A football finance analyst suggests that Manchester United was on the brink of violating the Premier League’s Profit and Sustainability Rules (PSR) last season but succeeded in meeting the league’s constraints due to two ‘exceptional allowances.’
Last season, Everton faced penalties from the Premier League for breaching financial regulations, resulting in an eight-point deduction due to two separate violations. Nottingham Forest also received a four-point penalty for acknowledging a rule infringement.
The PSR has created turmoil within the English top tier, compelling clubs to devise innovative strategies to adhere to the regulations.
Essentially, the regulations mandate that clubs report only a specified amount of losses across a three-year timeframe, concluding June 30. Clubs are prohibited from exceeding losses of £105 million over this three-year period, which breaks down to £35 million annually.
In contrast, Manchester United has experienced significant changes over the past year. The introduction of new minority owner Sir Jim Ratcliffe and INEOS has prompted adjustments at Old Trafford, affecting operations from the board level to matchday personnel.
Following INEOS’ substantial £1.3 billion investment in the club, United has been active in the transfer market, acquiring both Leny Yoro and Joshua Zirkzee this summer, with the total expenditure nearing £86 million for the duo.
United is also in the midst of a £50 million refurbishment of their training ground, along with discussions about potentially building a new 100,000-seat stadium.
However, according to finance expert Stefan Borson, United was nearly in violation of PSR last season.
‘United is a fascinating case because we have access to considerable information due to their quarterly report in the US, revealing a projected top line of £660 million and an EBITDA of about £140 million,’ Borson stated on talkSPORT.
‘These figures also provide insights into their costs. The bottom line is that when assessed over three years, United would have been non-compliant with PSR for the past season, were it not for two key factors.’
‘Firstly, they seem to have received an exceptional allowance of £40 million for COVID-related impacts in 2022, a figure that was not granted to any other club.
‘The maximum allowance to any other club was approximately £1 million that year, and the specifics of United’s allowance remain unclear.
‘Additionally, it appears they were allowed to report around £35 million in exceptional costs linked to the share sale to (INEOS CEO Sir Jim) Ratcliffe, which ideally should have been covered by the Glazers, as they reaped the main benefits.’
Joshua Zirkzee has become Manchester United’s first signing of the summer transfer window
Man United have completed the £52m signing of highly-rated Lille defender Leny Yoro, 18
‘Nevertheless, we know from the financial data that the allowance was £35 million, and according to various analysts who have examined the numbers, the only way to comply with the PSR for the 2023/24 season is through those allowances.’
Concerns have emerged regarding United’s £40 million COVID allowance, with fellow football finance expert Kieran Maguire addressing the issue on X.
After conducting his research, he shared on X: ‘Many have asked me to delve into the £40 million COVID allowance in United’s 2021/22 accounts.
‘Conversations with key figures at the club and beyond revealed several reasons: 1) Cancellation of the Summer 2021 tour; 2) Bad debts from a commercial partner’s insolvency; 3) Inability of the club to meet sponsorship commitments in the summer of 2021; and 4) Broadcaster rebates from PL & UEFA.
‘Since #MUFC is listed in New York, they must disclose more information than other clubs, many of which have COVID claims not visible in their accounts. The conclusion is that there was no wrongdoing by the PL.’
Several other clubs in the league are still being investigated regarding PSR compliance, including Leicester.
The Foxes may face sanctions next season following charges brought against them in March for violating regulations during the 2022-23 season, which resulted in their relegation to the Championship.
Newcastle is similarly taking measures to avoid financial penalties and is seeking to increase its capital to comply with regulatory requirements.
Meanwhile, Manchester City is currently engaged in a legal dispute with the Premier League over 115 alleged violations of the league’s financial regulations.
While no specific date has been set for the much-anticipated trial, an initial hearing could occur in November and may extend over six weeks.
In the meantime, clubs have agreed to replace PSR with squad cost control regulations from the 2025-26 season, which will restrict clubs to spending 85% of their total revenue on wages, transfers, and agent fees.
