After the Cristiano Ronaldo saga, Manchester United are in the news as the Glazers put them on sale. Although there haven’t been any concrete bids, the process has started. However, recent financial reports of the club suggest the club is making losses. 

The $4.6 billion valued club made it to the fourth spot in Deloitte’s 2023 Money League behind Manchester City, Real Madrid, and Liverpool. They have shown a 23% increase in turnover, but still below that in the 2018-19 season. Despite the surge in revenue, the club still suffered $2.4 Million in losses every week because of the high wage bill and transfer spending.

Why is the ex-club of Cristiano Ronaldo making losses despite of surge in revenues? 

Kieran Maguire, the soccer finance expert at the University of Liverpool, believes United’s costs are rising compared to their income. Since legendary Sir Alex Ferguson left, the wage-to-turnover ratio has risen significantly. 

Moreover, the club is away from silverware since 2013, having won FA Cup, EFL Cup, and UEFA Europa League once since the 2012-13 season. They had a record-breaking wage bill of over $475 million for the last season. The Covid pandemic impact, managers sacked, and investments in the squad with poor results have resulted in United’s poor financials.

After appointing Erik Ten Hag, United has invested heavily in the summer by spending over $240 million on the likes of Antony, Casemiro, Tyrell Malacia, and Lisandro Martinez. Yes, United is playing well this season, but it will take time for the club to rebuild. With detailed insights into financials, the owners are of the view that the club is making losses. Hence, the Glazers are willing to sell the club.

With the wage-to-turnover ratio increasing, the club might not invest in the renovation of Old Trafford, and there might be delays in player renewals. Earlier this month, United introduced a salary cap policy that will see salaries capped at $240k per week. They named it Ronaldo Rule. It will refrain the club from giving monstrous wages to the marquee players. Also, the measures will help the club in soon-to-be-introduced new FFP regulations.

New FFP regulations and Manchester United

A recent spending spree from Chelsea and the transfer policy of giving longer contracts has caught the eye of UEFA. UEFA will introduce the 70% squad cost rule by the 2025-26 season in a phased manner. It means the clubs will be allowed to spend only 70% of their revenues on the wages of players and coaching staff. 

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Last season, the squad cost ratio for United was 88%. It is comfortably below 100% allowed for this season. However, next season UEFA has allowed a 90% squad cost rule, and United is hovering near it currently. Although they have got Cristiano Ronaldo off their wage bill, they still have to look into it with the contracts of players like Marcus Rashford coming to an end. 

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It will be interesting to see how  Ronaldo Rule  helps the club in the future. Also, fans will hope for a new injection of cash into the club to revive the squad that can fight for trophies. Let us know your thoughts on the current situation of Manchester United.