Mixed bag of financial results for United

Manchester United significantly reduced their pre-tax loss in 2022/23 by £117m from £150m to £33m, as revenue rose £65m (11%) from £583m to £648m, which was not only a new club record, but the highest ever reported in England.

That was obviously good news, especially in a year when United did not participate in the lucrative Champions League, but it’s worth remembering that the club still posted a loss, despite all the impressive revenue progress.

United’s revenue growth was driven by new club records for both commercial, which shot up £45m (17%) from £258m to £303m, and match day, up £25m (23%) from £111m to £136m. On the other hand, broadcasting slightly dropped by £6m (3%) from £215m to £209m.

As has often been the case in recent years, United’s bottom line did not benefit much from profit on player sales, which fell £2m (7%) from £22m to £20m, mainly from the moves of James Garner to Everton, Andreas Pereira to Fulham and Tahith Chong to Birmingham City. United’s inability to match their rivals in terms of player trading goes a long way in helping to explain the club’s challenges with Financial Fair Play

Despite the improvement in 2022/23, the fact remains that Manchester United still reported a loss for the fourth year in a row. This adds up to nearly a quarter of a billion pounds before tax lost in this period (or £227m specifically).

United’s financial challenges are clearly illustrated by the deterioration in profitability in recent seasons. They posted healthy profits in five of the six years up to 2019, but the club now seems to have become loss-making.

That said, United’s £194m loss in the three years up to 2021/22 (the last season when all clubs have published accounts) was by no means the worst performance in the Premier League. Over this period, four clubs posted even higher losses, namely Everton £306m, Chelsea £242m, Arsenal £227m and Tottenham Hotspur £209m.

United’s wages decreased £53m (14%) from £384m to £331m, mainly due to lower bonus payments as a result of not qualifying for the Champions League, partly offset by investment in the squad and contract extensions. The club also said that the decrease was driven by “squad turnover”, as a number of highly paid players left on free transfers.

There was clearly some scope for the big reduction in wages, as United’s £384m in 2021/22 was comfortably the highest in the top flight. In fact, it was the highest ever in the Premier League, despite the club only finishing sixth and missing out on the Champions League.

Even after all the various refinancings, United’s £613m gross financial debt is still higher than the £604m owed after the Glazers’ leveraged buyout nearly 20 years ago. United have now paid a jaw-dropping £778m in interest since the Glazers’ leveraged buy-out in 2005. Put another way, that’s more than three-quarters of a billion pounds that could have been invested in the squad or the refurbishment of Old Trafford.

This set of accounts is a real mixed bag. On the plus side, United have set an English record for revenue, including new club highs for both commercial and match day, while the wage bill is under more control, but the fact remains that the club still posted a loss.

The club has spent big in the transfer market, but much of this has been funded by increases in debt in the shape of higher drawdowns from the loan facility and massive transfer payables, while also eating into the cash reserves. In addition, interest payments are rising and it would be a surprise if dividends did not resume this year.

Given the club’s inability to generate meaningful player trading profits, United’s business model is dependent on success on the pitch (no matter what former CEO Ed Woodward once said), so it is important that the progress under ten Hag is maintained, including qualification for the lucrative Champions League. At the moment it's not looking too promising.

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The Political Economy of Football V2

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