Can United meet FFP rules?

The closing of the transfer window has left many Manchester United supporters unhappy with the club’s recruitment policy. Even though United have been crying out for a goal scorer of Harry Kane’s stature, they were never really in the hunt for England’s captain, while expensive options that would have strengthened their midfield, like Declan Rice and Moisés Caicedo, moved elsewhere.

Football fans are often accused of being overly entitled, but a recruitment campaign that ends up with United having to field Harry Maguire and Jonny Evans in central defence agains Arsenal cannot be considered a great success.

Some would point to the Glazers as being the reason for United being outspent by their rivals, not least because of takeover talk dragging on, but the club itself has briefed that it is constrained by the need to meet Financial Fair Play (FFP) regulations.

As a result, United have gone for cheaper alternatives this summer, typified by two players arriving on one-year loan agreements, namely Sofyan Amrabat from Fiorentina and Sergio Reguilon from Tottenham, instead of permanent deals.

Nevertheless, United still spent £177m this summer, though this was less than a few of their peers. Obviously, it was much lower than the massive £408m Todd Boehly-fueled outlay at Chelsea, but it was also behind Tottenham £216m, Manchester City £210m and Arsenal £204m.

Transfer spend

United’s gross transfer spend peaked at £243m back in 2017/18. Since then, they have only broken through the £200m barrier once, namely in Erik ten Hag’s first season. In fact, they have spent less on players in the last six seasons (£942m) than the preceding 6-year period (£959m), so their direction of travel is the opposite of most clubs.

That said, this is still just shy of a billion Pounds in six years, which is not too shabby, and almost exactly the same as Manchester City and Arsenal. United’s transfer expenditure has only really been significantly outpaced by Chelsea, but in fairness the Blues have been in a class of their own with an astonishing £1.7 bln outlay in this period.

United’s owners have not put any capital into the club, so their maximum allowable loss over the 3-year monitoring period is only £15m. This means that they have much less room to manoeuvre compared to many of their rivals, whose owners have provided funding, either in the form of a capital injection or via a loan that is subsequently capitalised.

In other words, the Glazers’ parsimonious approach has made it much more difficult for United to meet FFP targets.

The net result is a £73m profit, i.e. £88m better than the £15m allowed loss. In other words, my model suggests that United were absolutely fine with the Premier League’s Profitability and Sustainability rules in 2021/22, though this does partly depend on how much of the COVID losses were accepted.

The Swiss Ramble’s model suggests that United were just about in line with UEFA’s maximum allowable loss, even after including £74m dividends. However, this was dependent on UEFA accepting the COVID losses claimed by the club.

Revenue worries

Another concern for United is their revenue, which for many years was the highest in England, but has not fully recovered from the effects of the pandemic. In fact, their 2021/22 revenue was £44m (7%) lower than their £627m peak three years ago.

In the same period, three of their rivals have managed to grow revenue significantly, namely Manchester City (up £78m), Liverpool (up £61m) and Chelsea (up £35m).

United’s position looks more precarious for 2023/24 in terms of the P & S model, which could help explain their (relative) caution in this summer’s transfer market.

This is partly because they lose the benefit of the large COVID adjustments for the combined 2019/20 and 2020/21 seasons, but still have to include the hefty 2021/22 loss in the P&S calculation.

1. Based on my model, United will be £57m over the limit, though they could still close the gap in one of two ways.    The owners could inject some capital to increase the maximum allowable loss, though supporters would be advised not to hold their breath on this one.
2. More likely, they could generate more profits from player sales in the January window. The obvious candidates would be Harry Maguire and Scott McTominay, who reportedly were already quite close to leaving this summer.

The Swiss Ramble’s estimate suggests that United will just about be OK with UEFA rules, though the margin for error is quite small. As noted before, any player sales in January would make life more comfortable from an FFP perspective.

Change of ownership would help

It is clear that United have had to be very conscious of FFP regulations, especially after the massive £150m loss in 2021/22. I think they should be fine for 2022/23, but they are likely to face some challenges for 2023/24, especially with the Premier League’s Profitability and Sustainability targets.

However, they could improve their chances of compliance with a couple of well-judged player sales, so it would be no great surprise to see departures in the January transfer window.

A change of ownership would also help if the purchasers put some capital into the club, as this would raise the allowable losses. As a result of the Glazers’ regime, United have had a much harder task than other clubs to meet FFP targets, due to the high interest payments and dividends, so many of the problems are actually of their own making.