What No European Football Means For Manchester United
Things go from bad to worse for Manchester United as they crash out of the Champions League at the first hurdle. Things are bad enough on the pitch already, but could the financial implications of this early exit impact the club?
Transcript
00:00 Hello everybody, Adam here again from 4-4-2 now Manchester United are out of the Champions
00:11 League. Would that have been a surprise at the start of the season given the group they
00:14 were in? Yes. Was it after what happened in Copenhagen and Istanbul? No, because they
00:20 had to beat Bayern Munich and of course they didn't. So, yeah, things aren't looking
00:25 good at Old Trafford are they?
00:27 However, there is something else that has arisen because of Manchester United's exit
00:31 from the Champions League. So, if you cash your mind back to the summer, you wait for
00:35 actually fine Manchester United 300,000 euros for breaching financial fair play regulations
00:41 over a four year period from 2019 to 2022 and recently Manchester United's debt has
00:48 surpassed the one billion mark and they're having a bit of touch and go misdemeanours
00:54 with FFP as well in general. Now, this is a cause for concern given the exit in the
00:59 Champions League.
01:00 So, of course, United will now be playing domestic football only for the remainder of
01:04 the season and with Jim Ratcliffe coming in for that 25% shareholder ownership of the
01:08 club, they're in a bit of a financial transitional phase and they really could have done with
01:13 the added revenue from getting through the group stage and perhaps beyond or even just
01:17 getting into the Europa League. But no, their losses have been completely cut and they could
01:21 have made a whole lot more to help supplement both the wage bill and just the financial
01:25 integrity and structure of the club. So, let's break the numbers down. Every single team
01:31 earns 13.3 million quid for just getting to the Champions League group stages and qualifying
01:35 alone and then for the one win and one draw that Manchester United got in the group this
01:39 season that added an extra 3.2 million in tournament winnings as well on top of that,
01:45 which in the grand scheme is not a lot because... So, they would have got an extra 8.25 million
01:51 had they escaped the group miraculously somehow and then if they'd have gone even further
01:55 and got to the quarterfinals that would have been an extra 9.1 million on top of that and
02:00 then an extra 10.7 million for getting to the semi-finals as well. So, a lot of money
02:05 missed out on for Manchester United. And just an additional little figure as well, not one
02:09 that really concerns Manchester United because they would have never won the Champions League,
02:12 but if you do win the Champions League you get 58.6 million in prize money on top of
02:18 that, which is a whole transfer fee for a big player. I say a big player, he's gone
02:23 for 50 million recently. Fred, Fred went for it. He could have got him another Fred if
02:27 they'd have won it. Now, of course, it was absolutely obvious, wasn't it, that Eric
02:31 ten Haag didn't really have the funds at his disposal, if some of it he'd have perhaps
02:34 liked. You look at Johnny Evans coming in on a free transfer to try and bolster the
02:38 squad but really he came in on a free. Then Amr Abat as well who you would assume United
02:43 probably wanted on a permanent transfer but ended up having to cut their losses and pay
02:47 8.5 million this season to have him on a one-year loan with an option to extend or buy him permanently
02:53 next year which will probably cost in the range of 20 million. That's not a setting
02:56 stone yet but really having to penny pinch just to get certain players that they want
03:01 and they can't really, they've got no financial muscle in the market as it stands. Of course,
03:06 in the summer as well Manchester United brought in Mason Mount and Andre Onana for pretty,
03:10 pretty big fees and it says here in this Athletic article that "Every prospective deal has
03:14 had to go through what one of the club figures calls the 'financial sausage machine'.
03:19 Everything is being calculated. Is that okay on FFP? Does it leave us enough room to do
03:23 what we want this summer on players?" But given the fact that they've now missed out
03:27 on the prize money from getting through the group stage, you're probably going to assume
03:32 that ten Haag's going to have a similar conundrum in January as well because an extra sort of
03:36 15 or so million on top of his transfer funds would have really helped to at least try and
03:40 get him something if he wanted to bring someone in to bolster the squad. I'm not necessarily
03:44 saying he does want to bring someone in in January but you'd assume if he wanted to
03:47 he'd need a bit of dough because there isn't much knocking about at Manchester United at
03:52 the moment. Now, according to numerous reports such as
03:55 the Athletic, United are slightly concerned by FFP and the fine that was of course issued
03:59 in the summer but there's no immediate pressure for the club to drum up funds through player
04:03 sales. That is what the reports are saying. However, I think there's evidence to the contrary.
04:09 If you actually look at the players that Eric ten Haag has tried to offload or has successfully
04:13 offloaded in the 18 months that he's been here, you look at Cristiano Ronaldo, David
04:17 De Gea, Paul Pogba, Fred, the likes of these players which were on extremely, extremely
04:22 high wage bills and now there's also murmurings that Rafa Varane might be on the way out too
04:27 after apparently falling out with ten Haag but he is also on a preposterous amount of
04:31 money. It seems to me like Eric ten Haag is trying to offload these high wage bill players
04:35 and perhaps the deadwood and fringe players in the squad to give himself and Manchester
04:39 United more flexibility with FFP because right now everything is very, very stringent.
04:44 So what is all the beef between FFP and Manchester United? Well, Manchester United lost a total
04:50 amount over the pandemic of £234 million in COVID related losses between 2019 and 2021.
04:58 Now in 2022 there was a monitoring period for UEFA that surveyed all the top level clubs
05:04 to see what losses they were making and how they were adjusting for these losses and United's
05:08 stance was that they were unable to adjust for the £47 million of COVID losses in that
05:14 2022 monitoring period because of an unforeseen change in how UEFA treated those losses during
05:20 the transition to its revised financial sustainability regulatory framework.
05:25 So United's stance is that UEFA changed this regulatory framework and this surveying of
05:29 all the teams that they like to do with too short notice for them to be able to adjust
05:33 their losses and the £47 million loss in this case. So what they've had to do United
05:37 is make cut losses basically to other departments of the club. So the youth infrastructure, the
05:42 women's team for example and also to things like community work as well which is quite
05:46 sad really because that's so integral to every football club in England really, especially
05:50 the top ones, you know, the sense of community that that brings having to make cuts in those
05:54 departments is quite a sad state of affairs truth be told. It's believed now that the
05:59 club are actually going to deduct between £50 and £60 million in these three areas
06:03 so the foundations, the youth development and also the women's team as well.
06:07 So it seems like United are chasing their own tails really in terms of trying to fix
06:11 this financial situation and what season did it really go wrong? Well the reading here
06:16 states that it's probably 21/22 when they failed to qualify for the top four that season.
06:21 Now of course we all know that the Glazers have never invested any of their own money
06:25 into Manchester United since taking them over in 2005 and to quote them that is for the
06:30 purposes of profitability and sustainability. So no money of their own has gone into the
06:35 club, we know this. But what this means is that United's losses have not been able
06:39 to exceed the standard £15 million limit. Yet this only became an issue when a miserable
06:45 21/22 season on the pitch was just as miserable off it. United posted a pre-tax loss of £150
06:51 million, which is by far the biggest loss over the preceding decade.
06:57 So after this pre-tax £150 million loss in 2022 United have really, really had to strike
07:03 a fine balance financially and what they actually did after Manchester United didn't get into
07:07 the top four that season was reduce the wages of the whole squad by 25%. This of course
07:13 is now lifted because Eric Ten Hag actually secured Champions League football last season
07:17 but without this added revenue given from getting through the groups and advancing further
07:22 into the tournament they're now having to still pay out this huge, huge wage bill that
07:26 they didn't have to a year ago having not had the prize money to kind of help supplement
07:31 it. So everything is very, very stringent for Manchester United financially at the moment
07:36 and this is one element of the problems at the club right now.
07:40 So what will actually happen to Manchester United financially and will they be able to
07:43 avoid exceeding a breach and then obviously being punished for it? Well, United will have
07:48 a reasonable idea because in the coming months publication of the club's full accounts
07:52 are expected to land. So I guess we'll have to wait till then, but they will know behind
07:57 the scenes whether there's a breach coming their way or whether they were spent within
08:01 check.
08:02 And moving forward for United, well it actually says here, even if United have successfully
08:06 avoided a breach for 2022/2023, the club still faces a challenge to stay on the right side
08:12 of the limit this season right now. Crucially, the next three year monitoring period will
08:17 not include the COVID-19 adjustments, but United's huge 2021/22 pre-tax loss, which
08:23 was of course £150m, will still be part of the equation, hence the need to tread carefully
08:28 in the market this summer and the summers moving forward.
08:31 And as for any punishments, well clubs who exceed the lower £15m profitability and sustainability
08:36 limit without secure funding to cover their losses can have budgets limited and transfer
08:41 spending restricted by the league's board to ensure they meet their financial obligations.
08:47 So there we go, that is just one problem at Manchester United at the moment. I'm sure
08:52 me and Adam are going to have plenty of time after the weekend to talk about the other
08:55 £50m if Liverpool do what I think most of us expect them to do, but you never know in
09:00 the Premier League do you? We shall see, but it's just the problems are piling up over
09:05 on the red half of Manchester, particularly for Eric ten Haag who at the moment must be
09:11 so stressed.
09:12 Anyway guys, yes you can let me know in the comments what you think the future holds for
09:15 Manchester United. Do you think they'll be able to continue spending like they have done
09:18 in previous years based on the evidence here? It doesn't really look like it even with Jim
09:23 Ratcliffe coming in with that 25% ownership, but you can let me know what you think. Do
09:27 not forget to subscribe guys, hope you have a lovely, lovely day. I've been Adam Monk,
09:31 goodbye.