Manchester United’s recently announced financial results make for dismal reading and a massive increase in the wage bill will make recovery difficult.
As announced yesterday and reported here, United recorded a net loss of £92.2 million in the financial year ending on June 30th.
The operating loss was £36.9 million.
The Athletic notes that ‘Revenue dipped — to £494.1 million — following a full season played during the pandemic, with the club playing 33 home matches across all competitions behind closed doors.
‘The club’s net debt was meanwhile down from £474.1 million to £419.5 million year on year, largely because of increased cash from season ticket revenues and favourable exchange rates.
‘United’s wage bill also increased by 13.6 per cent to £322.6 million. Players benefited from the club qualifying for the Champions League, while in August United committed to paying all employees at the club above the real living wage.’
This last issue is set to get considerably worse, as The Telegraph’s James Ducker reports, following the summer signings of Cristiano Ronaldo, Raphael Varane and Jadon Sancho.
‘The huge costs involved in signing Cristiano Ronaldo, Raphael Varane and Jadon Sancho have been laid bare with the trio expected to add another £65 million to Manchester United’s wage bill this season,’ Ducker reports.
‘It means wages now account for a record-high 65 per cent of turnover [whereas] United have traditionally worked towards a wage/turnover ratio of 50 per cent.’
Ducker claims that Ronaldo’s overall package at United is ‘worth more than the £560,000 a week Alexis Sanchez stood to earn during his ill-fated spell at Old Trafford’ and that ‘France defender Varane – who signed from Real Madrid for an initial £34.2m – has a four-year contract worth around £400,000 a week.’
It should be noted that these figures are not simple salary figures and include bonuses and commercial endorsements. Varane’s salary is £340,000 per week, Sancho’s is £350,000 and Ronaldo’s is £510,000 per week, according to Spotrac.com.
Spotrac’s figures tie in with chief financial officer Cliff Baty’s comment yesterday that United were ‘forecasting a wage increase of “around 20 per cent” for this season, which totals a similar figure.
The 65% of turnover figure is a massive increase on previous seasons, which in the post-Sir Alex Ferguson era have ranged between 45 and 56%.
Such an expensively assembled squad puts immense pressure on manager Ole Gunnar Solskjaer to deliver silverware this season and make a genuine challenge for the Premier League and Champions League.
Europe is especially wide open this time around with the likes of Juventus, Barcelona and Real Madrid posting even more horrific losses than United and struggling to keep up with the Premier League big guns in the summer transfer window.