In May 2018 Ed Woodward said, “Playing performance doesn’t really have a meaningful impact on what we can do on the commercial side of the business.” But how correct is the Man United vice chairman?
Football clubs generate income from three sources: matchday, commercial and broadcasting.
In 2018/19 the Red Devils, they generated £111 million from matchday revenue. Although this is impressive compared to other Premier League clubs, it is in fact lass than 2017 and only a growth of £2 million from when Sir Alex Ferguson retired in 2013.
Historically, the Red Devils have been the strongest commercially. They do this through selling their image rights to partners in different countries. In 2018/19, they generated £275 million, the same as 2017 and a considerable increase from the £152 million in Ferguson’s last campaign. However, it is little growth from 2016 (£268 million) which suggests maybe the lack of silverware count be stunting commercial growth as companies prefer to associate themselves with success.
Broadcast revenue increased by £37 million (from £204 million to £241 million) from 2017/18 to 2018/19. This was mainly due to the new Champions League deal starting. In 2016/17, Man United won the Europa League which meant they pocketed £38 million whilst two years later they got £83 million for getting to the quarterfinals of the Champions League.
Their lead over top six clubs has decreased drastically in recent years. In 2016/17, they earnt £217 million more than Liverpool, the following year that had dropped by £82 million. If Liverpool continue their success on the pitch, the Reds may overtake United within a year.
The 13-time Premier League winners also have to think about their costs. Their main outlay is in player wages. Despite having less trophy and win bonuses, their wage bill increased by £36 million from 2017/18 to 2019/20. Since Ferguson’s retirement in 2013, the wage bill has increased by £151 million, just over £83 million. This leaves Man United’s average weekly wage at around £160 thousand.
Due to their huge income generated, they can afford to pay these wages. For every £100 of income, £53 is spent on wages.
Transfer amortisation is the cost of the transfer fee spread over the length of their contract. When Pogba rejoined the club in 2016, he set the club back £89.3 million and signed a five-year contract. This meant his annual amortisation is £17.86 million. In Ferguson’s last year the annual amortisation was £42 million, by 2017/18 this had risen to £138 million. This emphasises the club’s desire to get back to the top of English and European football by spending huge sums of money on players.
When Liverpool and Tottenham contested the Champions League final in 2018/19, their annual amortisation that season was less than Man United’s. This along with high profile failings have brought the club’s recruitment into question.
It cost the club £19.6 million to sack Mourinho and his staff. This brought the total cost of getting rid of managers to over £40 million since 2013.
Although the club have made profit (£50 million) in 2018/19, that is still £12 million less than 2012/13. However, this is before the club have paid back their debt.
In 2005, the Glazers bought the club for £790 million. Lenders were wary of their ability to pay back money which saw some interest rates exceed 16%. This leaves the club’s outstanding loan at over £500 million and they pay it off £450,000 a week. Due to the interest, the club’s cumulative interest cost has recently reached over £800 million, more than what the Glazer’s bought the club for.
In recent years, the club’s growth in sponsorship deal values has reduced drastically. This is potentially due to the lack of trophies and on the field success.
This evidence suggests that Ed Woodward is wrong and the struggles on the pitch do affect the club’s commercial revenue and finances. This would have the owners and shareholders worried.
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