Manchester United have announced a reduced £5.6million ($7.2m) pre-tax loss over the first six months of the season, easing concerns around their compliance with financial fair play (FFP) rules.
The second quarter results cover up until the end of December, shortly after the announcement of Sir Jim Ratcliffe’s $1.64bn deal to buy a minority stake in the Old Trafford club.
United had previously posted a £32.8m pre-tax loss for the first quarter of the 2023-24 financial year, but a £27.2m pre-tax profit in the three months since has pulled the club back towards the black.
A club’s pre-tax profit or loss over three years is the starting point for calculations under the Premier League’s profitability and sustainability rules (PSRs).
United achieved record second-quarter revenues of £225.8m this season, with broadcasting and match-day income seeing year-on-year increases of 59.2 per cent and 81 per cent respectively.
That second-quarter profit was despite United paying exceptional costs of £9.6m in professional fees related to the strategic review process and Ratcliffe’s purchase. That figure does not include the $31.5m due to be paid to investment bank Raine Group, who advised the club throughout the strategic review.
Sir Jim Ratcliffe’s INEOS purchased a 25 per cent stake in Manchester United earlier this year (Peter Byrne/PA Images via Getty Images)
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Commercial revenues fell by 8.8 per cent due to an unfavourable comparison with a one-off sponsorship payment at the same time last year.
United’s wage bill stood at £95.1m, up from £77.3m over the same period last season due to participation in the Champions League.
United’s total debt stood at £773.3m, up from £741.9m this time last year, in part due to a £60m drawdown on the club’s revolving credit facility in October.
United had a quiet January with manager Erik ten Hag claiming that concerns over compliance with FFP regulations (PSRs) were preventing the club from making new signings.
“I looked but there is no space,” Ten Hag said in January when asked about United’s need for reinforcements up front. “There is no space for FFP to do something about this lack of quantity in the striker position.”
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What does this mean for FFP?
United’s £5.6m pre-tax loss is an important figure from an FFP perspective, as a club’s profit or loss before tax over three years is the first part of any PSR calculation.
Add United’s £5.6m loss so far this season to their losses in 2021-22 and 2022-23, and you are left with a total loss of £188m over the current three-year PSR monitoring period.
That figure can still rise and fall between now and June 30, the cut-off date for United’s next Premier League PSR test, but it is a lot more positive than the total three-year loss of £215m at the end of the first quarter.
And even if that loss increases, a number of deductions will be made to help bring it down below the £105m threshold in the final PSR analysis.
United will be able to write off spending on infrastructure, women’s football, youth development and community work as part of the PSR calculation. Up to £40m in costs related to COVID-19 incurred during the 2021-22 season will also be deducted.
Where will that leave United? It is impossible to say for certain with another six months of the financial year still to be reported and senior Old Trafford figures have consistently said United’s position is tight.
But as it stands, United can be more confident of coming in below PSR’s maximum £105m limit than they were at the end of the first quarter.
And though they are at risk of breaching the lower £15m PSR threshold, those losses can be covered by ‘secure funding’ — a term loosely defined in the Premier League’s rulebook, but one that includes the significant amount of cash in the club’s bank account following the first portion of Ratcliffe’s additional $300m investment.
(Michael Regan/Getty Images)
