A report has detailed why Manchester United’s debt has now surged to a worrying £1.29 billion, based on the club’s latest financial figures. While performances and results this season have improved markedly following Ruben Amorim’s first campaign - which ended in the Red Devils' worst-ever Premier League finish - financial issues have continued to loom large.
Sir Jim Ratcliffe and his INEOS team have been forced to act ruthlessly, introducing stark cost-cutting measures in a bid to regain control after the financial damage left by the Glazers’ ownership. These steps have included cutting the workforce by a third through redundancies, ending staff perks such as shutting the club canteen, and severing long-standing ties, including Sir Alex Ferguson’s ambassadorial role.
Although chief executive Omar Berrada pointed to “robust financial results” after the cuts contributed to an operating profit of £13.3 million, United’s overall debt - and the cost of servicing it - continues to rise.
Man United's Debt Continues to Grow
Sir Jim Ratcliffe
According to the Daily Mail, Man United’s £1.29 billion debt falls into two main categories: financial debt, largely linked to the Glazer family’s leveraged takeover in 2005, and trade debt, which is mainly made up of unpaid transfer fees. Financial debt has risen to a record £749.2 million, up from £714 million a year ago.
That increase is partly due to the club drawing an extra £105 million from a revolving credit facility to help fund the signings of Benjamin Sesko, Bryan Mbeumo, Matheus Cunha and Senne Lammens last summer. United have now used £268 million of the £350 million available, while cash reserves have fallen sharply from £149.6 million to £80.5 million over the past year.
Net debt from the Glazer takeover remains at £481 million, but servicing it continues to be costly, with £22.6 million spent on finance charges. United’s trade debt is split between payments due within the next 12 months and longer-term liabilities owed beyond that period.
In March, Ratcliffe bemoaned the fact that United still owe a substantial amount of money on players he inherited following Ineos’ minority takeover. Inherited issues include that of Casemiro's wage increase clauses, as well as problems linked with Jadon Sancho, Antony, Andre Onana, and Rasmus Hojlund.
The current payables have risen to £323.4m from £309.5m, and the non-current to £216.3m from £210.6m. It means the overall rise in United’s total debt is £54.8m, taking it to the record £1.29bn mark.
Rays of Hope in United's Ongoing Financial Turmoil
Manchester United manager Ruben Amorim staring.
The aforementioned cost-cutting strategies have paid off with a £13.3m operating profit as the wage bill has dropped £6.6m to £73.6m. It now makes up 52.5 per cent of the club's overall revenue, down from 56 per cent last year, with overall expenses down 7.1 per cent. United reiterated that the club are still on course for full-year revenues of £640m-£660m.
"These robust financial results reflect the resilience of Manchester United as we make strong progress in our transformation of the club," said Berrada. ‘
"The difficult decisions we have made in the past year have resulted in a sustainably lower cost base and a more streamlined, effective organisation equipped to drive the club towards improved sporting and commercial performance over the long-term."
Players remain United’s biggest expense by a considerable margin, and the club plan to reduce the wage bill by offloading some of their highest earners while attempting to renegotiate lower terms with others. Marcus Rashford, Jadon Sancho, Rasmus Hojlund and Andre Onana are all currently out on loan, with Barcelona, Aston Villa, Napoli and Trabzonspor covering the majority of their wages.
Top earner Casemiro is out of contract on June 30, and United have yet to trigger the 12-month extension in his £375,000-a-week deal, with just three weeks remaining before he is free to open talks with overseas clubs. Harry Maguire faces a similar situation, with the club yet to offer the England defender new terms as he enters the final six months of his £180,000-a-week contract.