Spending more of what you earn is never a sustainable practice. Any business that operates with losses for long periods will eventually find it difficult to survive. While losses may persist, the real issue arises when the organization does not generate positive cash flow.

Manchester United long road towards financial sustainability faces a bumpy stretch as the club released its financial results for the second quarter of 2025. Despite reducing its headcount by 250 following the restructuring plan announced last September (additional 200 jobs reduction announced of February 24th), the club’s financial struggles continue as revenue started declining and debt obligations climbed to record levels putting pressure in the organization’s liquidity.

To make matters worst, the on-pitch performance of the men’s first team has been disastrous during the first half of the season, which may impact this and next year’s revenue significantly. Moreover, the club’s senior leadership structure was shaken after only a few months being formed, with the dismissal of the sporting director and the men’s first team manager.

As pointed out in my last year’s article, having a cohesive structure and clear strategic plan while integrating finance strategy across the organization is fundamental to achieving financial sustainability. The recent developments around the club suggest there are internal organizational issues and lack of cohesive strategy affecting decision-making and consequently operational and financial outcomes.

On-Pitch Underperformance Driving Revenue decline as Operating Losses Rise

Manchester United reported for the first half 2024/25 fiscal year total revenue of £341 million, this represents a 11% decrease compared to the previous year. While commercial and match day revenue increased by 5.1% and 4.8% respectively, broadcasting revenue fell from £146 million to £93 million, a decrease of 36% year-on-year.

The decline in broadcasting revenue is driven by the men’s first team not being able to qualify to the UEFA Champions League and instead playing the second tier UEFA Europa League. Further revenue drop should be expected given the poor football results during the ongoing season.

As of the end of February, the men’s first team sits in the 14th place of the table. Should performance not improve and the same trend continues, it would have a significant direct impact on broadcasting revenue and consequently on the budget for the 2025/26 season. The estimated impact could be between £50 million to £60 million (i.e. Premier league revenue loss of £20 million in merit payment plus £30 million in Europe TV money unless they win the competition. Check out Swiss Ramble estimation).

While revenue growth has slowed down in the past two years, spending has continued to rise at a faster pace than revenue. Since 2011, United’s operating costs, including only wages and other fixed operating costs, have outpaced revenue in 11 out of the 14 fiscal years. This suggests how robust and inefficient the organization has become for long time.

When zooming in closer, since 2016 the annual growth rate of operating costs stands at 6.0%, which is nearly doubled the revenue average growth rate of 3.2%.

As a result of the overspending trend, profitability gets constantly hit. During the first half of 2024/25 year, United reported an operating loss of £17 million, compared to £9 million operating profit the previous year. The restructuring plan, which the club expects to yield between £40 million to £45 million of annual savings, would not be sufficient to offset the decline in revenue and thus might not go entirely to the bottom line.

When considering finance costs and income taxes, United net losses for the first half of the year resulted in £26 million, this is nearly 5x bigger loss compared to the first half results of 2023/24. Despite reducing wages in more than £22 million, or 12% YoY, the revenue decline in broadcasting revenue more than offset these gains.

Free cash flow, which is the club’s available cash after capital expenditures and funding working capital, resulted in a whopping negative £271 million at the end of the first half. Despite not generating sufficient cash from its operations, United continued spending in its football squad with significant acquisitions.

Debt Obligations Rising to £1.1 billion

United’s capital structure has heavily relied on debt to finance its operations and player acquisitions in recent years. Persistent net losses have worsened the debt issue, forcing the club to seek additional external financing.

As of the second quarter of the 2024/25 season, United’s financial debt stood at £731 million, following a £200 million drawdown from its revolving credit facility. While this represents a 5% decrease compared to first half of 2023/24 season, it reflects a 34% increase from the end of last fiscal year.

In addition to the financial debt, the club also owes £391 million in player transfer fees as of end of Q2’25. This represents an 18% increase compared to the end of the last fiscal year. In total, United’s debt obligations amount to £1.12 billion.

Transfer fees due within a year have reached a record high of £212 million, up from £156 million at the end of the 2023/24 fiscal year. Additionally, the club faces contingent fees related to player transfers, these are extra costs that may be triggered based on specific performance variables. As of the end of the second quarter, contingent fees could amount to £136 million.

Manchester United has also transfer fee receivables—this is cash to be received from player sales. However, as the club is traditionally more a buyer than a seller, these receivables are typically much lower than transfer fees owed. After accounting for transfer fee receivables, the net transfer fee debt stands at £300 million, with £167 million due within a year.

The club’s high debt levels raise concerns about liquidity. As of the second quarter, the current ratio stands at 0.41, which indicates United wouldn’t be able to cover its short-term liabilities. However, it’s worth noting that the revolving credit facility is not due until June 2027, which provides some relief over the next 12 to 18 months.

Manchester United’s practice of paying player signings in installments offers a form of free financing and some degree of cash flow flexibility. However, given the club’s weak balance sheet, selling clubs might become hesitant to negotiate with United, opting to engage with clubs with healthier finances.

Player’s Acquisitions Averaging £230 million Over Last Three Seasons, Yet On-Pitch Results Decline

As of the end of the first half of 2024/25, United has been able to trim wages by £22.7 million, or 12%, compared to prior year. This is primarily driven by a reduction in variable pay given the participation of the men’s first team in UEFA Europa League as opposed to UEFA Champions League.

With the ongoing restructuring initiative, which will see a total of 450 non-football positions made redundant, wages are expected to further decline by the end of the year. However, the more significant impact will come from football personnel wages and the likely scenario of United failing to qualify for any European competition next season.

The wages-to-revenue ratio has remained under control with 48% at the end of the first half of the present fiscal year, compared to 55% in 2023/24. However, the ratio doesn’t reflect completely the sluggish performance on the pitch this season. With only 11 wins across all competitions, the cost per win stands at £34 million, up by 9.7% compared to prior year. Winning has not only been elusive but quite expensive for United.

One of the most critical issue for Manchester United has been player signings. The club has spent a total of £700 million over the last three years hoping to bolster its squad and turn things around. However, the on-pitch performance has been worst prompting questions about the quality and the price of these acquisitions.

During the most recent summer and winter transfer windows, United has brought in seven new players for a total of €246 million while selling eight players for a total of €103 million, according to transfermarkt.com.

The fees for acquiring the players’ registration rights are amortized over the length of the contract, therefore they do not hit immediately the P&L statement. Amortization fees amounted to £101 million during the first half of 2024/25 as compared to £97 million the year before.

Investments in the men’s first team squad have in fact made the team worst. According to the Swiss Ramble, United has the third-highest squad cost of the Premier League, behind only Manchester City and Chelsea. Yet, aside from a third-place in the 2022/23 season, United’s performances over the past four years has fallen short relative to its investment.

Strategic Miscues, Short-Term Fixes and the Struggle for a Cohesive Identity

The head coach is one of the most important roles in a football club, arguably the most important. This position extends far beyond aspects of training and managing a football team. As the football industry has evolved both professionally and economically, so has the role of head coach. Today, a coach serves as talent manager, responsible for maximizing and allocating resources, promoting a football identity inwards and outwards, and acting as a unifying link between the commercial, operational, and football departments.

Since the retirement of Sir Alex Ferguson in 2013, Manchester United has appointed 10 head coaches, including both interim and permanent hires. This is an average of nearly one head coach per season over the past 12 years. In contrast, Manchester City has had just two coaches during the same period, while Arsenal has appointed four.

Manchester City’s stability at the head coach position has translated into outstanding success both on and off the pitch. Since 2013, they have won 21 trophies, while their revenue has surged from £271 million in 2012/13 season to £715 million in 2023/24. This remarkable growth has propelled the club to the second highest place in the Deloitte Football Money League.

With such high turnover, it’s fair to question the decision-making of Manchester United’s senior management. The strategic missteps and recurring mistakes have come at significant cost to the club. For example, in the first half of 2024/25 fiscal year, United has spent a total of £23 million in one-off expenses. This includes £14.5 million in severance payments related to the dismissal of Erik ten Hag and his coaching staff, as well as the sacking of the sporting director just after five months in charge.

While the decision to change a head coach is often made to improve the on-pitch results, its impact goes beyond the pitch, and is felt across the entire organization. One of the major downsides of frequent coaching changes is the disruption of continuity and stability of the squad.

United’s frequent managerial changes have led to significant roster turnover. Over the last three seasons, United men’s first team has had an average of 34% of new players, this is roughly a third of the team. While this might seem reasonable and normal for a football team, the real issue becomes more evident when analyzing the squad composition over a longer period.

For instance, more than half of the current squad consists of players who were not part of the team just two years ago. Since the 2020/21 season—except for the 2021/22 campaign—United’s squad has been built around new signings than a stable group of existing players. Such high turnover makes it quite difficult to build cohesion, chemistry, and familiarity—key elements for a football team striving to perform and compete at the highest level on the pitch.

Conclusions

United’s financial and operating struggles reflects an accumulation of several years of poor decision-making and strategic mistakes at the senior management level. A prolonged period of poor results exposes those truly responsible, the management team.

The club recognizes financial sustainability as a key objective. However, liquidity has become an increasing concern, with record debt levels and heavy spending that has failed to improve performance.

The challenges ahead are significant, both financially and on the pitch. The club currently sits near the bottom of the Premier League table, far away from any European qualification spot. While relegation to the second division is quite unlikely, it is a real risk for a club built to compete in Europe.

The financial outlook is grim. Revenue is starting to decline, partly due to poor on-pitch performances. Operating cash has deteriorated, compromising the club’s ability to meet interest payments. Although wages have been reduced, further cuts should focus on football personnel along with establishing stricter limits on costly player acquisitions.

Failing to qualify for any UEFA competition next season would be catastrophic for the club with major financial consequences. The club would suffer a major revenue shortfall from UEFA broadcasting money and as well from matchday revenue. This could potentially force the sale of several key and young players, perhaps at a discounted prices. Additionally, sponsorships revenue could take a hit, including a potential deduction from Adidas payments if United fails to qualify to the Champions League for a second consecutive season.

To address some of the liquidity concerns, United may seek additional capital injection through equity issuance, which the club began considering last September. Although this would impact the cost of equity. Another option could be restructuring existing financial debt to lower interest payments. However, the most critical and urgent aspect is implementing a stricter financial discipline and continue cutting in unnecessary spending.

As I mentioned in my previous article, the situation may get worse before achieving any real progress. The challenges ahead are enormous, and United may hit rock bottom before it can be fully rebuilt across all levels.