- Manchester United has spent more than its rivals on star players
- Underperformance on the field means the team is not making a good enough return on that investment
Nick Train, the famously long-term investor and one of Manchester United’s (US:MANU) top shareholders, recently explained to Investors’ Chronicle that he “hates selling” his favourite stocks. England’s richest football club appears similarly reluctant to part with its most prized assets.
Rumours hve been circulating in the football press that Manchester United is preparing to offer a £104m five-year deal to star player Paul Pogba, who is reportedly interested in leaving the club once his current contract ends next year. For Pogba, that would mean a £400,000 weekly salary, likely making him the Premier League’s highest earner.
For Manchester United's investors, that would mean an additional £5.7m every year in operating expenses – something the company should instead be looking to trim down. It reported on Friday that these costs exceeded sales by 17 per cent in the three months to March, leaving the club with an operating loss of £21.6m. The bulk of expenses came from salaries, which totalled £85.2m in the period.
The management team pointed to the impact of the pandemic, which all but wiped out matchday ticket sales in the quarter. But overall revenues were almost unchanged, after the disruption to the season’s schedule left it with more games and hence higher TV income over the period.
Footballers’ paychecks are a difficult balancing act for top clubs, which have to spend millions every week to keep hold of the star players that help them sell merchandise and pick up prize money and TV revenues from the big tournaments.
But despite spending more than its rivals, Manchester United has struggled to bring home the silverware in recent years. Data provider Transfermarkt estimates the club’s net expenditure on player transfers has exceeded every Premier League team bar Manchester City in the years since the 2012-13 season – the last time it won the title. Its failure to qualify for the lucrative Champions League tournament in the 2019-20 season deepened the financial blow from Covid-19.
Following the aborted attempt to form a European Super League with its wealthiest rivals, Manchester United’s last resort is to perform better on the field. After a second-place finish in this year’s Premier League season, the already debt-laden team says it has taken out an additional £60m loan as it enters the summer transfer window; Train will be hoping it invests that money wisely. Other shareholders should not put their faith in the team yet. Sell.
