United’s Super Massive Black Hole…Or is it?
Prudent financial management may just mean that all is not lost for Manchester United after losing the Europa League final.
Bilbao or Bust. Bust then. A new low. But did United budget for such a scenario. Sensible businesses plan for the worst case scenario and enable a best-case. I’ve previously talked at length on how winning the Europa League and qualifying for the ‘25/26 Champions League was an accelerant for change. But it was never a condition. Change will now come at a cost, as explained here , but can still happen. I believe the shortfalls of not being in Europe next season have already been budgeted for.
The bad news: declining revenue, potential £110mn hit
As we know, not winning the Europa League and qualifying for next season’s Champions League means a £100mn+ revenue growth opportunity has been squandered – c. £70mn prize money, £10mn reduction in adidas sponsorship deal and at least £20mn+ net gate receipts. But it’s actually worse than that, the loss means United’s revenue is set to decline for the first time since 2015 (excl. COVID, coincidentally the last time United didn’t qualify for Europe):
Commercial: At a minimum, sponsorship revenue could fall by £30mn. This includes the aforementioned £10mn decline in adidas sponsorship and expiration of the Tezos sponsorship deal (expiring at the end of the season). There could be further no Europe clauses in other deals (we don’t know this for certain).
Broadcasting/ Prize Money: No repeat of the Europa League should see a c. £30mn hit
Matchday: A potential £50mn hit. United will play 30 home matches by the end of the season. Next season that may only be 20 (19 Premier League games + 1 cup game, for instance). A 10 game reduction when United make c. £5mn net revenue per game is a sizeable £50mn hit.
This would take gross hits to revenue to £110mn. It could take commercial revenue back to pre-Covid levels of £290mn at a time where Liverpool has already taken over United on this front.
But costs will also fall, a potential £70mn benefit
There have been considerable reported cost cuts already. From limos to lunchboxes every fine detail of United’s cost base has been combed over in great detail:
Further cuts have been made which United will see the financial benefit of from next season – e.g. a further 200 redundancies, Sir Alex Ferguson & David Gill’s salaries.
£30mn of exceptional costs this year that should (stress should) not recur next year.
General opex savings and reduced running costs for the team (e.g. travel costs from non-European qualification).
For now, United can also operate with a smaller squad with more spaces open for youth prospects. I don’t mention the expiring contracts here (a c. £20mn impact) as this will be reinvested back into the Men’s first team. All in all, I can see scope for approximately £70mn+ in general savings.
Budgeting decisions already made can help offset the shortfall, another £40mn benefit
United’s reported target league position for next year is 6th. That feels like a lofty ambition given the team are likely to finish in 16th/17th this season. But financially it’s important. Even if United finished 10th next season, it would equate to a c. £20mn uplift in Premier League prize money. Finishing 6th would be a £30mn uplift. The unpopular season ticket price increases will also help bridge the gap, a further £15mn uplift.
So what does this all mean?
We might just be about to see the impact of prudent financial planning at Manchester United:
Gross reduction of revenue: c. £110mn, (commercial, no Europe, matchday revenue).
Offset by c.£40mn year on year benefits: season ticket price increases and improved league position.
Net revenue reduction of c. £70mn
Cost reductions of about the same
Beyond the £100mn PSR budget from expiring contracts new buys to be funded from sales (as always, in the absence of any external funding).
There will be further galling financial news for the club, they will likely move out of the Top 4 revenue generating clubs next season. In Europe, they may even fall out of the Top 10, a far cry from the previously perennial slugfest with Real Madrid. Now, can the new leadership team deliver on what they were brought on for…