Manchester United report losses despite of making record profits
Officials at Manchester United have confirmed that the club has made heavy losses in their financial year. The losses have been accounted for around £83.64 million in the last financial year.
These losses have been worrying many clubs in the last few months, especially because of the tougher legislation announced by UEFA. According to UEFA, the clubs would have to keep their losses around €45 million (£39 million). After the next three seasons,
however, it would be mandatory for the clubs to at least break even at the end of their financial year. Otherwise, UEFA is threatening these clubs with stricter punishments, including a ban from UEFA Champions League. This punishment is something that a club
like Manchester United cannot afford, so it is a good thing that they keep their finances in control.
The good news for Manchester United is that they have reported a record operating profit of £100.8 million. This is an all time record in Premiership history, which is mainly accorded to the efforts of Glazer family’s initiatives making Manchester United
a global brand. Manchester United is growing in international market, especially in Asia and North America, which has resulted in increase in their profits.
However, the overall losses are mainly because of the debt burden being faced by the club. There are a lot of funds being drawn out from the clubs finances in order to pay heavy interest of around £40 million. This is a problem which would continue to trouble
Manchester United in the future seasons as well, as they would seek ways to fulfil the conditions of UEFA for qualification in Champions League. Apparently, the owners are heavily responsible for creating such a precarious situation. They have drawn heavy
amounts from the club’s finances to pay their personal debts as well.
Apart from this debt, club finances have also risen as far as the player wages are concerned. During the summer transfer window, United bought Javier Hernandez, Bebe and Chris Smalling. However, these players did not cost a lot of money to United; rather
the club did not have to spend a lot on buying new players. In fact, many first team players had their contracts renewed, which resulted in a higher wage bill from last year. According to the report, there is an increase in wage and transfer bill by 7%.
Another problem faced by Manchester United was their poor performance in last season, as compared to the season before that. Last season, United went out of Champions League in the quarter final round, as compared to the previous season’s final appearance.
Also, United were thrown out of FA Cup in the third round, which was again a big loss. So, due to a lesser number of matches player, United made less revenue on match-days.
Despite a loss in revenue on match-days, United has increased its overall turnover of fans. Apart from that, United has grown as a brand, which has resulted in a big increase in media revenues. Therefore, the overall situation does look good for Manchester
United, while the only problem they are facing right now is their debt issues. Otherwise, it has been a financially productive year for the club, as they made record operating profits exceeding the amount of £ 100 million.
However, the future still looks bleak for Manchester United. They have already reported heavy losses, while they still need further investments. United is not performing up to the mark this season, which means that they would have to buy a few players to
reach their desired level. In the short term investment, United must look for a handy goalkeeper and a reliable attacking midfielder. Both would cost money, which means that the losses would be higher than they are currently accounted for.
Nevertheless, situation can be brought under control, once the burden of debts is resolved by the owners. Also, United is still a well-known brand with a lot of supporters around the globe. Therefore, it would not be a hard job for the officials to meet
the UEFA regulations at the end of this season.
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