Manchester United’s Financial Woes: A Closer Look at the Cost of Change
Manchester United, a club with a storied history and a global fanbase, has recently found itself in the spotlight for reasons that are far from celebratory. The club’s latest financial disclosures have revealed a hefty compensation bill of £14.5 million ($18.2m) paid to Erik ten Hag, his coaching team, and former sporting director Dan Ashworth. This financial burden comes in the wake of Ten Hag’s dismissal as manager in October, a decision that has sparked much debate among fans and analysts alike.
Ten Hag’s departure came just four months after he had signed a new contract at Old Trafford. This contract extension followed an FA Cup Final win against Manchester City in May, a victory that secured Europa League qualification for United. However, this success was overshadowed by the team’s disappointing eighth-place finish in the Premier League, marking their worst-ever performance in the league.
Dan Ashworth, who had joined United as sporting director, also left his position in December after just five months. His arrival at the club was not without its own financial implications, as United had to reach a settlement with his former team, Newcastle United, that reportedly ran into millions of pounds.
The Financial Impact of Contract Decisions
The decision to extend Ten Hag’s contract until June 2026, rather than allowing his existing deal to run its course, has proven costly. The financial figures released as part of the second quarter fiscal period accounts submitted to the New York Stock Exchange (NYSE) highlight this expense. The severance packages for Ten Hag and Ashworth were categorized under ‘Exceptional Items,’ with the club stating, “Exceptional items for the quarter were a cost of £14.5m. This relates to costs associated with the departure of former men’s first team manager Erik ten Hag and various members of football staff.”
In addition to these costs, United has embarked on a series of cost-cutting measures, including over 200 redundancies, since Sir Jim Ratcliffe’s INEOS group completed a minority share purchase of 27.7% on February 20 last year. More cuts are expected, and the financial figures underscore the importance of Champions League football to United. The club is unlikely to compete in this prestigious competition next season unless Ruben Amorim’s team wins the Europa League.
Broadcasting Revenue and Financial Challenges
While commercial revenue saw a modest increase of £3.8m to £43m year-on-year, thanks to a new shirt sponsorship deal with Qualcomm, broadcasting revenue took a significant hit. It plunged by 42.1% to £61.6m due to United’s participation in the Europa League rather than the Champions League this season. Additionally, net finance costs rose dramatically from £300,000 to £37.6m, a jump attributed to “an unfavourable swing in foreign exchange rates resulting in unrealised foreign exchange losses on unhedged USD borrowings in the current year quarter, compared to a favorable swing in the prior year quarter.”
Despite these financial challenges, United’s chief executive Omar Berrada remains focused on improving the men’s team’s league position. The team currently sits in fifteenth position, just three places above the Premier League relegation zone, as they prepare to face Everton on Saturday.
Looking Ahead: Challenges and Opportunities
Berrada expressed optimism about the club’s progress in other competitions, stating, “We recognise the challenges in improving our men’s team’s league position and we are all working hard, collectively, to achieve that. At the same time, we are pleased to have progressed to the knock-out phase of the UEFA Europa League and the fifth Round of the FA Cup.” He also highlighted the success of the women’s team, which is currently placed second in the Women’s Super League and has reached the quarterfinals of the FA Cup.
United’s redevelopment of the Carrington Training Complex remains on track, and the club continues to work towards a decision on the future of Old Trafford as part of a wider regeneration programme. This initiative has now attracted UK Government support, following the efforts of the Old Trafford Regeneration Task Force in demonstrating the significant economic potential of a revitalised area around a future stadium project.
Fan Reactions and Ticket Price Concerns
The Manchester United Supporters Trust (MUST) has voiced concerns over the club’s financial strategy, particularly the recent decision to make all tickets £66. MUST claims that this move would raise just £2m in revenue and argues that “Fans should not pay the price for a problem that starts with our crippling debt interest payments and is exacerbated by a decade or more of mismanagement.” The statement calls for a freeze on ticket prices, urging everyone involved with the club to unite in restoring United to its former glory.
Originally Written by: Mark Ogden
