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).

Threat of financial calamity removed from Baggies

West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s

Gold standard ground boosts Tottenham's income

The gold standard in European football grounds is the Tottenham Hotspur stadium in north London, a £1bn construction project completed in 2019. Its impact on the club’s finances has become increasingly clear as the effects of the pandemic have faded. Previously, the average fan would spend less than £2 inside the ground on a typical match day, but now that figure is about £16, thanks to new facilities including the longest bar in Europe and an on-site microbrewery. Capacity has gone up from 36,000 at the club’s previous home of White Hart Lane to 62,000. The new stadium — built on land adjacent to White Hart Lane — has opened the door to a broad range of other events that have helped to push commercial income up from €117mn in 2018 to €215mn in 2022. Last year, Tottenham hosted US singer Beyoncé for five nights on her global Renaissance tour, two NFL matches, as well as rugby games and heavyweight boxing bouts. Money brought in from football has gone up too. Match day income is

Spurs to sell minority stake

Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to depl

The Political Economy of Football V2

Search This Blog