09 Jan 2025 08:48:33
Question for those in the know.
Are our finances really in the precarious position the media keep pumping out?
If so, you can understand the idea of selling homegrown players.
09 Jan 2025 09:48:49
The finances are not precarious at all.
There is a need to comply with the current PSR rules, and that compliance is going to be heavily linked to sales and reduction in wages.
It is perhaps best to think that United position financially is that to get players in they need to get players out to allow the accountants to perform the magic with numbers to create the room to get players in.
It's a problem entirely of their own making, the have overpaid for players in terms of fees and wages for so long it created an accounting nightmare which they are trying to get back under control.
Interestingly there is much discussion of the PSR rules changing/ being replaced to effectively a cap on player spending as a percentage of turnover. Those rules would out United in a much better position to spend due to their high turnover.
I think it's important to understand United are not financially in trouble at all. The are just in a mess over being allowed to spend their way out of trouble quick because the made a pigs ear of all their previous attempts to spend their way out trouble and so have to sort that before they have another go and dropping huge piles of cash on players.
09 Jan 2025 10:18:56
My understanding is that we have reported a loss of some £250m over the last three years, PSR says you can only make a loss of £105m during that period.
Some of the expenditure can be written off as exceptional such as the strategic review costs which I believe was around £50m and infrastructure costs at Carrington, but it means we aren’t awash with cash. I don’t see this as a bad thing as it might end the Man Utd tax on players we buy.
I don’t see the situation improving in the short-term, we have not made a profit since 2019, and if we miss out on Europe, which is a distinct possibility, broadcast and match day revenue will be reduced, and I think sponsorship contracts might be affected.
But don’t worry the Glazers have an extra £1 billion in their back pocket from the strategic review and knowing how much they love the club, I expect some Man City style sponsorship agreement in the coming months.
09 Jan 2025 10:46:24
Please ignore my ignorance on the whole PSR situation. Is it possible that we can buy in January without the need to sell, so long as we then balance the books by the end of June.
Probably not the way the club would want to do it as is risky and leaves you open to low bids knowing we need to sell.
09 Jan 2025 11:45:22
Revenue - £661.8m
Total Operating expenses - £768.5m
Net Loss - £113.2m
Pre-Tax loss for 3 year PSR cycle - £312.9m
Total debt estimated at £714m (cost per year £61m 23/ 24)
There was an exceptional (£48m) from the sale/ strategic review pre tax loss has widened year on year from £33m to £83m.
Wages £365m (up 34m from previous year)
I am not up to speed on the rules of PSR, I thought clubs were allowed a £105m loss over the three year cycle. However, I do not know the technical details so there may be ways of writing some off/ down.
In conclusion, its not great. The biggest take away for me is the debt size and cost, I haven't seen the net cash held info. However, I would assume its not great which means we will be financing players through debt and structured payments. An example would be Zirkzee, he had a release clause of £34m we agreed a fee of £36.5m for extended financial terms, that's a 7.4% increase in costs and doesn't take into account any financing costs such as loan fees and interest from our lenders, borrowing money is not cheap.
Imagine paying £1.25bn for 27.7% of something losing that much money. I wonder if Sir Jim Ratcliffe wishes he stepped aside and let the Qatar bid win. We would of been debt free and had a financed stadium.
09 Jan 2025 12:12:03
Rews,
Each of their own on the ownership but we are where we are. The club isn’t broke or in any financial trouble as said above, it’s all to do with PSR. A lot of clubs seem to be struggling with it though not just us so there may be a chance the rules will change going forward. It’s not a bad thing for the club to get themselves into order financially though and get some silly overpaid earners off the books, it can only help going forward.
09 Jan 2025 12:27:26
I think last year we were over £1 billion in debt. From the original loan the glazers took out to buy us (which we've paid nearly £1.5 billion in interest payments) and over £300,000,000 left to pay on transfers.
We had some high earners leave last summer but spent a fair wedge getting players in. As Rewz said above, you have to look at the Zirkzee deal to see how delicate the funds are. We paid over his release clause to off the transfer in installments.
Also Ugarte is officially on loan this season with an obligation to buy. So effectively we're already spending next years budget this season.
I would assume that there is little to no wiggle room to get players in this window unless players department. But keep in mind that for instance, if Antony were to leave for say £30,000,000, we wouldn't have any scope to use those funds as he still technically has roughly that amount left on our books.
This is why selling an academy player is normally more beneficial. There is no amortization on a fee paid so it's all pure profit.
Lefts face it though, we've been absolutely woeful in the transfer market over the last decade. We've wasted well over a billion quid on dross and never utilised the outgoing side of the transfer market well at all.
Maybe having to reign in our spending isn't a bad thing. Our record when it comes to big money signings is woeful.
09 Jan 2025 13:33:37
As ed002 would have said. Leave the finances out. You don't know the detail. Too much conjecture and not enough detail.
It's very complex and as said above there is the business finances which are not in awful shape but then their is compliance to the everc hanging competition rules which we are very close to being non compliant.
The lack of knowledge on these issues and also the lack of ability to understand them even if the details were furnished added to the irresponsible reporting full of false figures leads to fan frustration.
Yesterday someone said the club isn't a business to him. It's a bit like stamping your feet like Veronica salt. I'll stream and I'll scream even though I don't understand. It is a business sheeter it feels that way to you or not.
In 18 months time I think and believe we will be in much better shape both on and off the pitch.
It's Ralph's open heart surgery starting but due to the finances some tough calls have to happen to out us back on an even footing before we can grow again. Don't worry and be happy that things are being addressed for the better.
09 Jan 2025 13:55:10
Ken,
I agree with you. Alos at some point it was inevitable that the club would have to enforce cost cutting measures due to losses.
I have wondered whether SJR would look at renaming OT to the INEOS stadium to pump funds into he club u till a new stadium is built. It certainly would help with PSR compliance.
Hopefully it isn't too long before UTD are back in the CL, as that is a big loss financially aswell.
09 Jan 2025 14:27:27
Year Total debt Change
2023-06-30 £0.62 B -2.87%
2022-06-30 £0.64 B 19.82%
Taken from companiesmarketcap, as a PLC the info should be correct due to needing to submit audited account to the SEC
That’s the debt info above.
As to the PSR, I have no idea about this. I don’t know the technicalities of the agreement or what can be written off/ down. What is fairly clear is on the face of it we need to get the rolling three year number down. Which could explain the home grown player rumours.
09 Jan 2025 14:49:31
Before the summer there was a lot of stuff written about us having a budget of 35-50 mill. We spent 200 mill and sold for close to a 100 I believe.
I think its more about getting players out before adding players and not having a chelsea situation with a over bloated squad.
Reality in the jan window is that you get very few decent players available and ones that are available are surplus to requirements. Kolo Muani being one but he has had a fall out with psg manager and similar to rash. Generally you hardly see any major transfers of key players that are integral to the their current set up as clubs will not sell them.
09 Jan 2025 15:44:35
Finances are not in a mess but when Ed Woodward famously said “results on the pitch don't materially effect us commercially”, his galaxy brain/ super genius logic was wrong.
09 Jan 2025 17:50:21
Ahmad it’s about profit from sales not the sale amount.
09 Jan 2025 19:14:54
Sort of fuser but not quite as simple as that of course.
But selling home grown players generates a 100% contribution to profit before twisted expenses taxes, pay offs, agents fees, etc.
The club were no doubt hoping rashford would generate decent profit but in Jan that's not going to be the case.
But in order to sell the likes of sancho cas, antony, onana, zirkzee, to get their wages off the books they need to sell a payer at significant profit to off set the loses they would incur from those sales and associated costs for those sales.
Based on a very rough guess calculation of their book value I would imagine the break even number for each would be in the region of
Sancho 25m
Onana 30m
Cas 25m
Antony 40m
Zirkzee 30m
Good luck with that? hence the need for a good home grown sale. To offset through loses from above
The likes of lindelof Shaw or ericksen would not generate much profit or loss.
The huge win on top of breaking even on those sales is the impact it has on cajole in savings on wages problem targeting somewhere in the region of a million a week. Cas rash ericksen antony Evans gets you close to that with maybe 2 players coming in on 150k plus rises for mainoo and amad takes 50% of that straight away.
We are walking the tightrope between safety and psr failure. Once that's resolved and we ate in a good position to trade.
09 Jan 2025 20:58:21
Without going in to the detail, it’s probably a fast track way of clearing the crap too. It’s almost like old school championship manager where they’ve transfer listed everyone. You clear house, get what you can and then start rebuilding.
10 Jan 2025 00:39:32
The club won't be going bankrupt despite the losses over the past few years.
What I don't understand is to what extent the whole PSR problem is alleviated by the adoption of the new squad cost system that I read is due to be voted in this coming summer and be applicable to the 2025/ 6 season. If it happens won't PSR simply disappear to be replace by a requirement that teams qualifying for European competitions will be required to limit their total player cost (wages+ amortization + agents fees) to under 70% of total revenues. Those that aren't in Europe will be able to spend 85%. Even without European football United should be able to comply comfortably with these limitations whether in Europe for not.