United better able to meet financial challenges

Manchester United have announced financial results for the first half of 2023/24, incorporating the first six months of the season which cover July to December 2023, in other words before Sir Jim Ratcliffe’s purchase of a minority stake.

Manchester United’s pre-tax loss narrowed from £25m to just £6m, as revenue increased by £72m (23%) from £311m to a first half record of £383m and profit on player sales more than doubled from £14m to £30m. However, this was accompanied by operating expenses rising £52m (16%) to £383m, while net interest payable also increased by £16m (85%) from £19m to £35m.

The revenue growth was driven by the return to the Champions League, which drove large increases in both broadcasting, up £52m (55%) from £94m to £146m, and match day, up £24m (47%) from £51m to £75m. This was partially offset by lower commercial, which fell £4m (2%) from £166m to £162m.

The impact of interest payable on United’s accounts is striking, amounting to £35m in the first half, which represents a significant increase over the previous comparative periods. This is partly due to rising interest rates, but largely because the majority of the club’s debt is denominated in USD and unhedged. Therefore, the weakening in the Pound against the Dollar has led to higher interest charges in the club’s accounts, which are reported in Sterling.

This is the third season in a row that Manchester United have reported a pre-tax loss in H1. Revenues and costs are not evenly phased during the financial year, but it is perhaps worth noting that the previous season’s £25m loss after the first six months ultimately became a £33m loss for the full season.

However, United’s bean counters will be gratified that their first half loss has rebounded a little this season, though it is still nowhere near as good as their performance in the years up to 2021, when they regularly generated large profits.

Player sales

United’s profit from player sales increased from £14m to £30m, mainly thanks to the moves of Dean Henderson to Crystal Palace, Anthony Elanga to Nottingham Forest and Fred to Fenerbahce. This was United’s best result from player trading for many a year, but it remains relatively low by Premier League standards. They didn’t make any major sales in the January window, so this gain will only improve if they register more deals before the 30th June accounting close.

Looking at player sales profits in the five years up to 2021/22, we can see that United’s £92m was firmly in the bottom half of the Premier League, miles below the likes of Chelsea £467m, Liverpool £263m and Manchester City £254m.

United’s H1 revenue increased by £72m (23%) from £311m to £383m, which was a club high for the first half, boosted by a new record in match day. The club has maintained its revenue forecast of £635-665m for the 2023/24 season, though this is £15m lower than the initial outlook of £650-680m, again because of the early Champions League exit.

The difference in United’s earnings in the seasons when they qualify for the Champions League is obvious. For example, the Swiss Ramble estimates that United will earn €60m this season from the Champions League, even after their disastrous fourth place finish in the group, which meant that they didn’t even avail themselves of the safety net of dropping down to the Europa League. That is around twice as much as the €33m they received last season in the Europe League, even though they went further by getting as far as the quarter-finals.

United’s wage bill increased by £25m (16%) from £160m to £185m, mainly due to higher bonus payments as a result of qualifying for the Champions League, allied with investment in the squad and contract extensions.

The club still has to confront a number of financial issues, as shown in these figures for the first half of the season. Despite setting a new revenue record, the fact remains that United still posted a pre-tax loss, while the second half of the year will lose the benefit of Champions League income.

Furthermore, the club’s operational cash outflow had to be funded by taking on an additional £160m of debt. As a result, total debt shot up to around £1.1 bln, including a huge amount owed for transfers, though Sir Jim’s money has since reduced this by £120m.

In conclusion, there will be no shortage of challenges facing the new management team, but at least there is now a willingness to do something about them.

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