Manchester United need a return to the Champions League with a £2bn build on the horizon
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Sir Jim Ratcliffe looks on during the Premier League match between Manchester United FC and Chelsea FC at Old Trafford on November 3, 2024 in Manchester, United Kingdom
Manchester United co-owner Sir Jim Ratcliffe(Image: Manchester United via Getty Images)
Even after a season of competitive struggle and tumult on and off the pitch, the possibility of Manchester United in the UEFA Champions League (UCL) next season remains.
While Ruben Amorim’s men won’t be making the top four this season, they can make it to European football’s top table for 2025/26 if they can make it all the way to Bilbao and lift the Europa League in May, with the winners of that competition punching their ticket to the lucrative Champions League the following season.
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Manchester United and finances have been in sharp focus in recent weeks. From the publication of their second-quarter results in February which showed a £38million pre-tax loss for the three-month period, where the club handed former boss Erik ten Hag a new deal only to sack him four months later, with a similar mistake made in the hiring and subsequent firing of ex-sporting director Dan Ashworth in a five-month window, to the reveal of a £2billion plan for a new 100,000-seater stadium, it has been a whirlwind.
While the club remains majority owned by the absent Glazer family, it is British billionaire Sir Jim Ratcliffe, the founder of petrochemicals giant INEOS who has been front and centre of all the developments at Old Trafford.
The 72-year-old last week went on something of a PR charm offensive as he gave a series of interviews ahead of the release of United’s stadium plans, with his candour in said interviews revealing the rather dire nature of things financially at the club, although perhaps with a little creative license applied.
Among the claims made by Ratcliffe was that the 400 to 450 jobs had to be shed in order for the club to be a profitable and sustainable enterprise. He also said that United “would have run out of cash by the end of this year” were it not for a working capital injection by Ratcliffe and his INEOS firm.
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It has been reported in recent weeks that United have been working towards a ‘Europa League budget’ for the next few seasons, not banking on making it to the Champions League, a competition where this year’s revamp will see nearly all of those English clubs who took part scoop some £100million plus in attributed revenue.
Europa League money is far, far lower for clubs, with the revenue for United after the end of the group stage this season sitting at around £19million. In comparison, Liverpool pulled in £84million from the Champions League, while Aston Villa scooped some £60million, and that was before triumphing over Club Brugge in the last 16. The sums are night and day.
Like with Chelsea’s grand plan under the ownership of Todd Boehly and Clearlake Capital, the long-term success of the project under Ratcliffe’s guidance, with the December 2023 27.7% stake purchase from the Glazers handing him oversight over football strategy, is very much predicated on the club being in the Champions League season after season, although the re-evaluation of budgets points to the confidence about that happening in the short to medium term being relatively low.
A look at what has happened at Arsenal in the last few seasons should be instructive as to how impactful the Champions League is for clubs.
The Gunners, United’s fiercest foes and closest rivals for Premier League honours during the late 1990s and much of the 2000s, had a period in the European wilderness, their appearance in the Champions League in 2016/17 being their last until 2023/24.
That period away, at a time when their rivals were qualifying for the competition, saw a gap open up when it came to finances. The last two years of competing in the UCL, with the club into this season’s quarter-finals and already all but assured a seat at the top table again next season, has seen revenues surge.
The Deloitte Football Money League, published last month, had Arsenal at seventh in terms of revenue in world football. While they still trailed United by £47million in revenue, the growth on the Gunners side saw them leapfrog Tottenham Hotspur, Chelsea, and Liverpool. Another season of growth and Champions League football will likely see them surpass United, and that is despite the fact that the revenue gap stood at some £200million plus annually not too long ago.
The prize for a Europa League triumph is one of the most lucrative in European football, and United have to get past French side Olympique Lyonnais in the quarter-finals next month to keep that dream alive.
Success would come at a financial cost, too. If United were to qualify for the UCL next season they would see the wage bill increase, potentially by as much as 25% by some estimates, with contractual penalties for many written into contracts that sees wages diminish after a period of time away from the Champions League.
Manchester United’s wage bill for 2023/24 stood at £365million. That was for all of the staff, not just the players. As per the UEFA European Club Finance and Investment Landscape Report, the club were spending £244million on player and backroom staff salaries. Not all of the squad would likely have a contractual penalty for failure to qualify for the UCL, but if they did then the wage uplift would be some £305million, although that figure would likely be lower given variables.
But even with a sizeable uplift in wages in relation to UCL participation, United would get back £10million on the Adidas deal, with the club penalised for a lack of qualification over a prolonged period of time as per the contractual agreement between them and their kit partner, who pay some £90million per year.
With the additional games at Old Trafford included in the expanded UCL, the club would get a greater sum than their Premier League rivals when it came to additional matchday income due to the larger capacity. A strong run in the league format could deliver around £90million for United, a figure £70million higher than what they have received thus far in the Europa League.
In order for the Ratcliffe plan to work the need for Champions League football is evident, especially at a time when the club are seeking to embark on a £2billion stadium build, one they will have to finance themselves and where they will incur heavy interest payments, perhaps as high as £50million per season before even factoring in principal repayments, likely deferred until the stadium was built and started to generate revenue and ease cash flow issues.
Budgeting for the Europa League is prudent, especially when you consider that the club has looked so far removed from being a top four challenger in the near future. But the absence cannot be for long, and they might not get a better chance to speed up the recovery process than achieving Europa League glory this season. They should be, and will be all in as a football club. It would be enormously impactful.