

(Top photos: Getty Images; graphic: Eamonn Dalton)