Man United’s vicious cycle of growing debt weighing club down – The Athletic | OneFootball

Manchester United’s financial woes have been well-publicised lately and are constantly in the media glare as the biggest club in England.

Ineos have taken a lot of flak since they have come in as new owners due to their cost-cutting measures that have seen ticket prices rise and significant job losses as just some of the unpopular decisions taken.

Owner Sir Jim Ratcliffe recently gave an interview where he delved into the reasons why and stated that the club is in such a financially dire place, such harsh measures were unavoidable if the club was to have a successful future on and off the pitch.

This has resulted in fan anger. Groups like The 1958 have already held large-scale protests before games and are currently planning action with FC United of Manchester fans to express how irked they are by current events at the club.

But just how bad is the situation at Old Trafford? The crux of the issue is that the Glazers’ used a leveraged buyout to take over the club in 2005 and United have been paying the price ever since.

The Athletic have taken a deep dive into what the current financial problems at the club are and the key issue here is debt.

When a lot of football clubs are bought, the new owner pays for it, but the Glazers have effectively anchored the club with debt it never had before they decided to purchase the famous old football club.

Another big issue is that in the decade since Sir Alex Ferguson retired, they have been spending like a Champions League club even though they have only made the competition in five out of those 11 years.

As The Athletic put it, “it’s a sign of the largesse and wastage at Old Trafford in recent years that the world’s fourth-highest-earning football club is worrying again about PSR.”

The club look on course to survive English demands but UEFA’s financial restrictions are harder to comply with.

“To compete in European competition, United must comply with a couple of different rules, principally ones surrounding squad costs and, again, loss limits. While we project United’s squad cost ratio will land at around 63 per cent this season, well below the 80 per cent limit, the losses side looks rather tighter.”

Another issue the club must face is not only that the club’s domestic prize money has lagged due to poor performances but “the real gulf has come abroad.”

“To the end of last season, United earned €504m from their campaigns in the Champions League and the Europa League over the previous decade. By contrast, Manchester City earned €904m, while both Liverpool and Chelsea out-earned United on the European stage. In all, 10 clubs earned more from UEFA competitions over that period.”

“Even if United win the Europa League this season, the club’s prize money would fail to hit £40m”. Therefore, the real prize of Ruben Amorim’s side winning the Europa League would be the qualification for Champions League football next year. To compare, Liverpool, despite exiting the Champions League this year in the last 16, will earn £47.3million, more than United would if they go on to win the Europa League.

Nonetheless, the real issue at the club is debt.

“One of the conditions of Ratcliffe’s share purchase was him injecting £238.5m in shares to boost club coffers in his first year.”

Nonetheless, this has basically made no dent in the debt at all due to the high interest payments the club must pay every year.

“Financing that debt continues to hit United’s pocket, with net interest payments of £35.5m last season and a further £17m paid out in the first six months of 2024-25. Those amounts look pretty minimal compared to the whopping transfer spend, but that makes them no less impactful on the day-to-day.”

United are not the only club in big debt, Tottenham Hotspur and Everton have incurred huge debts but with the purpose of building brand-new stadiums that have and will start in the Toffees’ case, generating large sums of money for the club.

The Red Devils in contrast, gain nothing from it. “United have almost nothing to show for the continued cost of funding debt that only appeared on their books to enable the Glazer family’s takeover.”

As things currently stand, “to the end of December 2024, 19 and a half years of their ownership has cost United £835.0m in cash interest payments, £169.7m in dividends (£128.7m of which went to the Glazers), at least £27.4m in management and consultancy fees and £24.6m in net loan repayments.”

Ratcliffe, to his credit, has been the first person to put their own money into the club but it has barely made a dent in the debt due to huge interest payments and shoddy decisions like the firing of Erik ten Hag only a few months after giving him an extension or sacking Dan Ashworth just after paying a rather large compensation to get him out of Newcastle.

With a brand-new stadium on the horizon and debts increasing, it has become even more imperative that the club starts turning around its fortunes on the pitch and fast.

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