A series of interviews by Sir Jim Ratcliffe have covered a number od topics in relation to Manchester United. Here the focus is on what he had to say about club finances.
“The simple answer is the club runs out of money at Christmas if we don’t do those things,” Ratcliffe told the BBC, referencing the cost-cutting measures that have been put in place over the past year (more on that below). He repeated the line to The Telegraph and Times: “It (United) goes bust at Christmas (without change)”.
Those statements stretch credulity in the extreme. Quite simply, United would still be operating as a company in nine months’ time had the staff restructuring and money-saving not taken place. Going bust means the club would have been forced to close, but United is an SEC-listed company that Ratcliffe bought into at a $6.4billion (£5bn) valuation, and there are numerous mechanisms to avoid such a fate.
United do have a cash problem, as outlined by The Athletic in January, with last season’s total of £74million only possible due to the £159m investment by Ratcliffe as per the terms of his deal with the Glazers. Otherwise, the flow of cash out of the club compared to money generated would have seen United hit by an £86m fall.
But it was not staffing levels or free lunches that have been putting United in the red for the past five years; it was player trading and interest payments on the debt. Last season United spent £191m on new signings and £36m servicing the bank loans, partly those forced on the club by the Glazers’ leveraged buyout.
To put this into context, European football’s governing body UEFA recently released its report on European club finance and investment landscape, which listed United top for operating profit at €144m (£121m, $156m), above Arsenal (€141m), Real Madrid (€133m) and Tottenham Hotspur (€87m). That is the money made from the day-to-day functioning of the club through ticket sales, merchandise, sponsorships, broadcast revenues, minus running costs such as wages, travel and bills. United signed a deal with Qualcomm worth $225m over three years.
Undoubtedly, there were areas of spending excess within the organisation, but Ratcliffe’s decisions on the running of the club come more from the INEOS ideology than an absolute financial imperative.
According to the most recent accounts, United expect to save £40m to £45m on the first round of 250 redundancies, so a similar number seems plausible for the next round. But Ratcliffe put the changes as much higher, adding: “We reduced the cost of running the club by about £125m, so that transforms the club.”
Ratcliffe’s regime has incurred extra costs however, notably £4.1m for the episode which led to the departure of sporting director Dan Ashworth, £10.6m for Ten Hag’s departure, and £11m for hiring Amorim. Finishing in the bottom half of the Premier League costs in the region of £30m in prize money. United, under Ratcliffe, also made a £200m drawdown on the revolving credit facility to pay for last summer’s transfers. It was also Ratcliffe’s call to spend £50m on revamping the training ground.
For all the implied criticism of the Glazers’ stewardship of the club, Ratcliffe stepped back from attacking them over the interest payments on the club’s debt. “Interest is one of the costs but it isn’t the biggest cost in this club,” he said. Interest payments recently hit £1bn cumulatively.
He said the exact picture of United’s balance sheet had not been “crystal clear” in the due diligence stage amid a “forest of numbers”. But there were several months to analyse the accounts during the sale process and United is a public company.
Labels
Manchester United Premier League
West Bromwich Albion had effectively been in decline ever since the club was sold to a Chinese consortium in August 2016, paying a figure north of £200m to buy former owner Jeremy Peace’s stake. Controlling shareholder Guochuan Lai’s ownership was fairly disastrous for the club, but his unloved tenure finally came to an end after Bilkul Football WBA, a company ultimately owned by Florida-based entrepreneur Shilen Patel and his father Dr Kiran Patel, acquired an 87.8% shareholding in West Bromwich Albion Group Limited, the parent company of West Bromwich Albion Football Club. This change in ownership was urgently required, due to the numerous financial problems facing West Brom, including growing high-interest debt and serious cash flow concerns, following years of no investment from the former owner. Indeed, West Brom’s auditors had already rung the alarm bell in the 2021/22 accounts when they cast doubt on the club’s ability to continue as a going concern without making player s...
Tottenham Hotspur is in talks to sell a minority stake in a deal that could value it at up to £3.75 billion and pave the way for Joe Lewis and his family to sever ties with the Premier League football club. Tottenham chairman Daniel Levy is seeking an investment that values the club at between £3.5 billion and £3.75 billion, including debt. While the terms of any deal have not been finalised, City sources expect Spurs to sell about 10 per cent. The club is being advised by bankers from Rothschild on the sale. Tottenham wants to raise fresh capital for new player signings and to help fund the development of an academy for its women’s team, as well as a 30-storey hotel next to its north London stadium. The financier Amanda Staveley, who brokered the deal for Saudi Arabia’s Public Investment Fund to take over Newcastle United, is understood to be among the parties to have expressed an interest in Tottenham. Staveley’s fund, PCP Capital Partners, has raised about £500 million to ...
Millwall’s season was overshadowed by the tragic death of owner John Berylson following a car accident. The American had been an exemplary owner, beloved by the fans for his leadership, passion and generosity. Millwall’s finances had been pretty good during his tenure, which we shall explore by looking at the most recent accounts from the 2022/23 season, when the club narrowly missed out on a place in the play-offs after finishing 8th. Millwall’s pre-tax loss slightly reduced from £12.6m to £12.2m, as revenue rose £0.8m (4%) from £18.6m to a club record £19.4m and player sales improved from a £0.1m loss to £2.5m profit. However, other operating income dropped from by £1.1m from £1.3m to £0.2m, while operating expenses increased £1.7m (5%) from £31.6m to £33.3m. The main driver of the revenue increase was broadcasting, which rose £1.1m (12%) from £9.1m to £10.2m, though match day was also up £0.4m (7%) from £5.8m to £6.2m. In contrast, commercial fell £0.7m (19%) from £3.7m to £3....