While Jose Mourinho’s side are struggling on the field, the Old Trafford side have published figures that should make happy reading for their fans off it.
It was a week of contrasting fortunes for Manchester’s two main clubs. Man City’s memorable comeback against Barcelona was offset by Man Utd’s embarrassing defeat to Fenerbache, but the latter’s fans at least take solace in their financial results.
United have shown amazing growth for a club who were knocked out of the group stages of the Champions League by PSV and Wolfsburg, and only finished fifth in the Premier League.
Clubs generate sales from three main areas: fans (matchday), sponsors (commercial) and TV companies (broadcasting).
The figures for the 2015-16 season showed that United had nearly three times the growth of City overall, and became the first English club to generate over half a billion pounds of revenue.
United benefit from having a large ground – Old Trafford had a capacity of 75,700 compared to City’s 55,000 – and charge higher prices overall. Over the course of the season an extra 403,000 fans watched United at their home fixtures.
The average price paid at Old Trafford per spectator was £74.52 compared to £51.13 at the Etihad. This reflects United having a large number of spectators in the corporate hospitality suites prepared to pay premium prices. City, on the other hand, are working hard to increase their fanbase and had the lowest season ticket prices at £299 in the Premier League, compared to United’s cheapest at £532.
In terms of commercial income, in 2016 United have the benefits of the Adidas kit sponsorship deal, worth £75 milion, plus a further £53m from shirt sponsors Chevrolet. Where United have been very successful is setting up global sponsor deals around the world, their latest being an official mattress and pillow partner (Mlily) to add to the other 70 products that the club endorses.
Being a commercial driven company such as United comes at a price. The club has played 29 overseas matches to extend the United ‘brand’ and keep overseas sponsors happy over the last five years. Whilst this is good news for the accountants, it is questionable whether this has helped pre-season development of the squad in terms of fitness and being prepared for the season ahead.
Failure to qualify for the Champions League for 2016-17 is likely to come at a price. A number of commercial deals have penalty clauses if United do not appear in this competition, rumoured to be up to 25 per cent of the agreed fees.
City’s main sponsor is Etihad Airways, which has both a shirt sponsorship and stadium naming rights agreement with the club. Despite reaching the semi-finals of the Champions League and finishing ahead of United in the Premier League, City only had a 3% increase in commercial income last season.
In terms of broadcasting income, City outperformed United in terms of gross numbers. United’s 30% increase was due to competing (unsuccessfully) in the Champions League and to a lesser extent their progress in the FA Cup. City’s 19% increase was due to making the semi-final of the Champions League and winning the League Cup.
The main costs for football clubs are wages. United invested heavily in new players and gave some existing ones (such as David de Gea) new contracts. This meant that United’s wage bill grew by 15% to £232m, the highest in the Premier League. City, on the other hand, after years of heavy investment trying to attract players to the Etihad, only increased their wage bill by 2% to £198m, as despite expensive signings such as Kevin De Bruyne and Raheem Sterling, there were players leaving the club who were removed from the wage bill.
Louis van Gaal’s sacking at the end of the season led to a payoff for him and his staff of £8.4m. Overall, United had a wages ratio (wages as a percentage of revenue) of 45% compared to 50% at City.
United did report a loss of £9.8 million in respect of player sales. This would mainly be in respect of previous record signing Angel Di Maria, whose 12 months at Old Trafford were unhappy for both the player and the profit and loss account.
City, on the other hand, made a profit of over £20m from player sales. This is mainly a technical gain in terms of the sale of Alberto Negredo to Valencia, who had spent the previous season there on loan.
One area where City have a big advantage over United is that they have no bank borrowings. The generosity of the Mansour family, who have invested over £1 billion in the club since taking over in 2008, has meant that they have had to pay relatively little interest to banks each year. United, meanwhile, still owed banks over £490m at the end of the 2015-16 season. These loans were at times having interest charges of up to 16.75%, although the club has renegotiated these downwards in recent years. Even so, United paid out over £20m in interest in 2016, compared to over £35 million the previous season.
City have had a wobble on the playing field, but their Abu Dhabi owners seem to have a long term strategy in terms of growing the club.
In football, as we all know, things can change very quickly though.