Reduced income and signing of Bruno means #MUFC's cash reserves have dropped from £308m to £100m.
Woodward’s public words and private negotiations must also be seen in context of United’s cash levels, which are down to £100.9 million — the lowest since March 2015.
In June 2019 that figure stood at £308 million but United paid out £187 million on transfer fees in the next six months, recouping £22 million in sales. While much of the outgoings related to previous signings, a sizeable amount was also accounted for in the £80 million purchase of Harry Maguire, with Leicester demanding the full fee up front — confirmed for the first time in these accounts. Usually transfer spending is spread over a number of years, as is the case with Bruno and, evidently, Romelu Lukaku’s move to Inter.
The knock-on effect is that United are at least free from needing to budget for too many add-ons this summer.
Cliff Baty, United’s chief financial officer, projects United’s capital expenditure for the fiscal year (July 1 2019 to June 30 2020) to be £190 million — so a modest increase on the cash already spent.
In response to a question from Laurie Davison, a director at Deutsche Bank, about future transfer budgets, Baty said: “We don’t guide on what that will be, for obvious reasons. What I will say, is that the level of capex spend [capital expenditure] we’ve got this year does reflect the accelerated payment of and deferred receipt profile of last summer’s activity.”
This was in reference to upfront payments for Maguire, Aaron Wan-Bissaka and Daniel James, as well as some historical staggered spending.
“That does mean our future commitments liabilities are in a very good place, compared to where we might be in more typical years,” Baty added.
Still, it doesn’t mean that United will be liberal with their spending. That £100.9 million cash figure hardly makes United paupers, but nor does it classify as what the headline writers love to call a “war chest”, especially in the market Solskjaer will be shopping.
That cash coming down meant United’s net debt rose to £391.3 million — an increase of £73.6 million over the year — and only sales or increased revenue will take the line on that particular chart back up. (United’s gross debt remains unchanged at $650 million — down in sterling terms to £492.4 million from £508.2 million because of fluctuating currency rates.)
The effect of Champions League qualification to revenue was laid bare in the announcement. Broadcasting revenue for the quarter was £64.7 million, a decrease of £39 million (37.6 per cent) over the prior year quarter, “primarily due to non-participation in the UEFA Champions League.”
United do pass some of this reduction on to players in terms of salary cuts. Their wages for this quarter were £70 million, a decrease of £7 million from last year, again “as a result of non-participation in the UEFA Champions League.”
Sponsorship revenue for the quarter was £45.1 million, an increase of £4.8 million over the prior year quarter, due to new deals, and United trumpeted their new global partnership with Mondelez International — the multinational group behind Cadbury, Oreo and belVita. But a second year out of the Champions League would bite in the summer with penalty clauses included in the club’s Adidas contract.
Selling players would be one way to make up the deficit and sanctioning a transfer for Paul Pogba could fund the signings of two players in one go. United put a £150 million price on Pogba’s head last summer but industry sources have told The Athletic the club may have to accept about £80 million given the way things have gone this season. It is to be seen if there are clubs willing to pay that.
Woodward’s public words and private negotiations must also be seen in context of United’s cash levels, which are down to £100.9 million — the lowest since March 2015.
In June 2019 that figure stood at £308 million but United paid out £187 million on transfer fees in the next six months, recouping £22 million in sales. While much of the outgoings related to previous signings, a sizeable amount was also accounted for in the £80 million purchase of Harry Maguire, with Leicester demanding the full fee up front — confirmed for the first time in these accounts. Usually transfer spending is spread over a number of years, as is the case with Bruno and, evidently, Romelu Lukaku’s move to Inter.
The knock-on effect is that United are at least free from needing to budget for too many add-ons this summer.
Cliff Baty, United’s chief financial officer, projects United’s capital expenditure for the fiscal year (July 1 2019 to June 30 2020) to be £190 million — so a modest increase on the cash already spent.
In response to a question from Laurie Davison, a director at Deutsche Bank, about future transfer budgets, Baty said: “We don’t guide on what that will be, for obvious reasons. What I will say, is that the level of capex spend [capital expenditure] we’ve got this year does reflect the accelerated payment of and deferred receipt profile of last summer’s activity.”
This was in reference to upfront payments for Maguire, Aaron Wan-Bissaka and Daniel James, as well as some historical staggered spending.
“That does mean our future commitments liabilities are in a very good place, compared to where we might be in more typical years,” Baty added.
Still, it doesn’t mean that United will be liberal with their spending. That £100.9 million cash figure hardly makes United paupers, but nor does it classify as what the headline writers love to call a “war chest”, especially in the market Solskjaer will be shopping.
That cash coming down meant United’s net debt rose to £391.3 million — an increase of £73.6 million over the year — and only sales or increased revenue will take the line on that particular chart back up. (United’s gross debt remains unchanged at $650 million — down in sterling terms to £492.4 million from £508.2 million because of fluctuating currency rates.)
The effect of Champions League qualification to revenue was laid bare in the announcement. Broadcasting revenue for the quarter was £64.7 million, a decrease of £39 million (37.6 per cent) over the prior year quarter, “primarily due to non-participation in the UEFA Champions League.”
United do pass some of this reduction on to players in terms of salary cuts. Their wages for this quarter were £70 million, a decrease of £7 million from last year, again “as a result of non-participation in the UEFA Champions League.”
Sponsorship revenue for the quarter was £45.1 million, an increase of £4.8 million over the prior year quarter, due to new deals, and United trumpeted their new global partnership with Mondelez International — the multinational group behind Cadbury, Oreo and belVita. But a second year out of the Champions League would bite in the summer with penalty clauses included in the club’s Adidas contract.
Selling players would be one way to make up the deficit and sanctioning a transfer for Paul Pogba could fund the signings of two players in one go. United put a £150 million price on Pogba’s head last summer but industry sources have told The Athletic the club may have to accept about £80 million given the way things have gone this season. It is to be seen if there are clubs willing to pay that.
