How bad is it, really? (Financial thread)

[Charlie Foley]

Only just found out. Inter have made two CL finals in the last three years, while making a €100m PROFIT in the transfer market.

We gave half of them that profit with the Onana transfer (€50.2m a year after they got him on a free)

 

[the hea]

Do we know when our financial obligations will be completed for the players that ETH brought and we are still paying their transfer fees for?

Specifics like that are not disclosed but at the end of the last reported quarter (31 December 2024) we owed £136m in transfer fees to other clubs.

 

[roseguy64]

 

[RedCoffee]

At the end of the day the club is valued at £4bn and the debt is valued at £1bn. There's plenty of wealth in this club if it financials are structured properly. If it runs into trouble then some form of financial restructuring will solve any problems so we shouldn't worry too much.
Our key shareholders are worth £10bn (Glazers) and £20bn (Ratcliffe).

 

[maximus419]

At the end of the day the club is valued at £4bn and the debt is valued at £1bn. There's plenty of wealth in this club if it financials are structured properly. If it runs into trouble then some form of financial restructuring will solve any problems so we shouldn't worry too much.
Our key shareholders are worth £10bn (Glazers) and £20bn (Ratcliffe).

Unfortunately value and debt don't work like that. Utd's value has plummeted a lot over the last 12 months, a club that was valued around 6 billion a couple of years back has lost 2 billion of worth in a small space of time due to failures on the pitch and rising debt.

Restructuring that debt when the value has been reduced means borrowing against a depreciating asset means higher debt interest. Unless the Glazer family or Ratcliffe (Ineos) were to put their own money into the club, either reducing the debt or contributing towards other financial needs, the club are basically operating under austerity style economics. Hence the many job redundancies and other cost cutting measures.

The Glazer's nor Ratcliffe have the type of available cash to inject into the club, if they did, they probably would, because even they don't want to see the clubs value continue to drop. However the lack of any injection of cash proves they can't. In short, Utd are in a lot of trouble, if they fail to get things right next season, well it's game over.

 

[Von Mistelroum]

This is the thing that's likely to kill United as a top level club. While Radcliffe is trying to arrange a shiny new stadium to play in, we're in huge financial debt and are struggling on and off the pitch where a club like Chelsea or Barca would find a solution.

Maybe the incentive isn't there for the Glazers and their good chum Ratcliffe as they wouldn't benefit financially from finding a solution but it's hard to believe that we're the one club who can only sell on our captain, best player and talisman in order to have a reasonable transfer budget.

I really worry for United next season and Ratcliffe needs to be held accountable for whatever happens along with his buddies.

 

[U.N.C.L.E]

United isn’t a football club.

They’re a merchandising brand.

The antics on the pitch are secondary nowadays.

 

[For My Sins]

This is the thing that's likely to kill United as a top level club. While Radcliffe is trying to arrange a shiny new stadium to play in, we're in huge financial debt and are struggling on and off the pitch where a club like Chelsea or Barca would find a solution.

Maybe the incentive isn't there for the Glazers and their good chum Ratcliffe as they wouldn't benefit financially from finding a solution but it's hard to believe that we're the one club who can only sell on our captain, best player and talisman in order to have a reasonable transfer budget.

I really worry for United next season and Ratcliffe needs to be held accountable for whatever happens along with his buddies.

1st Para - Chelsea seem to be gaming the system successfully so as to manage their finances (also made some canny transfer sales), but Barca are in an even worse financial position than MU - absolutely dire, in fact. Basically they've sold off, mortgaged or pawned just about everything they can in the effort to keep up with Real, PSG and the English clubs. (It's why they were desperate to get the European Super League going, may they and it rot in hell).

As for the Glazers or Ratcliffe putting in money, they can do so for infrastructure, womens team and Academy etc, but spending on transfers, wages and agents' fees are subject to a cap, which they're already likely pushing. While under pressure from UEFA, the PL is bringing in new rules which restrict this spending to a percentage of revenue generated. Now fair enough, MU still generate huge revenues, but much of this is presumably taken up by debt servicing, which will probably continue to rise, at least without European football, plus low PL prize money for finishing 15th etc.

 

[TheLord]

Unfortunately value and debt don't work like that. Utd's value has plummeted a lot over the last 12 months, a club that was valued around 6 billion a couple of years back has lost 2 billion of worth in a small space of time due to failures on the pitch and rising debt.

Restructuring that debt when the value has been reduced means borrowing against a depreciating asset means higher debt interest. Unless the Glazer family or Ratcliffe (Ineos) were to put their own money into the club, either reducing the debt or contributing towards other financial needs, the club are basically operating under austerity style economics. Hence the many job redundancies and other cost cutting measures.

The Glazer's nor Ratcliffe have the type of available cash to inject into the club, if they did, they probably would, because even they don't want to see the clubs value continue to drop. However the lack of any injection of cash proves they can't. In short, Utd are in a lot of trouble, if they fail to get things right next season, well it's game over.

What exactly is "game over"?

 

[Sir Erik ten Hag]

1st Para - Chelsea seem to be gaming the system successfully so as to manage their finances (also made some canny transfer sales), but Barca are in an even worse financial position than MU - absolutely dire, in fact. Basically they've sold off, mortgaged or pawned just about everything they can in the effort to keep up with Real, PSG and the English clubs. (It's why they were desperate to get the European Super League going, may they and it rot in hell).

As for the Glazers or Ratcliffe putting in money, they can do so for infrastructure, womens team and Academy etc, but spending on transfers, wages and agents' fees are subject to a cap, which they're already likely pushing. While under pressure from UEFA, the PL is bringing in new rules which restrict this spending to a percentage of revenue generated. Now fair enough, MU still generate huge revenues, but much of this is presumably taken up by debt servicing, which will probably continue to rise, at least without European football, plus low PL prize money for finishing 15th etc.

Barca being in a worse position than United is laughable. You see how successful they are on the pitch without the need for megabucks signing? Because their academy is too good.

 

[maximus419]

What exactly is "game over"?

In terms of the ownership of the club, if the team continue to struggle and we see another bottom end of the table finish, Ineos and Glazer's will likely have to sell up.

The debt is unsustainable, big sell offs are inevitable and fans will make sure it's over for them IMO.

 

[RedSince82]

I feel sorry for fans nowdays in a PSR and money driven world where the size of your bank account is the main driver as to where a team finsihes in the league. Fans are not accountants. But are expected to understand corporate finance to know whether they can afford a player this summer.

I work in finance so can see through the tosh the journo's print.

United is the 4th richest club in the world and 2nd richest in England regardless of poor performance.

The issues faced right now are short term and INEOS are dealing with things in the right way. 1) getting rid of over paid, underperforming players 2) reducing staff levels...much higher compared to a similar sized club 3) cutting wasteful day to day expenditure 4) getting good value in the transfer market.

Its the equivalent of someone on a million pound a year salary saying they are always skint and in debt. They sold their maclaren and bought a bmw. Downsized their country mansion to a 5 bed detached house. Stopped shopping at Harrods and started at waitrose. To any normal person they are still unimaginably wealthy. Same principle with United. The income is so high, that if you reduce the spending on running costs, there is still an enormous amount left over to spend on players.

Weve spent/spending 120m on cunha and mbuemo plus a likely further 60m on gyokeres. Fans of other clubs are frothing at the mouth because theyve been told for 12 months by financially illiterate journalists that United are skint.

We are not skint. This is still the biggest club in England and at present the 3rd biggest in the world.

 

[Andycoleno9]

Berrada said (i think) that we have "plan A" and "plan B".
Our plan B so far is Cunha, Mbuemo and striker. All of them for big fees.

My question is; what the hell was our plan A then? Vinicius, Wirtz and Isak?

 

[ShinjiNinja26]

Berrada said (i think) that we have "plan A" and "plan B".
Our plan B so far is Cunha, Mbuemo and striker. All of them for big fees.

My question is; what the hell was our plan A then? Vinicius, Wirtz and Isak?

I think plan A wouldn’t have been that different in terms of who we were targeting but more the number of positions we could strengthen in one window. We’d have still went for Cunha and Mbuemo and probably went all out for Gyokeres, but we’d also have looked to sign a new GK, midfielder and wing backs all in one window which were unlikely to do now. Maybe we’d have went for a bit of a luxury signing in Cherki as well.

 

[Ish]

Berrada said (i think) that we have "plan A" and "plan B".
Our plan B so far is Cunha, Mbuemo and striker. All of them for big fees.

My question is; what the hell was our plan A then? Vinicius, Wirtz and Isak?

How is Cunha plan b if his transfer was basically sorted out before the Europa final (and not contingent on the outcome)?

 

[Cassidy]

Berrada said (i think) that we have "plan A" and "plan B".
Our plan B so far is Cunha, Mbuemo and striker. All of them for big fees.

My question is; what the hell was our plan A then? Vinicius, Wirtz and Isak?

Plan b is more than likely alot of the same players but just less done this window

 

[Giggsyking]

 

[Giggsyking]

 

[sparx99]

Unfortunately value and debt don't work like that. Utd's value has plummeted a lot over the last 12 months, a club that was valued around 6 billion a couple of years back has lost 2 billion of worth in a small space of time due to failures on the pitch and rising debt.

Restructuring that debt when the value has been reduced means borrowing against a depreciating asset means higher debt interest. Unless the Glazer family or Ratcliffe (Ineos) were to put their own money into the club, either reducing the debt or contributing towards other financial needs, the club are basically operating under austerity style economics. Hence the many job redundancies and other cost cutting measures.

The Glazer's nor Ratcliffe have the type of available cash to inject into the club, if they did, they probably would, because even they don't want to see the clubs value continue to drop. However the lack of any injection of cash proves they can't. In short, Utd are in a lot of trouble, if they fail to get things right next season, well it's game over.

The club hasn’t lost any of its value. Forbes valued us at $6.6bn this year and the previous year it was $6.2bn.

 

[bb8]

Not bad. We're going to spend £100M - 150M net in transfers this summer, just as we always do. The amount of alarmism with our finances is really silly, and just shows the poor accounting knowledge the football journalists (and fans) have for the most part.

 

[Insanity]

I hate the term "pure profit". It makes no sense. What's "impure profit"? Profit is profit whether it comes from selling an academy player or selling a player we bought for profit.

 

[Big Ron’s Coat]

I hate the term "pure profit". It makes no sense. What's "impure profit"? Profit is profit whether it comes from selling an academy player or selling a player we bought for profit.

That’s all to do with PSR. No one used the term in reference to player sales before it came about.

 

[Klean]

I hate the term "pure profit". It makes no sense. What's "impure profit"? Profit is profit whether it comes from selling an academy player or selling a player we bought for profit.

When I have seen this term used its used in regards to an academy player. So an academy player sales goes straight into the profit because there was no cost to acquire, whereas a player that was purchased will have a book value (like an asset for a company) that will be amortized across the length of their contract. If the sale price is less than the book value then the player is sold at a "loss."

 

[Insanity]

That’s all to do with PSR. No one used the term in reference to player sales before it came about.

Yup.

When I have seen this term used its used in regards to an academy player. So an academy player sales goes straight into the profit because there was no cost to acquire, whereas a player that was purchased will have a book value (like an asset for a company) that will be amortized across the length of their contract. If the sale price is less than the book value then the player is sold at a "loss."

Yeah, I get it. It's for academy players or anyone with their amortization taken care of in the books. For example: Shaw will be "pure profit" if we were to sell him now. However, if we sell 'Arry for 20m in this window, anything over his amortization value is also "Pure profit"...or simply profit.

It's my minor petulance. Anything is either profit or loss. 'Pure profit' as a term doesn't make much sense.

 

[Scampi]

Yup.

Yeah, I get it. It's for academy players or anyone with their amortization taken care of in the books. For example: Shaw will be "pure profit" if we were to sell him now. However, if we sell 'Arry for 20m in this window, anything over his amortization value is also "Pure profit"...or simply profit.

It's my minor petulance. Anything is either profit or loss. 'Pure profit' as a term doesn't make much sense.

It’s because it’s describing the income, not the profit itself.The income is pure profit because there are no costs to offset against it.

I don’t post often, but semantics and accounting did it for me this morning

 

[justsomebloke]

Not bad. We're going to spend £100M - 150M net in transfers this summer, just as we always do. The amount of alarmism with our finances is really silly, and just shows the poor accounting knowledge the football journalists (and fans) have for the most part.

Except that our ownership have themselves been doing a good deal of messaging to that effect. It's been said over and over, by Amorim and others, that there's not going to be much money and that we're going to have to sell to buy, because of PSR. Until that was suddenly no longer the case.

 

[Beachryan]

For me to have faith in INEOS and the 'cultural reset' it will come down to 3 things:
1. Can we sell players for a decent fee, like literally every club except us
2. Can we bring in players without the United tax, and stop over-paying because of our name
3. Will new players that come in fit into the new, hopefully very improved wage structure, or will we still use wages to get deals over the line

It's not complicated. We've been both the worst buying and selling club in recent years, and that is why we're in trouble. Fix that, and our revenues can sustain us being a top 4 club indefinitely.

 

[Insanity]

It’s because it’s describing the income, not the profit itself.The income is pure profit because there are no costs to offset against it.

I don’t post often, but semantics and accounting did it for me this morning

Any income from the sale of player who value has already been amortized or we selling them over the remaining amortization is the same. All that additional income is profit too, "pure profit".

In reality, there is a cost associated with running the academy too. Some of the players like Mejbri cost money to acquire. However, the FFP/PSR rules are such that any capital investment or academy expenditure isn't counted towards their calculations. Chelsea have been using the system to their advantage for years.

 

[tomaldinho1]

For me to have faith in INEOS and the 'cultural reset' it will come down to 3 things:
1. Can we sell players for a decent fee, like literally every club except us
2. Can we bring in players without the United tax, and stop over-paying because of our name
3. Will new players that come in fit into the new, hopefully very improved wage structure, or will we still use wages to get deals over the line

It's not complicated. We've been both the worst buying and selling club in recent years, and that is why we're in trouble. Fix that, and our revenues can sustain us being a top 4 club indefinitely.

2. seems already to have happened somewhat? Yoro is the sole signing who sticks out (18 years old, £52m with £6.7m add ons) but we're paying for the potential + it seems a solid investment if he can stay fit.
3. Has been in place since latter Murtough days from what we know, they put a cap in and moved to the Pool style of heavily incentivised contracts. Issue we have is now no one knows what they look like and the scrapers (capology) are so far off given how they function it's almost pointless to use them.

1. Is the key, though, they are hamstrung a bit by some of these guys wages but if we can get Rashford out for £40m, Sancho for let's say £25 (amazing how far his stock has fallen) and Antony for similar, I think there's a decent bit of hope there. As much as it's controversial, if they had manoeuvred Bruno into leaving for £100m I think it would be hard to not give them a tip of the hat in terms of doing what we never seem to do, and moving older players on for the best fee even if it seems a tough decision.

 

[AneRu]

For me to have faith in INEOS and the 'cultural reset' it will come down to 3 things:
1. Can we sell players for a decent fee, like literally every club except us
2. Can we bring in players without the United tax, and stop over-paying because of our name
3. Will new players that come in fit into the new, hopefully very improved wage structure, or will we still use wages to get deals over the line

It's not complicated. We've been both the worst buying and selling club in recent years, and that is why we're in trouble. Fix that, and our revenues can sustain us being a top 4 club indefinitely.

I think you guys are looking at it from the wrong perspective, the fees and the wages only matter when you invest them in the wrong signings who dont deliver on the pitch. When done right, it works a treat. To me its not the fees or the wages, it's the scouting and our prioritisation.

We had a fairly good window in 2021 when we signed Sancho and Varane. We then neglected the midfield and the team collapsed as a result. Now imagine if we had done the necessary due dilligence on Sancho and worked out that he preferred the left, where Rashford played, isn't quick enough for the league and has attitude issues then spent money on a better fit who could consistently deliver 20 g+a!

The club has at its disposal the resources to bring in the brains that can do these assessments and get better value for money especially on signings over £50m. What's needed is a rigorous selection process to ensure that we get a better hit rate for our big money signings not to avoid bid money signings. Are Chelsea and Arsenal regretting the decisions to spend £100m on Rice and Caicedo?

 

[AneRu]

2. seems already to have happened somewhat? Yoro is the sole signing who sticks out (18 years old, £52m with £6.7m add ons) but we're paying for the potential + it seems a solid investment if he can stay fit.
3. Has been in place since latter Murtough days from what we know, they put a cap in and moved to the Pool style of heavily incentivised contracts. Issue we have is now no one knows what they look like and the scrapers (capology) are so far off given how they function it's almost pointless to use them.

1. Is the key, though, they are hamstrung a bit by some of these guys wages but if we can get Rashford out for £40m, Sancho for let's say £25 (amazing how far his stock has fallen) and Antony for similar, I think there's a decent bit of hope there. As much as it's controversial, if they had manoeuvred Bruno into leaving for £100m I think it would be hard to not give them a tip of the hat in terms of doing what we never seem to do, and moving older players on for the best fee even if it seems a tough decision.

This is not happening

 

[justsomebloke]

I think you guys are looking at it from the wrong perspective, the fees and the wages only matter when you invest them in the wrong signings who dont deliver on the pitch. When done right, it works a treat. To me its not the fees or the wages, it's the scouting and our prioritisation.

We had a fairly good window in 2021 when we signed Sancho and Varane. We then neglected the midfield and the team collapsed as a result. Now imagine if we had done the necessary due dilligence on Sancho and worked out that he preferred the left, where Rashford played, isn't quick enough for the league and has attitude issues then spent money on a better fit who could consistently deliver 20 g+a!

The club has at its disposal the resources to bring in the brains that can do these assessments and get better value for money especially on signings over £50m. What's needed is a rigorous selection process to ensure that we get a better hit rate for our big money signings not to avoid bid money signings. Are Chelsea and Arsenal regretting the decisions to spend £100m on Rice and Caicedo?

"We had a fairly good window in 21"? Sancho, Ronaldo and Varane for about 130 million and around 50 m p/a wages? That's pretty much the best example I can think of of a disaster of a window. Agree with your general point though.

 

[tomaldinho1]

This is not happening

Let's see - ineos real test re selling overpaid players.
Also - summer window of '21 was the worst window we've ever had apart from Alexis.

 

[AneRu]

"We had a fairly good window in 21"? Sancho, Ronaldo and Varane for about 130 million and around 50 m p/a wages? That's pretty much the best example I can think of of a disaster of a window.

It became a disaster the moment we became emotional over Ronnie going to City. What I meant was financially it was feasible and addressing the areas we felt we needed to address but because we didn't do due diligence on Sancho it became a disaster. Get the Sancho decision right and we go on to challenge or just get CL football.

The Sancho example is meant to address the issue of making sure before lunging into a big money transfer. The Ronaldo issue is about priorities, we should have gone for a CM but went for CR7 for sentimental reasons and belief that he could propel us with his goals alone. He did score goals but the league was too fast for him.

Do things differently, not necessarily spending less money but making better decisions on who to invest in is what's more important. Before the benefit of hindsight, the 21 window looked good that's why I said we had a fairly good window not how it turned out in reality. We all thought we had done some good business then.

 

[AneRu]

Let's see - ineos real test re selling overpaid players.
Also - summer window of '21 was the worst window we've ever had apart from Alexis.

Thats the benefit of hindsight but in August 21 no one judged that window a disaster.

 

[Hammondo]

Let's see - ineos real test re selling overpaid players.
Also - summer window of '21 was the worst window we've ever had apart from Alexis.

Selling overpaid players at the amount we are overpaying them would take a miracle.

 

[MaMa given red]

I hate the term "pure profit". It makes no sense. What's "impure profit"? Profit is profit whether it comes from selling an academy player or selling a player we bought for profit.

I've never understood why they don't just say one hundred per cent profit instead!

 

[tomaldinho1]

Thats the benefit of hindsight but in August 21 no one judged that window a disaster.

Ah right, most windows are like that then.

 

[tomaldinho1]

Selling overpaid players at the amount we are overpaying them would take a miracle.

What does this mean? As in selling them for the calculation of the remainder of their contract?

 

[Hammondo]

What does this mean? As in selling them for the calculation of the remainder of their contract?

I mean selling any of these players on the wages they are on, is very difficult. No one wants them for close to the wages they are on, and at least some of them could just wait out their contract to earn money, then sign for free to a new club with high wages.