United will have biggest English wage bill ever

The authoritative Swiss Ramble reviews the Q1 results of Manchester United from his Zurich lair.

The pre-tax loss improved from £27m to £20m (£16m after tax), as revenue increased £17m (16%) from £109m to £126m and player sales swung from £13m loss to £17m profit, though expenses up £31m (25%). Operational improvement offset by interest payable rising £10m (forex losses).

The main driver of the £17m revenue increase was match day, which rose £17m from £2m to £19m, though commercial was also up £4m (8%) from £60m to £64m. In contrast, broadcasting fell £5m (9%) from £48m to £43m.

Interest went from zero in Q1 2021 to £10m net payable in Q1 2022, largely due to an unfavourable swing in unrealised foreign exchange movements on the club’s debt, which is denominated in USD, compared to a favourable swing prior year.

This is the second year in a row that United have reported a pre-tax loss in Q1, even though it was lower in 2021/22. It is worth noting that last season’s £27m loss in Q1 ultimately became a £24m loss for the full year.

The club have reported operating losses for the past two seasons, so it is no surprise to see another deficit in Q1, especially as the club tends to lose money in the first quarter. However, the £28m operating loss in Q1 2021/22 is the highest made for this period.

Although it is clearly good news that  revenue increased from £109m to £126m in Q1, it has still not returned to the £135m level pre-pandemic. This suggests that United are unlikely to reach the 2019 peak of £627m (though much will depend on Champions League progress).

Commercial income was up £4m (8%) to £64m, due to retail and merchandising rising by £5m (9%) to £28m, thanks to “increased Megastore footfall” (aided by the Ronaldo factor), though sponsorship dipped slightly to £36m. No pre-season tour possible.  This is still below 2020 Q1 £80m peak.

Q1 figures still include revenue from the highly lucrative £64m Chevrolet shirt sponsorship, as the contract was extended by 6 months to December 2021. However, this will be replaced in January by TeamViewer £47m, which is much lower than the current deal.

United estimate that their wage bill will rise by “around 20%” this season, as a result of signing Ronaldo, Varane and Sancho. That would imply a £65m increase to £387m in 2022, which would be the highest ever in England, around the same level as Barcelona in 2020.

£141m gross transfer spend in Q1 2021/22 was more than the £116m outlay in the whole of 2020/21, though not as high as some other years, e.g. £243m in 2017/18. Net spend in Q1 was £112m. United’s gross spend since 2014 is just under £1.5 ln.

Although it has fallen from its peak, the annual interest payment of about £20m is a lot higher than every other Premier League club. In Q1 2021/22 United paid £8m, around the same as previous years.   have found enough cash to pay shareholders (mainly the Glazers) an £11m dividend in Q1, delayed from 2020/21. Another semi-annual dividend will be paid on 7 January 2022. United are the only Premier League club to pay meaningful dividends (£133m since 2016).