Manchester United’s financial stability is under intense scrutiny as cost-cutting measures loom at Old Trafford.
Recently, the club warned supporter groups that they risk breaching profit and sustainability rules (PSR). These rules allow top-flight teams to incur losses of up to £105million over a rolling three-year period.
Sir Jim Ratcliffe has led a determined drive to slash expenses, which has only heightened concerns among fans and stakeholders. Furthermore, the club’s recent letter has sparked fresh debates about its fiscal direction. Consequently, every cost-saving move now comes under close examination.
The club had anticipated adopting a new squad cost ratio (SCR) system next season. This system was being trialed alongside top-to-bottom anchoring rules (TBA) to tighten financial control. However, a legal challenge by Manchester City over associated party transaction (APT) rules means the PSR system remains for 2025–26.
A senior financial advisor explained that the SCR system would have benefited Manchester United. In theory, the SCR excludes interest payments from its calculations. Currently, PSR rules factor in interest on debt incurred from non-stadium and infrastructure spending. Moreover, the club carries over £700million in such debt.
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In theory, the SCR system would set a cap at 85 percent on first-team costs and amortisation. Then, revenue and profits from player sales would be incorporated into the equation. However, participation in European competitions could drop this cap to 70 percent. This may work for Champions League clubs that earn an extra £60–100million, yet it poses serious challenges for those in lower-tier competitions.
Flying the squad around Europe for roughly 15 games incurs significant costs. Therefore, a lower cap could further strain the club’s finances. In contrast, the SCR system’s exclusion of interest expenses would have favored United. Regrettably, they must continue with the current PSR system next season.
The club’s latest accounts for 2023–24 reveal a record revenue of £661.8million. However, they also reported a net loss of £113.2million. Without adjustments for exceptional costs, it is believed the club would have breached PSR rules last season.
This season, revenue might decline further as the club misses out on Champions League football. Furthermore, struggles in the Premier League add to the financial woes. A recent report indicated a potential £27million hit in prize money. Consequently, uncertainty looms as Manchester United battles mounting fiscal challenges. Fans should stay updated for more breaking news on the club’s financial journey.