Football Finance
- Thread starter King Binny
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I don't have an issue with the share issues. I've said before that when an owner puts in money, they can do it either as shares or as loans. In the past, the main reason for using loans was that it would be easier to pull that money back out in the event that the club made a huge profit further down the line (although off the top of my head, only Brighton have ever been able to do this). Part of the reason why the Premier League didn't go after loans in the first place was that they knew this. The loans only became an issue because of City's associated party transactions case. So all of this conversion to shares is fine. They're just changing a loan, that was probably never going to be repaid, into shares, which will also probably never be "repaid".
But all of this round-robin selling of academy players at inflated prices and intra-group sales of assets, that needs to stop. The problem with the former is that you need to prove there was a scheme and that prices were inflated. Clubs will just say they got it wrong, sorry, shit happens.
And the problem with the sale of assets is that they asked clubs to consider outlawing it and they wouldn't vote for the change, as so many of them know they might need it to bail themselves out at some point in future. Turkeys not voting for Christmas.
That's why I think the PL should have taken a test case on it - if they can't change the rules then they need a commission to rule on it. If the commission goes "letter of the law" then the club gets away with it. If the commission decides it's not fair that some clubs can do it (because of their group structure) and others can't (because they keep it simple and honest) then maybe they rule in the PL's favour. On balance, I think the PL loses that case, but they should give it a go out of fairness to the clubs who can't exploit it. And if they win, they have a mandate to change the rules.
So we are where we are. The difference is that because the PL flexed their muscles over Everton and Forest, the teams are taking it seriously now, even if their solution is to take the piss with clever accounting and structuring, rather than reining in their spending.
And longer term, if they move to the football costs ratio, then it will be harder for clubs to do these tricks to get around the rules. Intra-group asset sales won't help and player sales will only add 1/3 of the profit to the calculation (as it takes the average player sales over 3 years). They are trialling this now in parallel with existing PSR, but it isn't binding, and I suspect it will be difficult to get it voted in as the future measure because it's less open to manipulation.
From EPSN.
Is transfer spending finally normal? Why a $100m player might be a thing of the past
Deflation is the opposite of inflation; prices go down, not up, over time.
And most economists will tell you that while excessive inflation is bad, deflation is generally really, really bad. If people think something is going to cost less next month than it does right now, they'll delay buying it. That slows down economic activity and production, the government collects less in taxes, folks get laid off because there's less spending, and everyone is worse off.
OK, that's in the real world. What about in the fantasy sports entertainment world we call football?
Nobody likes to talk about it because the outlook can be bleak. At best, when clubs have to cut back, they whine about needing to meet Profit and Sustainability Rules ... as if they weren't the ones who had chosen to implement PSR in the first place.
But an analysis of what happened to the world's richest league, the Premier League, in the last transfer window, when net spend went down by 40% and reached its lowest inflation-adjusted level of any non-COVID summer since 2014, as well as conversations with club officials, owners and intermediaries, paints a fairly stark picture.
Now, this isn't something you're necessarily going to measure in the current January transfer window, as winter transfers tend to have a "domino effect" anyway. Club A acquires Player X from Club B, who then spend part of the fee to replace him with Player Y from Club C, and so on. And there are some evident outliers like Manchester City, who could yet spend big since their ownership don't seem to have an evident profit motive and since their hefty profits the past couple of seasons mean they could, according to football finance blogger Swiss Ramble, lose as much as £369 million ($450m) this year and still be compliant with PSR.
However, you could also see it in other ways. Take midfielder Adrien Rabiot, who became a free agent last summer. He just turned 29 years old, he's a 50-cap France international (starting all three group games at Euro 2024), and he has big-club experience at Paris Saint-Germain and Juventus: You would have thought he'd generate plenty of interest as a free transfer. Nope. The summer window came and went, and he only ended up finding a club (Marseille) in mid-September. And even that was for a measly two-year deal that pays him less than half what he was earning at Juventus.
Or how about Victor Osimhen? Napoli wanted a fee of more than €100m for the then-25-year-old Nigeria striker (48 goals in 71 appearances the previous two seasons), eventually dropped the ask to €80m, then €60m, and still found no takers. He ended up moving to Galatasaray in Turkey, on loan, in September.
Real Madrid spent an initial €103m to sign Jude Bellingham from Dortmund. (Photo by Pedro Castillo/Real Madrid via Getty Images)
It's evident in other ways, too. Consider the league leaders in the Bundesliga (Bayern Munich) and the Premier League (Liverpool). Among Bayern's free-agents-to-be at the end of the season are Joshua Kimmich and Alphonso Davies, who are first and fourth, respectively, in league minutes played this season. Kimmich is 29, captain material and one of the best central midfielders around. Davies is 24 and one of the best left-side players. Both have been a huge part of the club's success in recent years.
(Heck, while we're at it, throw in attacking midfielder Jamal Musiala. His deal isn't up until 2026, but he's 21 and arguably the best player at the club. Not that long ago, it would have been unthinkable to allow someone like that to enter the final 18 months of their contract.)
As for Liverpool, the situation involving forward Mohamed Salah (32 and the Premier League's top scorer), center back Virgil van Dijk (33 and club captain) and right back Trent Alexander-Arnold (26 and Liverpool-born and bred) is well chronicled. Talks are "ongoing," everyone is "relaxed" (that word you always see in stories like this) and it's not affecting performance, yet nobody can remember the last time, amid such a successful campaign, that two massive, well-run, solvent clubs like Bayern and Liverpool left it so late to extend the contracts of key players.
Everyone is keeping their cards close to the chest, but you can only surmise that the reason it is taking this long is that the extensions are far from straightforward. The players and their agents have a certain idea of what their services are worth, while the clubs are dealing with a new economic reality. The market is changing, and this is complicating renewals too.
Real Madrid insist they won't be hitting the market this January despite the fact that injuries have left them with a 33-year-old winger (Lucas Vázquez) playing right back and a 6-foot-1 central midfielder playing center back (Aurélien Tchouaméni). Manchester United are trying to dump salaries (not just that of out-of-favor forward Marcus Rashford), and Manchester City are trying to move on from club captain Kyle Walker, just four months after giving him an extension through 2026.
According to Transfermarkt, there have been 16 transfers of over €100m in history. Look at the list more closely and you'll see that more than half of them turned out to be busts or, at least, not moves clubs would do again if they could go back.
There was a time when you could roll the dice on a pricey transfer, knowing that even if you got it wrong and had to shift the player for a loss you'd still find a taker and could swallow the hit. That's not the case anymore. Look at PSG as they try to find a club to take on forward Randal Kolo Muani, whom they paid €80m to sign from Frankfurt just 18 months ago. They'll be lucky to get more than half of what they paid for him if they can ever find a permanent deal, and he's set to join Juventus on loan for the rest of the season.
Why? Partly because there just aren't that many center forward jobs out there, partly because there aren't many clubs who will spend €40m or more on a striker, but largely because the vibe has shifted. Clubs watch every penny now.
This doesn't just affect the biggest clubs, either. Those teams that relied on player trading as part of their business model -- Brighton or Brentford in England, Borussia Dortmund in Germany, Atalanta or Udinese in Italy, Monaco in France, or Sevilla in Spain -- are finding it tougher, too. You're going to be more reluctant to spend €20m or €30m on that promising young winger you spotted if you think that, once he develops, you won't get much more than that back for him.
Take Dortmund's Donyell Malen. They paid €30m to acquire him from PSV Eindhoven as a 22-year-old in 2021. He didn't necessarily turn into the second coming of Lionel Messi, but he did score 15 goals as a winger last year and is a mainstay for Netherlands. Just 3½ years later, he joined Aston Villa for €25m.
Maybe this deflation is just a long overdue correction, one that was delayed somewhat by the wild Saudi Arabia spending two summers ago. Maybe clubs are realizing that revenue won't continue to increase the way it did. Maybe they understand that regulators -- whether UEFA, the Premier League, LaLiga (just ask Barcelona), whomever -- are serious about enforcing rules. Maybe they finally get the fact that was once billed as "investment in the squad" was actually some combination of ego trip and Ponzi scheme, and it actually gets really, really expensive.
Maybe they simply have come to terms with the fact that transfer fees and wages have reached such levels that once revenue stops growing vertically, you can only justify them if there's a certain number of suckers and irrational actors out there to mop up your mistakes. And there are fewer and fewer of those around.
Maybe we've reached some level of sanity. Maybe this will become a real, grown-up, sustainable business one day.
Is transfer spending finally normal? Why a $100m player might be a thing of the past
Deflation is the opposite of inflation; prices go down, not up, over time.
And most economists will tell you that while excessive inflation is bad, deflation is generally really, really bad. If people think something is going to cost less next month than it does right now, they'll delay buying it. That slows down economic activity and production, the government collects less in taxes, folks get laid off because there's less spending, and everyone is worse off.
OK, that's in the real world. What about in the fantasy sports entertainment world we call football?
Nobody likes to talk about it because the outlook can be bleak. At best, when clubs have to cut back, they whine about needing to meet Profit and Sustainability Rules ... as if they weren't the ones who had chosen to implement PSR in the first place.
But an analysis of what happened to the world's richest league, the Premier League, in the last transfer window, when net spend went down by 40% and reached its lowest inflation-adjusted level of any non-COVID summer since 2014, as well as conversations with club officials, owners and intermediaries, paints a fairly stark picture.
Now, this isn't something you're necessarily going to measure in the current January transfer window, as winter transfers tend to have a "domino effect" anyway. Club A acquires Player X from Club B, who then spend part of the fee to replace him with Player Y from Club C, and so on. And there are some evident outliers like Manchester City, who could yet spend big since their ownership don't seem to have an evident profit motive and since their hefty profits the past couple of seasons mean they could, according to football finance blogger Swiss Ramble, lose as much as £369 million ($450m) this year and still be compliant with PSR.
However, you could also see it in other ways. Take midfielder Adrien Rabiot, who became a free agent last summer. He just turned 29 years old, he's a 50-cap France international (starting all three group games at Euro 2024), and he has big-club experience at Paris Saint-Germain and Juventus: You would have thought he'd generate plenty of interest as a free transfer. Nope. The summer window came and went, and he only ended up finding a club (Marseille) in mid-September. And even that was for a measly two-year deal that pays him less than half what he was earning at Juventus.
Or how about Victor Osimhen? Napoli wanted a fee of more than €100m for the then-25-year-old Nigeria striker (48 goals in 71 appearances the previous two seasons), eventually dropped the ask to €80m, then €60m, and still found no takers. He ended up moving to Galatasaray in Turkey, on loan, in September.
Real Madrid spent an initial €103m to sign Jude Bellingham from Dortmund. (Photo by Pedro Castillo/Real Madrid via Getty Images)
It's evident in other ways, too. Consider the league leaders in the Bundesliga (Bayern Munich) and the Premier League (Liverpool). Among Bayern's free-agents-to-be at the end of the season are Joshua Kimmich and Alphonso Davies, who are first and fourth, respectively, in league minutes played this season. Kimmich is 29, captain material and one of the best central midfielders around. Davies is 24 and one of the best left-side players. Both have been a huge part of the club's success in recent years.
(Heck, while we're at it, throw in attacking midfielder Jamal Musiala. His deal isn't up until 2026, but he's 21 and arguably the best player at the club. Not that long ago, it would have been unthinkable to allow someone like that to enter the final 18 months of their contract.)
As for Liverpool, the situation involving forward Mohamed Salah (32 and the Premier League's top scorer), center back Virgil van Dijk (33 and club captain) and right back Trent Alexander-Arnold (26 and Liverpool-born and bred) is well chronicled. Talks are "ongoing," everyone is "relaxed" (that word you always see in stories like this) and it's not affecting performance, yet nobody can remember the last time, amid such a successful campaign, that two massive, well-run, solvent clubs like Bayern and Liverpool left it so late to extend the contracts of key players.
Everyone is keeping their cards close to the chest, but you can only surmise that the reason it is taking this long is that the extensions are far from straightforward. The players and their agents have a certain idea of what their services are worth, while the clubs are dealing with a new economic reality. The market is changing, and this is complicating renewals too.
Real Madrid insist they won't be hitting the market this January despite the fact that injuries have left them with a 33-year-old winger (Lucas Vázquez) playing right back and a 6-foot-1 central midfielder playing center back (Aurélien Tchouaméni). Manchester United are trying to dump salaries (not just that of out-of-favor forward Marcus Rashford), and Manchester City are trying to move on from club captain Kyle Walker, just four months after giving him an extension through 2026.
According to Transfermarkt, there have been 16 transfers of over €100m in history. Look at the list more closely and you'll see that more than half of them turned out to be busts or, at least, not moves clubs would do again if they could go back.
There was a time when you could roll the dice on a pricey transfer, knowing that even if you got it wrong and had to shift the player for a loss you'd still find a taker and could swallow the hit. That's not the case anymore. Look at PSG as they try to find a club to take on forward Randal Kolo Muani, whom they paid €80m to sign from Frankfurt just 18 months ago. They'll be lucky to get more than half of what they paid for him if they can ever find a permanent deal, and he's set to join Juventus on loan for the rest of the season.
Why? Partly because there just aren't that many center forward jobs out there, partly because there aren't many clubs who will spend €40m or more on a striker, but largely because the vibe has shifted. Clubs watch every penny now.
This doesn't just affect the biggest clubs, either. Those teams that relied on player trading as part of their business model -- Brighton or Brentford in England, Borussia Dortmund in Germany, Atalanta or Udinese in Italy, Monaco in France, or Sevilla in Spain -- are finding it tougher, too. You're going to be more reluctant to spend €20m or €30m on that promising young winger you spotted if you think that, once he develops, you won't get much more than that back for him.
Take Dortmund's Donyell Malen. They paid €30m to acquire him from PSV Eindhoven as a 22-year-old in 2021. He didn't necessarily turn into the second coming of Lionel Messi, but he did score 15 goals as a winger last year and is a mainstay for Netherlands. Just 3½ years later, he joined Aston Villa for €25m.
Maybe this deflation is just a long overdue correction, one that was delayed somewhat by the wild Saudi Arabia spending two summers ago. Maybe clubs are realizing that revenue won't continue to increase the way it did. Maybe they understand that regulators -- whether UEFA, the Premier League, LaLiga (just ask Barcelona), whomever -- are serious about enforcing rules. Maybe they finally get the fact that was once billed as "investment in the squad" was actually some combination of ego trip and Ponzi scheme, and it actually gets really, really expensive.
Maybe they simply have come to terms with the fact that transfer fees and wages have reached such levels that once revenue stops growing vertically, you can only justify them if there's a certain number of suckers and irrational actors out there to mop up your mistakes. And there are fewer and fewer of those around.
Maybe we've reached some level of sanity. Maybe this will become a real, grown-up, sustainable business one day.
Why did they leave out the Mbappe deal, you can gloss it over as a free but the club paid him €150m upfront? This more or less a transfer fee. Salah was offered for huge fee 12M ago... The owners didn't want to sell.
How many players out there that are worth €100m that clubs will sell?
I think the Mbappe omission is deliberate, because it doesn't really fit the hypothesis (which is flawed IMO). Are clubs spending less? Some of them are, basically those on the cusp of PSR issues, at least in the Premiership. This may just be a temporary thing until they force through a relaxation of FFP rules or join some sort of Superleague.
Are the clubs with capacity to spend spending less? Perhaps on transfer fees, but certainly not on wages. And that's where Mbappe fits in - the most expensive free transfer in the sport's history, to a club who could afford it. The wages and signing-on fees are astronomical, but when you look at the total spend over the life of the contract, with the excess wages replacing the transfer fee, it's not out of kilter with what you'd expect, it's just that it's all going to the player. That's in danger of becoming the direction of travel now. Players will run down contracts, hoping to get higher wages when they sign for a new club (or to strong-arm their existing club into paying them more to stay). I'm not really sure why this didn't happen sooner - Michael Ballack made himself very rich doing it 15 odd years ago. The clubs that will come out on top in this era are the ones who exploit the situation and sign top players on free transfers with top wages.
But ultimately it will decimate clubs lower down the pyramid who rely on transfer fees to keep going. The Red Bull model is probably the way those clubs need to go - buy them young, allow them to leave for reasonable fees, probably less than their open market values, but it's part of the sell to the player when you sign him.
Or you could buck the trend a go all Chelsea and splash over £1bn on transfer fees.
Are the clubs with capacity to spend spending less? Perhaps on transfer fees, but certainly not on wages. And that's where Mbappe fits in - the most expensive free transfer in the sport's history, to a club who could afford it. The wages and signing-on fees are astronomical, but when you look at the total spend over the life of the contract, with the excess wages replacing the transfer fee, it's not out of kilter with what you'd expect, it's just that it's all going to the player. That's in danger of becoming the direction of travel now. Players will run down contracts, hoping to get higher wages when they sign for a new club (or to strong-arm their existing club into paying them more to stay). I'm not really sure why this didn't happen sooner - Michael Ballack made himself very rich doing it 15 odd years ago. The clubs that will come out on top in this era are the ones who exploit the situation and sign top players on free transfers with top wages.
But ultimately it will decimate clubs lower down the pyramid who rely on transfer fees to keep going. The Red Bull model is probably the way those clubs need to go - buy them young, allow them to leave for reasonable fees, probably less than their open market values, but it's part of the sell to the player when you sign him.
Or you could buck the trend a go all Chelsea and splash over £1bn on transfer fees.
Evertons final PSR charge is dropped.
This feels like a set up for 115 to get away scot free.
If that's the case, this will probably be my last as avid watcher of the PL. They have no bollocks at all to enforce the rules. And our owners are the only ones sticking to the rules it seems
This feels like a set up for 115 to get away scot free.
If that's the case, this will probably be my last as avid watcher of the PL. They have no bollocks at all to enforce the rules. And our owners are the only ones sticking to the rules it seems
Nothing will happen to the 115 bois. A slap on the wrist at most.
Why else would Pep sign an extension ?
Haaland’s new contract.
Their rebuilding and shopping spree begins soon
Nah, it’s all been programmed.
Money talks.
Why else would Pep sign an extension ?
Haaland’s new contract.
Their rebuilding and shopping spree begins soon
Nah, it’s all been programmed.
Money talks.
The word proportionate is concerning in that statement.
I hope City’s wrists are strong enough for the incoming slap.
I hope City’s wrists are strong enough for the incoming slap.
I reckon they were thinking that Everton might feel victimised if they had another go at them, but also that they'd be punishing Everton this year for something the appeals panel really should have dealt with last season.
Just to put some colour on this. Everton set up a new company (I'll call it Stadium Co) to build its stadium. The club took on a load of debt and lent funds to the Stadium Co to give it the money to pay the bills. Usually when a company is building an asset, accounting practice allows them to add the interest costs to the fixed asset amount (so the expense doesn't sit in the profit and loss account). There are some conditions for this, which include that the debt must have been incurred to build the asset. Everton couldn't prove this, quite the opposite. The stadium construction was mostly funded by money from Moshiri (interest-free) and the loans were for general business funding. If they'd done things the other way round there wouldn't have been a problem, but they didn't. So there's a first appeal that says it's harsh to be punished for a technical failure, basically an error in their paperwork.
But before we get too sympathetic, there are two alternative readings and some more detail to consider.
Firstly, they charged hefty amounts of interest on the loan between the club and the Stadium Company. They then added the interest expense to the asset cost in the Stadium Company. The only issue with that is whether the interest charges were excessive, and I don't have enough detail to comment on that, but they did initially make the loan interest-free and then charged retrospective interest on it. That feels a least a bit naughty to me.
Secondly, we need to consider what they report on. In one of their hearings, it was documented that their original reporting was on the combined results of the club and the Stadium Co, but that Baxendale had requested permission to report the club only. It isn't clear from the hearings whether this permission was granted, but if it was then they significantly reduced their PSR losses by making charges of interest into the Stadium Co, and arguably artificially enhanced their results with the retrospective charges (the interest charges would have wiped out, even exceeded interest costs in the club's accounts).
If the permission wasn't granted, then they are reporting based on their group results, and this is where I have more of an issue. It was OK for the Stadium Co to add the interest to the asset cost in its OWN books, from Stadium Co's perspective, the money had been borrowed for the clear purpose of building the stadium so the conditions are met. The group accounts are then prepared by adding together the club and Stadium Co results. But, I believe the group accounts are wrong - the recharge of the interest to Stadium Co and the capitalisation of that cost should be reversed out when preparing the group accounts, but it hasn't been. The principle of group accounts is to pretend the entire business is carried on directly by the head of the group. The head of the group wasn't entitled to add the interest costs to the asset in its own books, but the group accounts assume it could do that. They managed to persuade their auditors this was OK. IMO it's not, and therefore they should have been punished more heavily last year as their losses as reported to the PL were understated. But they survived by 14 points last year, so had they been punished then (maybe 4-5 extra points), they would still have been OK. I reckon that's the excuse the PL has used to drop the case.
And that's a problem, because if the penalties they were given historically had been applied in the years the offences were committed, they'd have been relegated (which was the basis of the possible litigation by Burnley and others). So if the PL accepted a timing mis-match previously, they should accept one now.
Obviously if they survive by 4-5 points then it's academic anyway. And if they survive because City are relegated in their place then I can live with that.
But they've dodged a bullet here.
These PSR rules have more dirty great big gaping holes in them than PornHub - there’s no way a team like City gets punished enough to get relegated and doesn’t get it overturned at the shift Court.
I’m calling it now - unable to prove fraud and they get a fine for not being co-operative.
Chelsea will be the same - just a fine.
Pence it happens… Newcastle will be free to spend whatever they want - if City win their case and Newcastle get CL - they’ll go for Salah.
I’m calling it now - unable to prove fraud and they get a fine for not being co-operative.
Chelsea will be the same - just a fine.
Pence it happens… Newcastle will be free to spend whatever they want - if City win their case and Newcastle get CL - they’ll go for Salah.
I don’t think we’re getting that much for Darwin, but I’d definitely take it.
Deloitte money League is out today.
For all those believing 2024 was a financial skip fire, please note our turnover was UP to an all-time high, albeit in Euros, so there may be some exchange rate element.
Key point to note though is that commercial revenue growth compensated for the drop in media for not being in the CL, and there’s also a strong match day performance from the extended Annie Road stand.
It doesn’t necessarily follow that we’ll make huge profits as Deloitte focuses on turnover and there could be lots of extra costs that mean that won’t translate into bottom line profit.
But in short, we are NOT skint.
For all those believing 2024 was a financial skip fire, please note our turnover was UP to an all-time high, albeit in Euros, so there may be some exchange rate element.
Key point to note though is that commercial revenue growth compensated for the drop in media for not being in the CL, and there’s also a strong match day performance from the extended Annie Road stand.
It doesn’t necessarily follow that we’ll make huge profits as Deloitte focuses on turnover and there could be lots of extra costs that mean that won’t translate into bottom line profit.
But in short, we are NOT skint.
Excellent.
Excellent work triggering some posters
Just to follow up on a discussion from earlier in the week, the Deloitte report also gives the ratio of wages to turnover. This is given to whole percentage points, meaning it is possible to get a wages figure for the top 20 clubs (except for Marseille who didn't disclose) within an accuracy of €2-3m. So here goes (figures are for the 2023-24 season, and THEY ARE IN EUROS):
PSG €669m
Real Madrid €502m
Barca €494m
Man City €494m
Liverpool €450m
Man Utd €432m
Bayern €429m
Chelsea €393m (not sure I'm buying this)
Arsenal €380m
Villa €298m (highest ratio by a distance at 96%)
Dortmund €267m
Atletico €266m
Juventus €263m
Spurs €258m
Newcastle €372m
Inter €391m
West Ham €187m
Milan €187m
Lyon €161m
Points to note:
City's number may be higher if they didn't disclose the wages of their commercial and football technical staff who they shunted into side companies.
Not sure I buy the Chelsea number, but may be lower if heavily incentivised because they won stuff all.
Villa's wage to turnover ratio is the highest at 96%, followed by PSG at 83%, then Juve at 74% - they are dangerously over-spending.
EDIT - just to clarify on accuracy of the sources, Deloitte speak to the clubs directly (I remember them coming in for a meeting with us) so these numbers are solid.
Accounting for exchange rates, I reckon are wages were up about 3% on 2023.
PSG €669m
Real Madrid €502m
Barca €494m
Man City €494m
Liverpool €450m
Man Utd €432m
Bayern €429m
Chelsea €393m (not sure I'm buying this)
Arsenal €380m
Villa €298m (highest ratio by a distance at 96%)
Dortmund €267m
Atletico €266m
Juventus €263m
Spurs €258m
Newcastle €372m
Inter €391m
West Ham €187m
Milan €187m
Lyon €161m
Points to note:
City's number may be higher if they didn't disclose the wages of their commercial and football technical staff who they shunted into side companies.
Not sure I buy the Chelsea number, but may be lower if heavily incentivised because they won stuff all.
Villa's wage to turnover ratio is the highest at 96%, followed by PSG at 83%, then Juve at 74% - they are dangerously over-spending.
EDIT - just to clarify on accuracy of the sources, Deloitte speak to the clubs directly (I remember them coming in for a meeting with us) so these numbers are solid.
Accounting for exchange rates, I reckon are wages were up about 3% on 2023.
£14m increase in wages, despite no CL football. probably based on speculation
Whoever the one on the left is he has a face that fits a World War II Soviet propaganda poster.
Plus a 400m odd contract commitment for the Pale Orc…
From the Athletic..
“They are living a Champions League lifestyle on Europa League money”…
In this era of profit and sustainability, it is easy to forget that a football club needs two things to spend in a transfer window: room for manoeuvre on financial fair play and enough cold, hard cash to pay for signings in the first place.
“Revenue is vanity, profit is sanity, but cash is reality”. At Old Trafford, reality is beginning to bite.
ADVERTISEMENT
The January transfer window is open, but Manchester United are yet to make a signing due to a need to balance any incomings with outgoings.
That may come as a surprise to anyone glancing at the most recent set of accounts. As of the end of September, United had a healthy bank balance of £149.6m. That is more cash than they have held in reserve at any point since the Covid-19 pandemic.
Last month, a further £79m was added by Sir Jim Ratcliffe as part of the $300m investment promised upon him becoming a minority owner last year, which also increased his minority stake to 28.9 per cent.
You’d think that would still leave enough loose change lying around to buy Ruben Amorim a left wing-back and maybe United will, having held talks with Lecce to sign Patrick Dorgu this week.
United are pursuing a deal for Dorgu but are running low on cash (Getty Images)
There is a problem, though: United’s pile of cash has not been generated by the club itself.
It has come through either short-term loans, which carry interest charges and will one day need to be paid back, or through Ratcliffe’s investment, which is earmarked for upgrades to facilities at Old Trafford and Carrington.
And on top of that, according to September’s accounts, United still have a net figure of £319m in transfer fee instalments to pay for players they have already signed, with at least £154m due within a year.
“The thing that goes under the radar with Manchester United is that, especially under the Glazers, they bought players on tick,” says Kieran Maguire, football finance expert and lecturer at the University of Liverpool.
After five years of consecutive loss-making amid mediocrity on the pitch and stagnant revenues off it, United have had to defer payments, spend on credit and pull different financial levers to maintain their level of investment in the playing squad.
“They’re living a Champions League lifestyle on Europa Leagueincome,” Maguire adds.
That cannot go on forever because underneath the hood, once you compare the cash the club is actually bringing in against how much it is paying out, you can see why United need to balance the books.
All being well, United meet those obligations through the funds raised in the transfer market from selling players and their operating cash flow, which is the cash generated by the club’s day-to-day business.
ADVERTISEMENT
Last season, United’s operating cash flow stood at £118m, with a further £37m recouped in transfer fees. A £4m tax rebate also helped. Yet, all together, that £159m generated was quickly eaten up.
First, take away £36m paid out in interest, partly spent servicing the debt lumped onto the club by the Glazer family upon their leveraged buy-out in 2005. That is almost all the cash received in transfer fees immediately wiped out.
Then, subtract the £18m spent on improving facilities at Old Trafford and Carrington. Upgrading the stadium and training ground has been a long-term necessity and the type of investment United should have made long before now, but it is still a short-term cost.
And, finally, take away the £191m spent in transfer fees last season, which will have partly paid for the three major summer signings of Rasmus Hojlund, Mason Mountand Andre Onana, but will also have covered instalments due for previous deals.
You do not need a calculator to see that the cash generated by the club last season did not even cover United’s transfer outgoings. Factor in the interest payments and infrastructure upgrades and there was an £86m gap between the cash flowing in and cash flowing out of Old Trafford.
It was not a one-off, either. It was a similar story a year earlier, at the end of the 2022-23 season, when a £44m deficit contributed to United’s cash in the bank falling from £121m to £76m.
Fortunately, last season’s £86m gap could effectively be bridged by Ratcliffe’s first cash injection, worth £159m. As a result, United ended the season with £74m in the bank, about as much as they had when it started.
United’s credit facility can essentially be thought of as a credit card, which allows the club to borrow up to £300m any time they are short of cash.
Joshua Zirkzee, Leny Yoro, Matthijs de Ligt, Noussair Mazraoui and Manuel Ugarte were all subsequently signed in deals worth £219m combined, with that spending balanced out somewhat by the sales of Mason Greenwood, Scott McTominay and Aaron Wan-Bissaka among others.
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According to the latest figures, United owe a total of £230m on their credit facility. None of that debt needs to be repaid until June 2027. Even then, the terms could be extended.
Since making their first drawdown in 2020, United have tended to pay down their credit facility over the course of a season. The club owed £260m on it this time last year but had reduced it to just £30m by the end of the campaign.
Still, it costs United money to service that short-term debt through interest payments. If the club were to settle their £230m balance between now and the end of the season, they would have to dip into their cash reserves to do so.
And remember, United also owe £319m to other clubs in transfer debt, with at least £154m due to be paid within a year.
That figure always jumps up in the first quarter following a summer of spending, but £154m is the most United have owed in short-term transfer debt after a summer window for the past decade.
In the long run, Maguire argues that is unsustainable. “Anybody that lives their life on credit will tell you, eventually it catches up,” he says. “You can't go and buy a bunch of scratch cards if you know you’ve got to go and pay the rent.”
The club had an operating cash flow of £264m before the pandemic, yet it has barely reached half that figure in the years since. Were it not for the credit facility and Ratcliffe’s investments, United would have a negative cash flow of £330m since the end of the 2019-20 season.
United were disproportionately affected by Covid compared to other Premier League clubs in respect of matchday revenue, by virtue of the 74,310-capacity Old Trafford being English football’s largest club stadium.
ADVERTISEMENT
Nevertheless, unlike some of their rivals, United did not take advantage of the government’s furlough scheme and continued to pay casual staff despite matches being played behind closed doors.
Those choices were admirable, but the associated costs were small change in the grand scheme of things and do not themselves explain why the club began losing so much money.
Far more questionable was the Glazers’ decision to continue paying out £166m in dividends over the course of a decade between 2012 and 2022, much of which lined their own pockets as majority shareholders.
United’s interest payments on debt under the Glazers’ ownership have come at an even greater expense, totalling £790m since their leveraged buy-out in 2005, and have steadily increased in the last few years due to rising interest rates across the globe.
Yet by far the most costly expense — and in many cases, the most wasteful — has been transfer spending, which has seen a net £1.3bn in cash spent over the past decade.
Despite only reaching the quarter-finals of the Champions League once in the past 12 seasons, therefore missing out on the significant prize money that comes with progress in Europe, United have continued to spend at the level of the continent’s elite clubs.
And again, that is only cash payments — it does not include the £319m still owed for players already at the club.
Ratcliffe’s injection of $300m — worth £237.5m in total — has now been paid into Old Trafford’s coffers. Unless he is willing to pour more of his own money into the club and in doing so increase his stake, that is all the ownership funding United are due for now.
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In any case, that money was intended for Old Trafford and Carrington in the first place, so any spent in other areas needs to be replenished and eventually used for that purpose.
United could seek other investment. In September, the club released a prospectus to the New York Stock Exchange announcing plans to raise up to $400m through the sale of Class A shares and other securities.
However, none of those options address the fundamental issue at hand: United have struggled to generate cash through their day-to-day operations as a club and business since the pandemic.
Short of becoming a Champions League-quality side overnight, there are two ways United can quickly improve things: by cutting costs and selling players.
Ratcliffe has already set about on the first of those objectives, culling 250 jobs last year, casting the INEOS-led era as one of retrenchment. The scythe is now being wielded among the playing squad.
United are seeking suitors for Marcus Rashford, whose salary of more than £325,000 a week would clear significant space on the wage bill, but any exit this month is all but certain to only be on loan.
United will listen to offers for Rashford (Robbie Jay Barratt - AMA/Getty Images)
Casemiro, another of United’s highest earners, has appeared in just three of United’s last 12 games. Antony is closing in on a loan deal to Real Betis, while United are exploring options for Tyrell Malacia.
It is not just those on the fringes of Amorim’s squad under threat, though. Supporters were taken aback by news of United’s willingness to countenance offers for Kobbie Mainoo and Alejandro Garnacho, with Napoli and Chelseaboth pursuing the latter.
The Premier League and UEFA’s spending rules are part of United’s reasoning. As both are academy-trained players and therefore have little to no book value, fees would represent close to pure profit in the accounting books.
But there is also simple old-fashioned reasoning behind United’s willingness to listen to offers: Mainoo and Garnacho are two of United’s most valuable assets, who would therefore bring in the most money to reinvest in the squad.
Senior Old Trafford figures felt PSR compliance for the 2023-24 cycle would be ‘tight’. Despite an approximate pre-tax loss of £313m over the three-year cycle, United were able to apply deductions to bring that figure under the £105m limit and were not charged by the Premier League.
ADVERTISEMENT
That should bring confidence of compliance for the 2024-25 test, too. It also helps that, for the current three-year cycle, United’s £150m loss during the 2021-22 season has been replaced by last season’s mere £131m deficit — an extra £19m’s worth of room compared to last season’s test.
United still need to be cautious, however, and the need to comply with both the Premier League and UEFA's regulations is informing almost every decision the club makes.
It was telling that Erik ten Hag cited spending rules as the reasoning behind academy product McTominay’s £25.7m sale to Napoli, which United will benefit from in the 2024-25 cycle.
Triggering the extension in Harry Maguire’s contract will also give United a little extra wiggle room in their PSR calculations, reducing the annual amortisation charge of his hefty £80m transfer fee in the accounts.
Compliance with spending regulations is now a vital factor clubs have to consider before investing in their playing squad, but you still need the resources to hand, too.
It was always taken for granted that there would be money to burn at Old Trafford, but after years of failing to back their spending up with success on the pitch, United are beginning to wake up to their new reality.
(Header design: Dan Goldfarb; photos: Getty Images)
“They are living a Champions League lifestyle on Europa League money”…
In this era of profit and sustainability, it is easy to forget that a football club needs two things to spend in a transfer window: room for manoeuvre on financial fair play and enough cold, hard cash to pay for signings in the first place.
“Revenue is vanity, profit is sanity, but cash is reality”. At Old Trafford, reality is beginning to bite.
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The January transfer window is open, but Manchester United are yet to make a signing due to a need to balance any incomings with outgoings.
That may come as a surprise to anyone glancing at the most recent set of accounts. As of the end of September, United had a healthy bank balance of £149.6m. That is more cash than they have held in reserve at any point since the Covid-19 pandemic.
Last month, a further £79m was added by Sir Jim Ratcliffe as part of the $300m investment promised upon him becoming a minority owner last year, which also increased his minority stake to 28.9 per cent.
You’d think that would still leave enough loose change lying around to buy Ruben Amorim a left wing-back and maybe United will, having held talks with Lecce to sign Patrick Dorgu this week.
United are pursuing a deal for Dorgu but are running low on cash (Getty Images)
There is a problem, though: United’s pile of cash has not been generated by the club itself.
It has come through either short-term loans, which carry interest charges and will one day need to be paid back, or through Ratcliffe’s investment, which is earmarked for upgrades to facilities at Old Trafford and Carrington.
And on top of that, according to September’s accounts, United still have a net figure of £319m in transfer fee instalments to pay for players they have already signed, with at least £154m due within a year.
“The thing that goes under the radar with Manchester United is that, especially under the Glazers, they bought players on tick,” says Kieran Maguire, football finance expert and lecturer at the University of Liverpool.
After five years of consecutive loss-making amid mediocrity on the pitch and stagnant revenues off it, United have had to defer payments, spend on credit and pull different financial levers to maintain their level of investment in the playing squad.
“They’re living a Champions League lifestyle on Europa Leagueincome,” Maguire adds.
That cannot go on forever because underneath the hood, once you compare the cash the club is actually bringing in against how much it is paying out, you can see why United need to balance the books.
Why are United strapped for cash?
Like any Premier League club, United need cash to pay transfer fees, wages, tax bills and interest charges and to meet the cost of any upgrades to their stadium or training facilities.All being well, United meet those obligations through the funds raised in the transfer market from selling players and their operating cash flow, which is the cash generated by the club’s day-to-day business.
ADVERTISEMENT
Last season, United’s operating cash flow stood at £118m, with a further £37m recouped in transfer fees. A £4m tax rebate also helped. Yet, all together, that £159m generated was quickly eaten up.
First, take away £36m paid out in interest, partly spent servicing the debt lumped onto the club by the Glazer family upon their leveraged buy-out in 2005. That is almost all the cash received in transfer fees immediately wiped out.
Then, subtract the £18m spent on improving facilities at Old Trafford and Carrington. Upgrading the stadium and training ground has been a long-term necessity and the type of investment United should have made long before now, but it is still a short-term cost.
And, finally, take away the £191m spent in transfer fees last season, which will have partly paid for the three major summer signings of Rasmus Hojlund, Mason Mountand Andre Onana, but will also have covered instalments due for previous deals.
You do not need a calculator to see that the cash generated by the club last season did not even cover United’s transfer outgoings. Factor in the interest payments and infrastructure upgrades and there was an £86m gap between the cash flowing in and cash flowing out of Old Trafford.
It was not a one-off, either. It was a similar story a year earlier, at the end of the 2022-23 season, when a £44m deficit contributed to United’s cash in the bank falling from £121m to £76m.
Fortunately, last season’s £86m gap could effectively be bridged by Ratcliffe’s first cash injection, worth £159m. As a result, United ended the season with £74m in the bank, about as much as they had when it started.
How could United afford to spend in the summer?
That £74m was not going to be enough to bankroll a summer transfer window, so United made a £200m drawdown on their revolving credit facility.United’s credit facility can essentially be thought of as a credit card, which allows the club to borrow up to £300m any time they are short of cash.
Joshua Zirkzee, Leny Yoro, Matthijs de Ligt, Noussair Mazraoui and Manuel Ugarte were all subsequently signed in deals worth £219m combined, with that spending balanced out somewhat by the sales of Mason Greenwood, Scott McTominay and Aaron Wan-Bissaka among others.
ADVERTISEMENT
According to the latest figures, United owe a total of £230m on their credit facility. None of that debt needs to be repaid until June 2027. Even then, the terms could be extended.
Since making their first drawdown in 2020, United have tended to pay down their credit facility over the course of a season. The club owed £260m on it this time last year but had reduced it to just £30m by the end of the campaign.
Still, it costs United money to service that short-term debt through interest payments. If the club were to settle their £230m balance between now and the end of the season, they would have to dip into their cash reserves to do so.
And remember, United also owe £319m to other clubs in transfer debt, with at least £154m due to be paid within a year.
That figure always jumps up in the first quarter following a summer of spending, but £154m is the most United have owed in short-term transfer debt after a summer window for the past decade.
In the long run, Maguire argues that is unsustainable. “Anybody that lives their life on credit will tell you, eventually it catches up,” he says. “You can't go and buy a bunch of scratch cards if you know you’ve got to go and pay the rent.”
Where has all the money gone?
Look at United’s financial statements and it is no coincidence that things started to deteriorate during the Covid-19 pandemic. United’s cash reserves stood at £308m at the end of the 2018-19 season but had fallen to just £52m a year later.The club had an operating cash flow of £264m before the pandemic, yet it has barely reached half that figure in the years since. Were it not for the credit facility and Ratcliffe’s investments, United would have a negative cash flow of £330m since the end of the 2019-20 season.
United were disproportionately affected by Covid compared to other Premier League clubs in respect of matchday revenue, by virtue of the 74,310-capacity Old Trafford being English football’s largest club stadium.
ADVERTISEMENT
Nevertheless, unlike some of their rivals, United did not take advantage of the government’s furlough scheme and continued to pay casual staff despite matches being played behind closed doors.
Those choices were admirable, but the associated costs were small change in the grand scheme of things and do not themselves explain why the club began losing so much money.
Far more questionable was the Glazers’ decision to continue paying out £166m in dividends over the course of a decade between 2012 and 2022, much of which lined their own pockets as majority shareholders.
United’s interest payments on debt under the Glazers’ ownership have come at an even greater expense, totalling £790m since their leveraged buy-out in 2005, and have steadily increased in the last few years due to rising interest rates across the globe.
Yet by far the most costly expense — and in many cases, the most wasteful — has been transfer spending, which has seen a net £1.3bn in cash spent over the past decade.
Despite only reaching the quarter-finals of the Champions League once in the past 12 seasons, therefore missing out on the significant prize money that comes with progress in Europe, United have continued to spend at the level of the continent’s elite clubs.
And again, that is only cash payments — it does not include the £319m still owed for players already at the club.
What can United do to raise cash?
United still have £70m worth of room available on their credit facility if necessary, although that would mean placing yet more debt on the club and increasing their interest payments.Ratcliffe’s injection of $300m — worth £237.5m in total — has now been paid into Old Trafford’s coffers. Unless he is willing to pour more of his own money into the club and in doing so increase his stake, that is all the ownership funding United are due for now.
ADVERTISEMENT
In any case, that money was intended for Old Trafford and Carrington in the first place, so any spent in other areas needs to be replenished and eventually used for that purpose.
United could seek other investment. In September, the club released a prospectus to the New York Stock Exchange announcing plans to raise up to $400m through the sale of Class A shares and other securities.
However, none of those options address the fundamental issue at hand: United have struggled to generate cash through their day-to-day operations as a club and business since the pandemic.
Short of becoming a Champions League-quality side overnight, there are two ways United can quickly improve things: by cutting costs and selling players.
Ratcliffe has already set about on the first of those objectives, culling 250 jobs last year, casting the INEOS-led era as one of retrenchment. The scythe is now being wielded among the playing squad.
United are seeking suitors for Marcus Rashford, whose salary of more than £325,000 a week would clear significant space on the wage bill, but any exit this month is all but certain to only be on loan.
United will listen to offers for Rashford (Robbie Jay Barratt - AMA/Getty Images)
Casemiro, another of United’s highest earners, has appeared in just three of United’s last 12 games. Antony is closing in on a loan deal to Real Betis, while United are exploring options for Tyrell Malacia.
It is not just those on the fringes of Amorim’s squad under threat, though. Supporters were taken aback by news of United’s willingness to countenance offers for Kobbie Mainoo and Alejandro Garnacho, with Napoli and Chelseaboth pursuing the latter.
The Premier League and UEFA’s spending rules are part of United’s reasoning. As both are academy-trained players and therefore have little to no book value, fees would represent close to pure profit in the accounting books.
But there is also simple old-fashioned reasoning behind United’s willingness to listen to offers: Mainoo and Garnacho are two of United’s most valuable assets, who would therefore bring in the most money to reinvest in the squad.
How does all this relate to PSR and FFP?
Financial fair play regulations — and particularly the Premier League’s profit and sustainability rules (PSR) — have dominated discussion of every top-flight club’s finances over the past 18 months or so, with United no exception.Senior Old Trafford figures felt PSR compliance for the 2023-24 cycle would be ‘tight’. Despite an approximate pre-tax loss of £313m over the three-year cycle, United were able to apply deductions to bring that figure under the £105m limit and were not charged by the Premier League.
ADVERTISEMENT
That should bring confidence of compliance for the 2024-25 test, too. It also helps that, for the current three-year cycle, United’s £150m loss during the 2021-22 season has been replaced by last season’s mere £131m deficit — an extra £19m’s worth of room compared to last season’s test.
United still need to be cautious, however, and the need to comply with both the Premier League and UEFA's regulations is informing almost every decision the club makes.
It was telling that Erik ten Hag cited spending rules as the reasoning behind academy product McTominay’s £25.7m sale to Napoli, which United will benefit from in the 2024-25 cycle.
Triggering the extension in Harry Maguire’s contract will also give United a little extra wiggle room in their PSR calculations, reducing the annual amortisation charge of his hefty £80m transfer fee in the accounts.
Compliance with spending regulations is now a vital factor clubs have to consider before investing in their playing squad, but you still need the resources to hand, too.
It was always taken for granted that there would be money to burn at Old Trafford, but after years of failing to back their spending up with success on the pitch, United are beginning to wake up to their new reality.
(Header design: Dan Goldfarb; photos: Getty Images)
This is the APT case from a few months back, no? The one where City won a few concessions (begrudgingly given by the panel) and the PL then updated the rules?
I know this chart will give some people a hardon as being #1
View: https://x.com/AnfieldSector/status/1884175150922531324
View: https://x.com/AnfieldSector/status/1884175150922531324
The shiter you are, the more you spend
Save your time lads, guy knows fuck all.
We're top of the league, top of the Champions League, semis of the league cup, and this nob wants to have a moan.
Example - "wages went up £100m in 2017/18 due to being in Champions League blah blah blah".
Facts:
2016-17 wages £208m
2017-18 wages £264m
Mate, £56m is not £100m. If you think it is, can I have your spare £44m please?
EDIT - @bluebell I know you posted it in good faith mate.
