FootBiz newsletter #5: Man United accounts, Boehly's new plan, Mbappe sues and more

Manchester United’s accounts dropped yesterday, which seem as good a topic as any to build around in today’s newsletter. After all, if we’re going to be covering finance and the business of football then (probably) the biggest club on earth publishing their financial reports is hardly something we can ignore.

We’ve got a list of takeaways below, but more generally the £113 million loss just underlines to me that football clubs are still pretty unhealthy in financial terms. Too many clubs make losses, particularly in English football.

Not everybody shares this opinion, but I am fairly in favour of cost control measures or profitability and sustainability regulations because even though they’ve been implemented in different forms and ways across a number of different leagues and territories, I do think they’re fundamentally starting to work.

Yes, you can find loopholes and ways around them as Kieran Maguire wrote for us. That’s the case with any rules ever written.

In general though, preventing clubs from going out of business should be objective number one for the footballing authorities when regulating finances. Maybe this is just PTSD from the club I support nearly going out of business twice in my lifetime, but bankruptcy is the result that governing bodies cannot allow. Pushing them gently towards break-even is even better.

I have friends in the industry who disagree and believe that PSR and its cousins on the continent only serve to strengthen the cabal atop each league. It favours the big clubs and protects their hegemony. To an extent, I concede that this is true, but it is an unintended consequence. I also believe that if these clubs are not run well then they will continue to recede from the elite and better-run clubs who have a sustainable model will incrementally rise. It is a question of patience and time. For me, that is the definition of being well-run: your process will, over time, generate better results than the competition.

As we have acknowledged, there are flaws in how the rules are written.

Aston Villa lose a ton of money (£120m last year) but have virtually no debt. Tottenham, meanwhile, have net debt of nearly £700m and lost £86m. Which is more unhealthy? The answers are always nuanced, but a club like Villa feels held back by PSR rules as the owner wants to spend money to propel them up the table and can’t.

I don’t see a conspiracy to help the traditional elite there, simply another hole in the rulebook that could (and should) probably be fixed.

Anyway, the Premier League rules are changing as everyone knows. More generally, when I see these sky-high losses it’s just a reminder that football needs to drag itself to a more financially sustainable place, even if it means not spending £65m on a 28 year-old striker because the coach you’ll fire in 18 months or your fans on social media want you to.

But that’s a very long intro, so let’s get into the contents and then Man United’s accounts shall we?

Table of Contents

• 7 nuggets from Man United’s latest accounts

• M&A murmurs

• What if…?

• Mbappe pursuing PSG for £46m

• Just a reminder

• New Boehly bid?

• FIFA clearing house issues

• Griffin steps in

• Chelsea exec shake-up

7 nuggets from Man United’s latest accounts

For those who like it bitesize:

1. Financial Performance: Manchester United reported a net loss of £113.2 million for the year ending June 30, 2024. This follows losses every year since the pandemic (19/20: -£25m, 20/21: -£92m, 21/22: -£28m) indicating ongoing challenges despite record revenues of £661.8 million. Revenues went up largely due to increased broadcast income and matchday revenues from Champions League participation - even though United exited at the group stage. This season they will participate in the Europa League.

2. Investment and Strategic Review: The accounts reflect costs associated with the strategic review by the Glazer family, which led to Sir Jim Ratcliffe acquiring a 27.7% stake in the club. This investment, part of which is earmarked for infrastructure improvements, also gave Ratcliffe control over the sporting side of the club.

3. Cost-Saving Measures: Manchester United has implemented cost-saving initiatives, principally reducing headcount and employee benefits. In May, the club offered employees early payment of an annual bonus if they were to resign. Last month, several long-serving academy staff were among those put up for redundancy.

4. Compliance with Financial Rules: Despite the significant loss, United insist they remain compliant with Premier League's Profitability and Sustainability Rules (PSR), which allow for certain losses under specific conditions like infrastructure spending.

5. Transfer Strategy and Squad Management: There's an observable shift towards investing in younger talents with high potential like Leny Yoro rather than expensive, established players. Poor recruitment has been significant in their losses over recent seasons, with Jadon Sancho and Antony particularly costly errors.

6. Infrastructure Investment: Ratcliffe's investment includes funds for improving Old Trafford and the training facilities, addressing long-standing issues like the stadium's condition. For United to up gameday revenues to the level they would like, a new or upgraded stadium is crucial. Tottenham Hotspur and Real Madrid are the model here. The club mention that “for the 2024/25 season, general admission season tickets sold out at the fastest rate ever, and the waiting list for season tickets has increased to 171,000.” United could arguably expand the stadium to 120,000 seats while still selling out every week, and the resultant gameday income would be significant.

7. Interest milestone upcoming: Next season will see a milestone for the Glazer family’s leveraged buyout of United, because they will almost certainly pass the £1bn mark for interest paid on the transaction since it was consummated in 2005. We will never see the likes of this transaction again as they are now banned by the Premier League, which voted in 2023 to "cap leveraged buyouts at around 65 per cent of a club's value."

In general, I am fascinated by the idea of making Old Trafford the biggest stadium in the world. There is enough space (I think) on that site to do so. There is obviously enough demand for tickets. Well-connected editor of fanzine United We Stand, Andy Mitten, suggested in the latest edition that there is some extra expense that would make the jump from 92,000 to 100,000 needlessly expensive. My counter: do 120,000 then. Go big. Make it one of the great arenas in world sport, don’t just patch up a few leaks and cram some more seats in.

M&A murmurs

Bristol City have long been a club admired by potential investors. The fundamentals of Bristol itself are hugely appealing and City have stabilised themselves as a Championship club. They have never been in the Premier League but came closest when losing the Championship play-off final to Hull City in 2007.

Steve Lansdown owns the Robins, but they are losing too much money (£22m in 22/23). Most would agree they have immense potential, though, and the word is that a US-based group of former Barclays and Merrill Lynch bankers is interested not just in City but potentially some of the other Bristol sports teams as wider business.

The city’s rugby team, the Bristol Bears, are also owned by billionaire Lansdown who is understood to be willing to part with both.

What if…?

Though the Premier League and Manchester City have both been absolutely silent on it, we believe that the hearing into the now infamous 115 charges is due to begin on Monday.

With the potential to permanently alter the footballing landscape in England (and beyond) we will be covering developments extensively as they leak out, as well as the environment around the charges.

Rob Draper kicks things off by looking at what happens if City are found guilty… but also at the knock-on effects of them getting cleared.

As ever with Rob’s analysis, it’s for premium subscribers only but you can join by clicking the link above.

Mbappe pursuing PSG for £46m

Kylian Mbappe is planning to take Paris Saint Germain to an employment tribunal in pursuit of the £46.4million he claims the club owe him in unpaid salary and bonuses. PSG withheld the monies after Mbappe joined Real Madrid on a free transfer this summer due to a contractual agreement that he would not leave the club for free, which has led to France striker to take legal action.

A Ligue de Football Professionnel (LFP) legal commission yesterday recommended mediation between the two parties, a decision PSG are claiming as a significant victory. Mbappe has refused to accept the directive however, and must now take his old club to an employment tribunal if he wants to recoup the money.

Much of the two-hour hearing was dominated by a diatribe from Mbappe towards PSG, with his lawyer blaming the club for the player's poor form since joining Madrid. It’s as good an excuse as any.

Just a reminder

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New Boehly bid?

Todd Boehly is targeting the Middle East as he seeks to put together a team of investors capable of taking full control at Chelsea. Boehly and his partners, fellow American Mark Walter and Swiss businessman Hansjorg Wyss, want to buy out majority shareholders Clearlake Capital due to irreconcilable differences over how the club should be run.

Boehly has held preliminary talks with potential investors in the Middle East. His current group used £1 billion of their own money to buy a combined 38.5 per cent of Chelsea two years ago, but would need over £2bn more to put a credible offer to Clearlake, whose investors paid £1.5bn for their 61.5 per cent stake.

Clearlake are adamant that they will not sell and that the only two options in the takeover battle are maintaining the status quo or Boehly selling up.

FIFA clearing house issues

We’ve heard from a number of club owners recently that the FIFA clearing house (FCH) has been having issues.

For those unfamiliar, the FCH was established in 2022 to simplify distributions from transfer transactions.

In every transfer, 5% is retained as solidarity payments for clubs who contributed to the growth of that player. Solidarity payments are proportionally distributed to all clubs that trained the player between their 12th and 23rd birthdays, dependent on how long the player was at each club.

Prior to FIFA setting up the clearing house, clubs had to invoice a selling club for their share and wait for their money. If they didn’t get their money, they would then have to file a complaint to FIFA which could, eventually, result in a club getting a transfer ban until they’d paid their debts.

Clubs also had to know about these transfers. In many cases, solidarity payments were never paid because they were never requested because one of the formative clubs in that player’s development didn’t know they’d transferred and that they were entitled to a piece.

So the FCH is undoubtedly a good and much-needed thing for football’s global governing body to bring in.

The complaints we’ve had are that it doesn’t work.

One club believes it has over 20 payments outstanding despite submitting all the relevant paperwork.

So we spoke to FIFA to ask for their point of view and they acknowledged that there are some hiccups but that €120m of payments have been processed so far. They told us:

“While challenges remain on some operational levels linked to the effective execution of all payments and to the successful onboarding of football clubs to the FIFA Clearing House, FIFA sees a steady increase in amounts paid out every month. The entire Clearing House team is in constant and close contact with all football stakeholders to further optimise the system. The exact duration of the compliance and payment process depends largely on the collaboration from clubs and possible risk compliance matters. FCH is a financial intermediary; consequently, if the new club in a transfer does not pass the compliance assessment, the money cannot flow via the FCH until that failure is rectified.

“The FIFA Clearing House is carrying out continuous education and communication with stakeholders, together with the proper enforcement of the FIFA Clearing House Regulations. It is the first time that such a process is performed and once clubs have been onboarded, things go much faster. In fact, we already see Allocation Statements for already-approved clubs that take less than 2 weeks to be processed at the FIFA Clearing House.”

If this issue has affected your club, do get in touch. With some transfers triggering as many as 10 further transactions, it is obviously a complicated system but these unpaid amounts disproportionately affect smaller clubs so it isn’t something you’ll hear brought up at an ECA meeting.

Griffin steps in

As trailed on Tuesday, the USSF finally confirmed Mauricio Pochettino as the new USMNT coach, a huge hire by Matt Crocker with some help from Emma Hayes along the way, from what we’ve heard. Hayes and Pochettino worked together at Chelsea for a season and get on well, with Hayes helping convince him to move to America.

Ken Griffin, the founder of hedge fund Citadel, is helping pay a large portion of Pochettino’s salary which is understood to be around $6m per year.

As for Poch’s first task? They got him shifting tickets for their next game in Austin, Texas in October.

Chelsea exec shake-up

It’s been a wild few weeks at ownership level at Chelsea Football Club but underneath them there’s also been a bit of a reshuffle at exec level.

My former colleague Aki Mandhar will be leaving her role at The Athletic, where she ran the UK (and then international) business to become CEO of Chelsea FC Women.

On the men’s side, Chris Jurasek recently stepped down as CEO and returns to his old role at Clearlake Capital, while COO Jason Gannon moves up to replace him with the title of president and COO.

Gannon’s history at SoFi Stadium in Los Angeles tells you a lot about the ongoing priority for the Blues - building a new stadium or finding a way to upgrade Stamford Bridge. Both are difficult and expensive. Reports on Tuesday that stated that Chelsea were in talks over moving to Earl’s Court were then shot down rather quickly.

Joining from other Premier League clubs to round out the executive team are Tottenham’s chief commercial officer Todd Kline and Manchester United’s Phil Lynch, who was CEO of digital at Old Trafford.

Former AC Milan chief of staff James Murray, who joined Chelsea as chief of staff a year ago, has been promoted to chief strategy officer and head of business operations.