United's three quarters of a billion interest bill

Manchester United have announced financial results for Q3 of 2021/22, incorporating the first nine months of the season (July 2021 to March 2022), so these are boosted by the return of fans to the

The club have reported operating losses for the past two seasons, so it is no huge surprise to see another deficit in the first nine months of 2021/22. That said, the £44m operating loss is significantly more than the £0.5m lost in the same period last season.

Interest payments and dividends

Although it has fallen from its peak, the annual interest payment of about £20m is still a lot higher than every other Premier League club except Arsenal £34m (£32m break fee for debt refinancing) and Spurs £18m (new stadium). United have now paid an amazing three-quarters of a billion pounds in interest since the Glazers leveraged buy-out, while the debt owed is virtually unchanged at around £600m.

Interest went from went from £18m receivable in 2021 to £31m payable in 2022, an adverse movement of £49m, largely due to an unfavourable swing in unrealised foreign exchange movements on the club’s debt, which is denominated in USD, compared to prior year favourable swing.

The club have found enough cash to pay shareholders (mainly the Glazers) a £22m dividend, including £11m delayed from 2020/21. Another £11m semi-annual dividend will be paid on 24 June, taking year to £33m. United are the only Premier League club to pay dividends (£155m since 2016).

Revenue

United swung from £18m pre-tax profit to £58m loss (£45m after tax), despite revenue increasing £65m (16%) from £400m to £465m and profit on player sales rising from £0.3m to £18m, as expenses were up £109m (27%) and net interest went from £18m recoverable to £31m payable.

The main driver of the £65m revenue increase was match day, which rose £84m from £5m to £89m, as games no longer played behind closed doors, though commercial was also up £14m (8%) from £180m to £194m. In contrast, broadcasting fell £34m (16%) from £215m to £181m.

Profit from player sales rose from just £259k to £18m, thanks to the sale of Dan James to Leeds and a sell-on fee from Romelu Lukaku’s transfer from Inter to Chelsea. This is not that big by Premier League standards, but is more than twice as much as the 2020/21 full year £7m.

Although it is clearly good news that revenue increased from £400m to £465m, it has still not returned to the £496m pre-pandemic level for the first 9 months. This suggests that United are unlikely to reach the club’s 2019 revenue peak of £627m this season.

On a full year basis the Swiss Ramble estimates that the club will receive slightly less money from Europe this season, with £67m for reaching the Champions League last 16 compared to £70m in 2020/21 (Champions League group stage £54m plus Europa League finalists £16m).

Commercial income rose £14m (8%) from £180m to £194m, due to merchandising rising by £13m (19%) to £84m, thanks to “increased Megastore footfall” (aided by the Ronaldo factor), with sponsorship up slightly to £111m. No pre-season tour possible. This was still below 2020 £220m peak.

Wages

Wages shot up £49m (21%) from £239m to £288m, as a result of signing Ronaldo, Varane and Sancho, which works out to £384m on an annualised basis. This is in line with the club’s estimate of a 20% year-on-year increase to £387m, which would be the highest ever in England.

wages to turnover for first 9 months of 2021/22 was 62%, which is lower (better) than 65% in full year 2020/21, though still the second worst ratio that United have reported (and significantly higher than 45% in 2017), driven by higher wages and low revenue growth.

The net debt has increased by £76m in the last 9 months to around half a billion, as gross debt rose £62m to £592m and cash fell £15m to £96m. Took out new £40m loan, while US Dollar denominated borrowings were higher in GBP terms, due to foreign exchange movements.

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The Political Economy of Football V2

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