Sir Jim Ratcliffe knows how to reverse the situation of a business in difficulty. British billionaire, now responsible for the sports giant Manchester United’s sports operation, made his name and fortune by buying and revitalizing over more than two decades, low -performance chemical companies.
Does he know, however, how to reverse the situation of a soccer club in crisis? Evidence increasingly suggests than not.
In the three years until 2024, United has accumulated losses totaling more than £ 300 million, making it the second club’s second club, behind only Chelsea – a remarkable reversal over a decade ago.
Ratcliffe, who bought about 25% of Manchester United actions early last year, could have seemed a sensible choice as a Glazer family coach, given his business history. But revitalizing a soccer team requires more than standard corporate measures, such as optimizing processes or cutting costs. It requires much deeper cultural and strategic changes. This is evident in the very financial statements that Ratcliffe was in charge of restructuring.
There is no mystery about why United’s finances have deteriorated so quickly in recent years. On the side of the revenue, the commercial exploitation and the income of the games remained solid. However, transmission revenues – largely determined by the club’s performance – fell significantly.
Prolonged falls are not unprecedented among football giants, but the duration and depth of United’s decline have been unprecedented since the 1980s. No dominant club has fallen so much.
The bad position of the team in the Premier League by itself should result in a loss of £ 46 million in revenues over this and last season. Failure to qualify for the profitable Champions League has generated additional £ 90 million in the last three years, according to an analysis of Football Finance expert Kieron O’Connor. If, as it seems likely, United does not qualify for any of next season’s European competitions, that would mean loss of more £ 80 million in revenues.
Factory factors also explain the explosive increase in costs. The club’s hiring policy has been especially disastrous, both on and off the field. United has spent more money on contractual terminations of coaches and executives in the last decade than any other European club, including nearly £ 30 million only in the last three seasons.
As for the players, the scenario is even worse. More than half of the club’s most expensive hires in the last decade have been failures, with these athletes spending less than a third of the time available on the field.
This is a worse performance than any other major club in Europe and represents the waste of tens of millions a year. No club has impeccable history in the transfer market, but United accumulates an annual accounting cost of £ 81 million with non -active players – probably twice the average of competing clubs, both in the UK and abroad.
The most alarming thing is that the market value of players hired by United tends to depreciate almost immediately after arrival, instead of increasing, as with most rival clubs. Whether it is an indicative that the club is paying excessive prices or that its field problems are damaging the players’ performance in Old Trafford, the data reveals a worrying situation.
Over the past three years, adding the annual losses of £ 45 million in transmission revenues due to bad results, £ 5 million in indemnities for unsuccessful courses of coaches and executives and more £ 40 million wasted at transfer rates, reaching a total cost of 90 million per season due to club dysfunction – which equals almost 90% of United annual losses in the same period.
The most remarkable solutions proposed by Ratcliffe so far on the business side have involved reducing costs, cutting off football employees and eliminating free lunches for the club team. However, traditional corporate cost cuts do not address the real causes of the club’s deterioration, both in the field and in finance. Turbulence in the sports department has prevented any cohesive strategy about the club’s identity and players’ hiring policy.
Ratcliffe hired a new coach last November, but the results were barely improved if they didn’t get worse. Continuous decline in the field will easily cancel any economy obtained with punctual costs of expenses.
