The Ineos Compass – a glossary of ‘words we like’ and ‘words we don’t’ devised by Sir Jim Ratcliffe for his chemicals firm – is full of maxims that will be tested to the limit as Man United build a new stadium.
As well as ‘lukewarm cappuccinos’, ‘fancy slides’ and ‘B.S’, the dislikes axis includes ‘blame culture’, losing money’ and ‘making the same mistake twice’.
Without wanting to resort to the same tired platitudes as Ineos, the phrase ‘glass houses’ springs to mind when examining their record since the £1.25bn part-takeover in February last year.
Diagram showing the ownership and voting structure of Manchester United, broken down between Ineos and Sir Jim Ratcliffe, the Glazers, and the NYSE shareholders
Manchester United ownership diagram Credit: Adam Williams / United in Focus / GRV Media
We can’t speak to the temperature of the coffee at Man United HQ under Ratcliffe, nor how fancy the slideshow decks rationalising mass redundancies are, but we do know they’re haemorrhaging cash.
In terms of blame culture, Ratcliffe, David Brailsford and Omar Berrada have every right to point fingers at the Glazer family, though a non-disparagement clause prevents them from doing that explicitly in public.
In his latest round of interviews, Ratcliffe was clearly bristling with indignation that it is he, not the six Glazer siblings 4,500 miles away in Florida, who is now cast as the pantomime villain at Old Trafford.
The 72-year-old’s rhetoric was full of veiled – and justified – swipes at the ownership’s non-leadership over the last two decades, which have been characterised by nakedly self-interested financial decisions.
But the general consensus is that Ratcliffe came across as cold, detached and, at times, disingenuous.
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His claim that United would have gone bust by the end of the year without his ruthless cost-cutting decisions, for example, is patently untrue. The Red Devils have cash problems, yes, but not to that extent.
“Manchester United would have run out of cash by the end of this year – by the end of 2025 – after having me put $300m in and if we buy no new players in the summer.”
Sir Jim Ratcliffe
He repeated the line almost verbatim in multiple different interviews. It quite clearly came from a PR wonk and was designed to be parroted in headlines and on social media.
It is the kind of spin which relies on the fact that the average United fan doesn’t have an accountancy degree or the time to pour over the club’s 170-page annual accounts.
Chart showing Manchester United's pre-tax profit and loss account from 2013-14, superimposed over an image of Sir Jim Ratcliffe
Chart showing Man United’s profit-and-loss account CREDIT: Plumb Images/Leicester City FC/Getty Images
It was no surprise therefore to see United unveil designs for their new, 100,000-seater stadium the following day. It was a classic distraction tactic, straight from Public Relations for Dummies.
That the announcement came without anything resembling a finance plan in place illustrates that this was a fudge. “It will be financeable… I think,” said Ratcliffe. Hardly inspiring.
So how are Man United – a club with almost £1bn worth of debt on the balance sheet and an uncommitted, Glazer shaped-elephant in the room – going to pay for this stupefyingly ambitious stadium?
“The nuclear option is on the table…”
Kieran Maguire, speaking to UIF
Speaking exclusively to UIF, Liverpool University football finance lecturer and host of the Price of Football podcast Kieran Maguire analysed how the numbers might stack up.
The finances of Manchester United’s new stadium
Massive capital expenditure projects almost always come late and over budget, but Omar Berrada has projected that United’s new stadium will cost £2bn and be open in time for the 2030-31 season.
United obviously don’t have the cash to self-fund the development. No sports franchise in the world would for that matter, let alone one with bank covenants and transfer debts the size of United’s.
Infographic showing Manchester United's annual debt since the Glazers bought the club via a leveraged buyout in 2005, superimposed over an image of Avram and Joel Glazer
Manchester United debt infographic prepared by United in Focus and GRV Media Photo credit: Michael Regan/Getty Images
If United receive any government support, it will be for public infrastructure around the ground, not for the stadium itself. Broadly speaking, there are three avenues United can explore for funding.
Debt – Bank loans, bonds or debentures
Private investment – Direct funding from existing shareholders or development partners
Equity – Raising capital by selling new or existing shares in the cub
Almost all stadium projects of this magnitude feature a blended financing structure, incorporating different elements of each approach.
Tottenham, for example, borrowed £637m from Goldman Sachs, Bank of America and HSBC, with most of those loans later converted into a bond scheme.
Infographic showing the matchday incomes and stadium capacities of English clubs compared to Manchester United
Matchday income & capacity Credit: Adam Williams/United in Focus/GRV Media
They also received just over £30m in government funding, plus £10m from the NFL, who have a partnership with Spurs to play the annual London Games at the stadium.
The average interest rate on their borrowings is a little over 2.5 per cent, which was seen as a huge win for Daniel Levy. That deal will be impossible for United to replicate in the current macroeconomic climate.
For context, SONIA, an index which reflects the average interest rate paid by banks to borrow sterling which is used as an industry benchmark, is currently around 4.5 per cent.
Stadium Cost (adjusted for inflation) Location Opened
SoFi Stadium £4.25bn California, USA 2020
New Man United Stadium £2bn (est) Manchester, UK 2030 (est)
MetLife Stadium £1.5bn New Jersey, USA 2010
Allegiant Stadium £1.5bn Nevada, USA 2020
Wembley Stadium £1.45bn London, UK 2007
Yankee Stadium £1.4bn New York, USA 2009
AT&T Stadium £1.4bn Texas, USA 2009
Mercedes-Benz Stadium £1.2bn Atlanta, USA 2017
Singapore National Stadium £1.1bn Kallang, Singapore 2014
Tottenham Hotspur Stadium £1bn London, England 2019
Optus Stadium £900m Perth, Australia 2017
Data sourced from Structural Repairs, conversion ($-£ accurate) as of 13/03/24
Everton have since refinanced their stadium debt with a syndicated loan arranged by JPMorgan, but they previously had been paying as much as 15 per cent in some cases.
Significantly, though they are a trusted multinational company and have never had problems accessing debt before, Ineos recently had their credit rating revised down to ‘negative’ by the Fitch Ratings agency.
Man United could earn £250m in matchday income at Old Trafford 2.0
If and when United borrow to fund the new stadium, the debt will be secured against future revenues.
But how high will that revenue be? “The level of ambition for the new Man United stadium will bring £200m per year in matchday income,” says Kieran Maguire.
“The additional seats will be focused on offering domestic and international fans as well as the corporate hospitality sector, and those will be very much at premium prices.
An infographic of Manchester United's revenue in 2023-24, segmented between commercial, matchday and media income, superimposed over a general view of Old Trafford
Manchester United revenue breakdown infographic prepared by United in Focus and GRV Media Photo credit: Harriet Massey/Newcastle United/GRV Media
“Locals from Urmston and Stretford who have been on the waiting list for a season ticket for many a year and were perhaps hoping this might get them up the list are likely to be disappointed.
“In a good year, Man United could be getting fairly close to £250m in matchday revenues.
“It’s £130m at present. You only have to increase prices by 20-30 per cent and offer experiences similar to the tunnel club we have seen at Manchester City and others. The numbers very quickly stack up.”
Naming rights on the table for Red Devils
Naming rights are a delicate subject. Old Trafford is the soul of Manchester United and toying with the ground’s title, which has stood since 1909, would be unacceptable for supporters.
But Ratcliffe has suggested that a naming rights deal for the new stadium could be on the table, with Snapdragon and Ineos themselves among the mooted partners.
Infographic for United in Focus explaining stadium naming rights
Infographic for United in Focus explaining stadium naming rights Credit: Adam Williams/United in Focus/GRV Media
“There’s no doubt that a naming rights deal, should it go ahead, would be in the eight-figure range,” says Maguire.
Indeed, most analysts UIF has spoken to believe that the club would almost certainly command a world-record naming rights deal for a football club.
“There will be a line of brands wanting to align themselves with the club because they are so popular. They need to negotiate a good price and a deal that benefits all parties.
Equity sale or even more debt: How Ineos and the Glazers will fund new stadium
In six months’ time, the Glazers have the option to sell more of their equity in United, though the market’s lack of appetite for a full takeover at the price they quoted in 2023 suggests that is unlikely.
But bringing a new minority shareholder onboard or Ratcliffe increasing his stake in the club, which he would like to do, are among the limited options available to United.
They could even float more shares on the New York Stock Exchange, mirroring the listing that valued the club at £1.8bn in 2012, suggests Maguire.
Manchester United share price infographic, superimposed over an image of Joel and Avram Glazer at the original IPO
Manchester United share price infographic Photo by Dario Cantatore/NYSE Euronext/Getty Images
“Man United are predicting that they are going to be at the upper end of their £140-160m EBITDA [earnings before interest, tax, depreciation and amortisation] profit measure for 2024-25.
“Given that the club isn’t in the Champions League and is in the bottom half of the Premier League, an improvement in either of those would substantially increase EBITDA.
Infographic showing Premier League clubs' EBITDA in the last financial year, superimposed an image of a ball
Premier League EBITDA graphic Photo credit: Robbie Jay Barratt/Getty Images Data prepared by Adam Williams/United in Focus/GRV Media
“So, I don’t see any problem with the club paying interest and access the capital markets for loans. Could they go for an extended listing to raise more equity? That’s the nuclear option which is on the table.
“But the cash flows are more than enough to cover interest payments as we have seen at Spurs, although they won’t be in the same sweet spot for borrowing.”
The new stadium’s impact on PSR and the transfer budget
As Ratcliffe has explained, United currently have the Premier League’s PSR enforcers breathing down their necks.
And with lucrative European football unlikely next term, Profit and Sustainability Rules will remain a concern.
In the long term, the new stadium will supercharge revenues and should, in theory, ensure that PSR is a non-issue for United. However, in the medium-term future, budgets will be strained by the project.
Under the Premier League and UEFA’s spending rules, infrastructure investment and interest on related debt is exempt from United’s PSR calculation – but only while the stadium is being built.
Since the Tottenham Hotspur Stadium has been up and running, for example, the North London club have around £25m in annual interest payments deducted from their PSR quota.
Infographic explaining Profit and Sustainability Rules (PSR), the system which used to be called Financial Fair Play (FFP).
Profit and Sustainability Rules infographic Credit: Adam Williams / United in Focus / GRV Media
For Spurs, who have more headroom than almost every club under PSR, this isn’t a concern.
For United, whose interest payments could spiral to £50m annually within the next two years even without taking on an extra £2bn in debt to fund the new stadium, things will be tighter.
But Maguire is confident that the Red Devils can bear the cost, both in terms of cash flow and PSR: “During the construction phase, the borrowings will be capitalised, so that will have no impact on PSR.
“Once the venue is open, if you take a look at the additional interest compared to the revenues, they will be fine.
Chart showing Manchester United's revenue since 2003-04 and the breakdown between commercial, matchday and media income
Manchester United revenue Credit: Adam Williams / United in Focus / GRV Media
“There will be no doubt that United want to turn the stadium into a multi-function piece of real estate as opposed to just a football ground.
“If they go along the same route as Spurs, the increase in commercial revenue will be at least an extra £100m. Combined with matchday income, that will more than cover the interest costs.
“The depreciation of the stadium will be excluded from PSR as an infrastructure costs, so there are no negatives there.”
Sir Jim Ratcliffe was well versed in navigating public scrutiny before he bought the world’s biggest football club, but the heat he and Ineos have endured over the last year has been a new level.
Every minutiae of the chemical company’s operations now gets for more attention and column inches than it did before he became the public face of Manchester United in lieu of the Glazers.
Photo by Vladimir Rys/Getty Images
Photo by Vladimir Rys/Getty Images
Ordinarily, cancelling sponsorships with Spurs and New Zealand rugby, ending support for Ben Ainslie’s sailing team, and cutting the budget for the Ineos-backed Mercedes F1 team would go largely unnoticed.
But those developments, which have all taken place since the start of the new year, have been picked up, studied and held up as cautionary tales by the media and United fans alike in recent weeks.
Photo by Ash Donelon/Manchester United via Getty Images
Photo by Ash Donelon/Manchester United via Getty Images
It is said that Ineos are currently experiencing some liquidity issues, many of which are down to the cost of constructing a new plant in Belgium which has been beset by legal challenges.
When that site goes live in 2026, the purse strings are expected to be loosened once more. Although, how capital requirements for the new stadium factor into that is, at this point, anyone’s guess.