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Manchester United are finding themselves in an increasingly precarious financial position.
While the January transfer window is open, the club has been unable to finalise any significant signings due to a lack of readily available funds and the need to comply with regulations.
At first glance, United’s financial situation appears promising but the problem is far worse than we thought, as explained brilliantly by The Athletic’s Mark Critchley.
The club’s accounts from September reveal a healthy bank balance of £149.6m, its highest since the Covid-19 pandemic.
This was bolstered further in December by a £79m injection from minority owner Sir Jim Ratcliffe, part of a £300m commitment tied to his 28.9% ownership stake.
Despite these figures, the cash has either been borrowed or allocated for infrastructure projects, leaving little flexibility for player acquisitions.
United’s cash reserves have largely come from loans or Ratcliffe’s investment, which is primarily earmarked for much-needed upgrades to Old Trafford and the Carrington training ground.
Additionally, the club is burdened by £319m in outstanding transfer fee instalments, £154m of which is due within a year.
This reliance on deferred payments for player transfers has been a long-standing issue under the Glazers’ ownership.
“They’re living a Champions League lifestyle on Europa League income,” says football finance expert Kieran Maguire. With five consecutive years of operating losses, United have struggled to balance their books.
United’s £74m cash balance at the end of last season was insufficient for summer transfers, prompting a £200m drawdown from their £300m credit facility.
This revolving credit, akin to a credit card, enabled £219m in spending on players such as Matthijs de Ligt and Manuel Ugarte, balanced partially by the sales of Mason Greenwood, Scott McTominay, and Aaron Wan-Bissaka.
Cash reserves fell from £308m in 2019 to £52m in 2020. Compounding the issue, the Glazers continued to extract dividends, totalling £166m over the past decade, while interest payments on their leveraged buyout have reached £790m since 2005.
Despite these challenges, United has spent a net £1.3 billion on transfers over the last decade without achieving sustained success, particularly in the Champions League.
Cost-cutting and player sales have emerged as immediate solutions. High earners like Marcus Rashford and Casemiro, as well as promising academy players Alejandro Garnacho and Kobbie Mainoo, have been linked with exits.
Selling academy-trained players offers near-pure profit in accounting terms, providing a short-term financial boost.
Ultimately, United’s failure to align its spending with on-pitch success has created a precarious financial situation. While there are measures in place to stabilize finances, the club’s days of unchecked spending may be over as it faces the reality of its financial constraints.
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