The enigma of Manchester United’s finances has left fans and critics alike puzzled. The club, once renowned for its trophy-laden glory days under Sir Alex Ferguson, has seen a shift in fortunes since Jim Ratcliffe’s investment seized control of the football operations. This move was met with optimism, with fans eagerly anticipating the end of the post-Ferguson trophy drought. The excitement was palpable, with entrepreneurial fans cashing in on the spirit by selling ‘Make United Great Again’ baseball caps, and the club triumphing over Manchester City in the FA Cup final.
However, the euphoria was short-lived as rumors of significant job cuts began to swirl, soon turning into harsh reality. The cuts affected everyone, from ordinary staff members who saw benefits reduced and remote work banned, to high-profile former managers and players who faced termination or fee reductions. It’s no secret that the majority shareholder owners, the Glazer family, are not popular among the United fanbase, and these drastic measures were seen as evidence of Ratcliffe’s willingness to make tough decisions to turn the business around.
Critics of the Glazers argue that the club has the highest staff count of any Premier League club and that these job cuts were essential cost-saving measures. However, they conveniently overlook the fact that United, thanks to its mammoth stadium, significant media interest, and self-owned TV channel, also has the biggest brand and the resultant large communications team. Add to this the increased compliance costs of running a business registered in the Cayman Islands and traded on the New York stock exchange, it becomes clear that the operation isn’t as bloated as critics claim.
Despite the high staff numbers, United spends only £55 in wages for every £100 of revenue, the third-lowest in the Premier League. This is considerably below the £70 benchmark suggested by UEFA, which further complicates the narrative surrounding the club’s financial management.
Adding to the controversy, it was recently revealed that there would be further job cuts of around 200 staff members. Ratcliffe defended these redundancies as necessary steps to prevent the club from going under. This came as a shock, considering the same club was touting high Ebitda profits to investors just a few months prior. In fact, a letter to fan groups The 1958 and Fan Coalition 1958 revealed that the club had made pre-tax losses of more than £300m over the past three years. The letter also warned that the club was at risk of violating profitability and sustainability rules (PSR), which cap losses at £105m over three years, if corrective action wasn’t taken.
Controversial decisions to hike members’ match-day ticket prices to £66 without discounts for seniors or children, increase parking fees for disabled fans, and eliminate the £50 reward for the steward of the match, were rationalized as necessary measures. Some even suggested that the club’s financial woes were the result of poor management by the Glazers, though they were never explicitly named.
So, how can a business be both profitable and loss-making? The answer lies in the various definitions of profit. A company can highlight a profitable figure to impress investors while using a different metric to justify decisions to fans.
A key factor in United’s financial conundrum is player recruitment. Since Ferguson and David Gill’s departure in 2013, the club has spent a staggering £2.1bn on players. While this places United at the top in terms of spending, the quality of recruits is questionable. Like many clubs, United opts for credit purchases, resulting in outstanding transfer fees of £414m, second only to Chelsea. This financial model creates a strain as old transfer payments take precedence over new signings, further muddying the complex puzzle of Manchester United’s finances.