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.


Manchester United: Crisis, this crisis

MANCHESTER UNITED are in a mess. One of the world’s most popular, richest, celebrated and envied clubs is being mismanaged and is rapidly losing ground both domestically and internationally. The club’s 6-1 home defeat at the hands of Tottenham was a shocker, not so much because they were outclassed by a peer, but because it highlighted just how far they have fallen since 2013 when Sir Alex Ferguson finally retired.

It is no longer a surprise when they fail and they are rarely considered contenders for the top prizes.

Just over 24 hours after their humiliation at Old Trafford, United sought help from a 33 year-old forward as the international deadline drew to a close. Edinson Cavani is a talented, but short-term, hiring who has arrived on a free, but will doubtless be earning well. United will be hoping he can get them through their crisis and be as successful as Zlatan Ibrahimovic was.

Hide in your shell

It is a crisis, too, for upheaval is just around the corner for Manchester United and their manager, Ole Gunnar Solskjaer, is likely to be first in the firing line. It won’t be long before rumours start circulating about the popular Norwegian’s successor.

Unable to get close to the club at the moment to vent their feelings, United’s fans are very unhappy and demonstrated near the stadium about the owners, the Glazers, and the deeply unpopular Chief Executive Officer and de facto director of football, Ed Woodward.

United have nowhere to hide. Their financials for 2019-20 are due any day now, but despite claiming they are staring at a big loss of income due to the pandemic, United cannot point to financial problems as the sole cause of their current malaise. Over the last five years, their net spend has been close to £ 500 million, a figure beaten only by their neighbours City. The trouble with many clubs that have resources is that they waste their money and United have certainly not spent wisely in recent seasons.

So many of the club’s headline-making signings have not worked out as planned: Fellaini, Di Maria, Depay, Sanchez, Pogba and Fred could all be classified as disappointing, although Pogba has produced the goods occasionally. But £ 90 million? When the history is written of the post-Ferguson period, Pogba will not look like good value for money. Even England centre half Harry Maguire and former Palace defender look like extravagant purchases at £ 78 million and £ 49.5 million respectively. 

Since Ferguson left, United have spent £ 1 billion on players, recouping £ 335 million in the process. They invariably miss out on the top names, witness the way they have unsucessfully trailed Jadon Sancho but were unable to meet his wage demands.

They also experienced rejection from players like Erling Haaland and Jude Bellingham who chose Dortmund instead of a move to Old Trafford – astonishing for a club of United’s stature. Their wage bill is already well over £ 300 million, the highest in the Premier League, but their revenues are of such a high level that the wage-to-income ratio is just 54%.

It’s raining again

How this looks when the club issues its 2019-20 financials is anyone’s guess at present. They had forecast £ 580 million in revenues but that figure has been withdrawn. The club is losing around £ 4 million for every game played behind-closed-doors. United had an EBITDA (Earnings before interest, taxes, depreciation and amortisation) of £ 186 million, but the 2019-20 figure is unlikely to be close to that. The club has said they must not dip below an EBITDA of £ 65 million in a rolling 12-month period as it would trigger covenants around some of United’s bank borrowing. The club’s net debt had increased by £ 127 million to £ 427 million at the end of its third quarter.

It is worth asking the question about United’s long-term view. The seven seasons since Ferguson left have delivered just three trophies: the FA Cup in 2015-16 under Van Gaal and the Europa League and Football League Cup with Mourinho at the helm in 2016-17. This is the most unsuccessful seven-year period since before the Premier. Indeed, in the last seven years of Sir Alex’s reign, they won nine trophies, including five league titles.

Ole Gunnar Solskjaer was appointed rather hastily after a interim period following the departure of José Mourinho. Everyone agrees Ole is a nicy guy and people are reluctant to talk negatively about him, but was he always just a stop gap? His win rate is 54.75%, which has only been bettered by Mourinho since 2013.

United have been outplayed in all their league games this season and were rather fortunate to win the points they have secured at Brighton. They looked decidedly second rate against Crystal Palace and Tottenham. But it is not all bad news (not quite), there are positives at Old Trafford, including the emergence of Mason Greenwood and the signing of Donny van de Beek and Bruno Fernandes. The squad does look like it is perpetual need of a clear-out, though.

Crime of this century

There is an underlying feeling that unless the club radically changes personnel in key roles, their fortunes will not change and United would be in danger of becoming one of European football’s fallen giants – rich, well supported, strong brand but unable to get it right on the pitch. Much of the blame is being pushed to the door of Woodward and his Bristol University pals, Richard Arnold and Matt Judge. Judgement around the recruitment of players is certainly an issue, but Woodward’s biggest “crime” could actually be that he is a former banker – not a species generally appreciated in the football industry!

European club football always has its faded clubs but United have all the tools necessary to shake off this malaise – there are some similarities to the last time they drifted into mediocrity in the post-Busby – but will their ownership structure permit them to boldly change their approach? The fans certainly think they know what’s needed to recalibrate the club.


Photo: PA