Manchester United has managed to avoid a financial penalty by claiming £40 million in Covid-related losses. This comes as a relief for the club, as football finance expert Stefan Borson had previously warned that only “relatively exceptional” allowances would prevent them from breaching Profit and Sustainability Rules. Borson pointed out that without the leeway provided by the £40 million Covid claim for the 2021-22 season, coupled with the exclusion of £35 million costs related to Ineos’ deal to buy into the club, Manchester United would have exceeded the £105 million limit for losses over a three-year period.
However, it seems that Manchester United is not the only club to have made significant Covid-related loss claims to avoid breaching the Profit and Sustainability Rules. While some clubs, like Manchester United, declared these losses in publicly-available accounts, others submitted private figures. Premier League officials have accepted Manchester United’s claim of a £40 million loss for the 2021-22 season, despite the fact that the club remained the highest-earning club in England.
The Covid pandemic has had a significant impact on various aspects of football, including sponsorships and partnerships. Some sponsors were unable to meet their financial obligations or had to end partnerships due to their own financial difficulties caused by the pandemic. Additionally, the lack of a 2021 summer tour also affected Manchester United’s finances.
In February, Sir Jim Ratcliffe’s Ineos completed a £1.03 billion deal to buy a stake in Manchester United from the Glazers. The club stated that they incurred £35 million in fees and costs related to this deal. Manchester United believes that these costs should be excluded from the Profit and Sustainability Rules calculations, considering them as separate from the core football business. It is speculated that Chelsea may have taken a similar approach with costs related to their own takeover in 2022.
However, the strict confidentiality surrounding Profit and Sustainability Rules means that details only come to light if a club is charged with breaching the rules. Manchester United, on the other hand, maintains that they are fully compliant with the rules.
Overall, Manchester United’s ability to avoid a financial penalty by claiming Covid-related losses highlights the challenges faced by football clubs due to the pandemic. The allowances provided in these exceptional circumstances have allowed clubs to mitigate their financial losses and maintain compliance with the Profit and Sustainability Rules. As the football industry continues to recover from the effects of the pandemic, it will be interesting to see how clubs adapt and navigate the financial landscape in the coming seasons.