Are United 'trading off their history'?

Ed Woodward, Manchester United’s former executive vice-chair, claimed to analysts in 2018 that the team’s “playing performance doesn’t really have a meaningful impact on what we can do on the commercial side of the business”. United’s ongoing struggles on the pitch since then are bringing that assertion into question.

After increasing its commercial revenues by a total of just 10 per cent over the past six seasons, the club has been leapfrogged by its two biggest rivals, Manchester City and Liverpool, which between them have won nine out of the previous 12 Premier League titles since United’s last triumph in 2013. Even after a 15th-place finish last year, and a failure to qualify for the lucrative Champions League, United’s commercial revenues remain commensurate with the most successful clubs in world football.

 Andy Green, finance director at Manchester United Supporters Trust and head of investment at private equity firm Rockpool Investments, warned the Financial Times that the club was “trading off its history”. As a new Premier League season gets under way, observers like Green believe the club now needs to deliver meaningful improvements on the pitch to stand a chance of reclaiming the ground lost off it. In 2023-24, United generated £302mn of commercial revenue, compared with £308mn and £349mn at Liverpool and Man City respectively. Arsenal, Man City, Chelsea, Liverpool and Tottenham Hotspur have all increased their commercial revenues at a greater pace than United has managed since 2019, albeit from a lower base.

 In 2024, petrochemicals billionaire Sir Jim Ratcliffe paid $1.6bn for a 29 per cent stake in United in a deal that handed him control of its sporting operations. Despite its travails, Ratcliffe is confident in the United brand. “It stands shoulder to shoulder with Coca-Cola and Apple,” he said at the opening of the club’s recently upgraded training facilities, a £50mn project overseen by architect Sir Norman Foster. The redesigned complex features an underwater treadmill and a “high altitude” exercise room with adjustable heat and humidity.

United has spent more than €2bn signing players since Sir Alex Ferguson retired as manager in 2013, after leading the club for more than two decades as it dominated English football. Its net spend, which takes account of income from player sales, is €1.7bn since Ferguson’s departure, the highest of any Premier League club, according to data website Transfermarkt.

After overseeing a deeply unpopular period of cost-cutting — including scrapping free staff lunches, cutting bonuses and culling 450 jobs — Ratcliffe has sanctioned yet more spending on player transfers. So far this summer the outlay comes to about £200mn, spent on three attacking players: Matheus Cunha, Bryan Mbeumo and Benjamin Šeško. Only defending champions Liverpool and Chelsea have spent more, according to Transfermarkt.

United continues to be able to attract blue-chip sponsors. Qualcomm’s Snapdragon brand last year extended its $75mn-a-year front-of-shirt sponsorship deal until 2029. In 2023, Adidas agreed a 10-year kit deal worth about £900mn, though £10mn will be deducted this season owing to United’s failure to qualify for the Champions League.

The club’s commercial revenue totalled £245.1mn in the nine months to March 31, up 5.8 per cent on the same period a year earlier. “It’s tough, right, but we’re committed to this thing. And so we’re going to work through it and we’re going to be supportive of the club,” Don McGuire, chief marketing officer at Qualcomm told the :Pink ‘Un. “Obviously performance on the pitch helps,” he added. “I believe they’re going to get there and I am super happy with some of the moves they’ve already made”.

Green, the finance director of the supporters trust, believes there’s “no silver bullet” to increase revenues at the sort of rates seen in the Woodward era. United’s commercial income almost quadrupled to nearly £200mn in the decade to 2015. People close to the club say a new stadium, which could cost at least £2bn, is key to opening up new commercial revenue streams, including sponsorship deals.

But with construction yet to even begin, the more immediate opportunities to reaccelerate commercial revenue growth lie in qualification for the Champions League. With only domestic football to worry about this season, Ratcliffe and co-owners the Glazers are betting that new signings can improve performances under manager Ruben Amorim, who was appointed last November.

Green cautioned that the recent transfer spend was not without risk. “The risk they’re taking essentially is that it doesn’t pay off,” he said. “That profitability doesn’t materially improve because they can’t get back in the Champions League, that revenue doesn’t improve and they build up more transfer debt that needs to be settled over the next three or four years.”