Manchester Utd’s 20-21 financials provide warning for the rest

MANCHESTER UNITED are arguably robust enough to withstand the financial pain of the 2020-21 season, but a huge net loss and a dramatic drop in matchday income, 92.1%, provides some indication of how challenging the next stage of the pandemic might be for the rest of football. 

United’s net loss was £ 92.2 million, but £ 66.6 million of that is attributable to the writedown of a US deferred tax asset. The club’s EBITDA (earnings before interest, taxes, depreciation and amortisation) was £ 95 million and their pre-tax loss was £ 24 million. 

United’s revenues were down just 2.9% to £ 494.1 million. United’s matchday income totalled £ 7.1 million, compared to £ 89.8 million in 2019-20. This was compensated by an 81.7% increase in broadcasting revenues from £ 140 million to £ 255 million. 

This was primarily due to participation in the UEFA Champions League plus the impact of playing 20 additional games in the financial year owing to a deferral of 10 games from 2019-20. United failed to progress beyond the group stage in the Champions League but then went on a protracted run to the Europa League final, which they lost to Villareal.

Commercial earnings fell by almost 17% to £ 232 million, the lowest level since 2015, which was not helped by the club cancelling a pre-season tour as well as reduced traffic at United’s retail operations. The commercial stream contributed 47% of United’s overall performance, while broadcasting weighed in with 51.6%, matchday was just 1.4%. Normally, United would expect around 18% of their revenues to come from the latter. 

Despite the overall drop in income, United’s wage bill was up by 13.6% to £ 322.6 million, representing a wage-to-income ratio of 65.3%, an increase of more than nine percentage points on the previous season. While the ratio is the highest for over a decade, the club’s wages were higher in 2019. It is not hard to imagine that with the signing of Cristiano Ronaldo and Jadon Sancho, United’s staff costs will increase in 2021-22, in fact the club is expecting a 20% rise. 

The club’s ability to turn a profit on player trading appears to be in decline, the £ 7 million profit for 2020-21 represented around a quarter of the amount made in 2019. Sport Bible recently claiamed that United have sold only five players for a profit in the past 10 years, the most recent being Daniel James, who was unloaded to Leeds for £ 25 million very recently.

United’s gross debt, at £ 530 million, is at its highest level, but with cash totalling more than £ 100 million, net debt has fallen by 12% to £ 419.5 million. 

Ed Woodward, the club’s outgoing Chief Executive, told investors: “While the impact of the pandemic is very visible, our underlying strength is also clear. We said during the depths of the pandemic that the club would emerge in a stronger relative position and I believe we are now seeing that borne out as we build towards recovery from a very solid foundation.”

United have started the 2021-22 season well and the arrival of Ronaldo will undoubtedly provide a boost to sponsorship and other commercial income. As the Champions League result in Berne showed, however, there is still much work to be done on the pitch.


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