Manchester United will enter their most important summer transfer window, hopefully armed with Champions League football, and United in Focus can exclusively reveal how that spending could look.
For Manchester United, Champions League football is not just a desire at this point, but it’s a borderline necessity due to their financial situation.
Michael Carrick has worked miracles with the squad to put them in a good position, which leaves them well-positioned to attack the window.
United in Focus spoke to finance expert and GRV Media’s Head of Football Finance and Governance, Adam Williams, to gauge how much the club will spend in the summer, with and without UCL football.
Manchester United co-owner and CEO, Sir Jim Ratcliffe and Omar Berrada
Photo by Crystal Pix/MB Media/Getty Images
Manchester United’s ALARMING transfer debt
Who's to blame here? 🤔
Chart depicting Manchester United's transfer debt
Manchester United transfer debt table Credit: Adam Williams/United in Focus/GRV Media
Man Utd’s PSR freedom, and the cash flow problem
To get into the details of United’s summer spending, we first need to look at the factors that influence said spending.
After speaking to Williams, these factors are fourfold: cash flow, performance, on the pitch, PSR, and owner appetite.
For United, the performance on the pitch is helping because UCL qualification brings a lot of money with it. They have plenty of headroom with PSR limits as well.
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The issue is with the cash flow, because United have had to consistently dip into a revolving credit facility to finance their spending, which directly leads to owner appetite.
The Glazers will never spend a single penny of their own, while Sir Jim Ratcliffe is pleading poverty every day.
Williams explained: “Whether United go big in the summer will be dictated by cold, hard cash. As of their last set of accounts, they had used £290m of a £350m revolving credit facility, which basically functions as an overdraft. They also had £44m in cash, down from £95m at the same period last year. Basically, they are spending much more than they are earning.
“They have net transfer debt of about £350m, and they owe about £325m in the next 12 months.
“When you’ve got an annual wage bill of £300m-plus, £325m committed in transfer instalments, about £170m in other operational expenses and £20-40m in interest costs, that means you need about £800m in turnover before you can even break even.”
Clearly, crossing that £800m barrier in turnover is not easy, so qualifying for the Champions League helps. That is where the squad churn comes in to supplement the spending.
Surprise sales, and predicting Man Utd’s summer transfer budget
Williams was left surprised by the extent of spending by United last summer, even with no European football, and expects the chicken to come home to roost this time.
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He said that United will need to finance their spending in the upcoming summer by being “strategic” with their sales, with or without UCL football.
He said: “I think in order to spend big again this summer, sales are an absolute necessity. This doesn’t mean they are going to have to sell all of their best players; it does mean that they have to be far more strategic.
“I would also expect some more surprising sales, too. I don’t think United will spend more than £150m net if they do qualify for the Champions League.
“I was very surprised by the extent of their spending last summer, and they will have to account for that at some point. With the Champions League, it’s easier. Without it, there would need to be more dramatic measures.”
The Champions League has become the final bastion for United because just qualifying for it can be the difference between competing with the club ahead of them or looking over their shoulder for clubs chasing them this season.
No other club could have withstood this level of underperformance, but United are a financial beast. However, even that beast could go down on his knees after so many bruises by the Glazers.
UCL qualification will be the tonic to aid its recovery.
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