United post a loss and look at the big picture

AT A time when the city of Manchester has been in the spotlight over the issue of lockdowns and monetary aid, Manchester United Football Club announced its financials for the 2019-20 season and revealed how the pandemic has affected its off-pitch performance.

United’s total income was down almost 19% to £ 509 million, which on reflection could have been worse even though forecasts ranged from £ 550- 580 million. The club was still able to pay a dividend of £ 23 million to shareholders and the Glazer family despite reduced revenues and the overall loss of £ 23.2 million for the financial year. In a year in which they were absent from the UEFA Champions League, United estimated covid-19 has cost them £ 71 million.

There will be little sympathy for United in the current climate, especially as the club is one of those seeking a reconfiguration of the Premier League (along with Liverpool) and have also been named as an interested party in the European Premier League concept now attracting very negative media attention. Interestingly, CEO Ed Woodward claims he saw a report about this latest development, but he had “no idea where it came from”.

United’s biggest drop in income came from broadcasting, a fall of almost 42%, partly attributable to the rebate given to TV companies as football disappeared for a few months. This income stream amounted to £ 140.2 million. Matchday income, inevitably, fell by 19% to £ 89.8 million, while commercial revenues were robust, rising by 1.4% to £ 279 million. 

Manchester United, who average more than 70,000 at Old Trafford in normal conditions, may find the club-supporter dynamic looks very different in the medium-term. Even though crowds will return, there has to question marks against the future of enormous attendances and the willingness of people to risk close contact on a mass scale. 

Therefore, the advantages that clubs like United have enjoyed may be eroded. Old Trafford, a stadium that has fallen behind contemporary arenas, notably Spurs, Liverpool, Arsenal and Manchester City, will need some modernisation to adapt to safety and practical requirements. The club had plans to increase capacity even further to almost 90,000 and estimates of a major refurbishment ran to over £ 200 million. The Glazers have gone as far as buying-up space around the stadium to allow for Old Trafford’s expansion at some point.

But there are other factors to consider: United’s net debt has grown substantially and now stands at £ 474 million, up from £ 203 million in 2018-19.  This was largely attributable to transfer activity – United’s outlay included around £ 190 million on Aaron Wan-Bissaka, Harry Maguire and Bruno Fernandes  – as well as foreign exchange movements. Furthermore, the club’s cash levels reduced from £ 307 million to £ 52 million. 

United trimmed their wage bill by 14.5% to £ 284 million, but their wage-to-income ratio went up from 53% to 55.8%. The highest earner on United’s books is reputed to be goalkeeper David De Gea on £ 350,000 per week. Recent signing Edinson Cavani is apparently being paid £ 189,000 every week.

With every major club experiencing financial pressure as a result of the pandemic, United’s position in European football’s hierarchy is relatively secure. However, their debt levels should be a major concern as well as their declining cash position. On the pitch, the club is far from settled, as witnessed by some of their recent results and they are no longer a Champions League mainstay even though they returned to the competition for 2020-21. Nevertheless, the size of the club and its ability to generate vast sums of cash suggests they are strong enough to withstand the current crisis.

Photo: PA

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