Man Utd have published their quarterly accounts – and they reveal the financial costs of sacking Erik ten Hag, dismissing sporting director Dan Ashworth and why INEOS and Sir Jim Ratcliffe are making cuts.
The decisions to extend Ten Hag’s contract in the summer and then fire him and his backroom staff nine games into this season set United back around £10.4m.
The accounts show that it cost United in excess of £4.1m in compensation and then severance to bring Ashworth to the club and then sack him.
And with the men’s first team not qualified for Champions League football, a big dip in broadcasting revenue has contributed to operating profit falling from £27.5m to £3m.
Here, Sky Sports News senior reporter Rob Dorsett answers the key questions from this financial statement – and what it means for Ruben Amorim’s side and the wider club…
How much did the Ten Hag sacking, Ashworth exit and Amorim appointment cost Man Utd?
The headline, without doubt, is how much it cost Man Utd to get rid of Erik ten Hag and his backroom staff, and Dan Ashworth, the sporting director.
The Ashworth one is really interesting because the accounts show that, in this period, it cost United in excess of £4.1m in compensation and then severance to bring Ashworth to the club and then sack him – and he was in place for five months. It’s clear there were further costs of employing him in other accounting periods but the exact amount isn’t specified.
That’s not good management, plain and simple. They got that one wrong.
I don’t think it’s a huge shock that elite managers cost a lot of money when you appoint them and sack them but again there are question marks because Erik ten Hag was given an extended contract in the summer, only to be sacked a couple of months later.
One thing that isn’t specified in these figures is how much it cost to appoint Ruben Amorim.
We’ve learned those costs are actually included in the “Amortisation” section of the accounts which means the reported £8.5m compensation cost that United had to pay Sporting for his services has been spread over the duration of Amorim’s two-and-a-half-year United contract – in effect, £2.3m per year. Another big cost.
It shows how expensive it is for these huge clubs to change their managers and make big changes at the top. But it also raises serious questions over how Man Utd is being run right now.
The bosses at Old Trafford have made some very significant changes – and those changes have cost them an awful lot of money.
Do these figures suggest there will need to be more cuts from Ratcliffe and INEOS?
Total revenue is down 12 per cent – that’s because broadcast revenue is down 42 per cent because they weren’t in the Champions League. That tells you how the performances on the pitch can affect the finances off it.
Although, there was an 18.5 per cent increase in commercial revenue. The club say the results represent an underlying operational strength – but they also highlight the financial challenges the club is facing.
INEOS and Sir Jim Ratcliffe haven’t made any secret of the fact they’ve got a big restructuring going on and we know they’ve been doing a lot of cost cutting within Man Utd and their other businesses as well.
Now, 100 more jobs are under threat at Old Trafford after they made 250 members of staff redundant in the first round of cuts.
What do we know about INEOS as a group and their own financial situation? Are their other sports teams suffering too?
Their sponsorship deals are being cut back left, right and centre – there’s news today INEOS are considering cutting short their sponsorship deal with Tottenham, a five-year deal they struck in 2022.
We know already they’ve cancelled a sponsorship deal with New Zealand Rugby and New Zealand Rugby are suing them for breach of contract over that.
They’ve ended a long-term agreement with Ben Ainslie and his America’s Cup campaign.
The INEOS Grenadiers cycling team are looking for new investors, saying INEOS “don’t want to spend any more money.”
All of that is not a good look for INEOS and Sir Jim Ratcliffe at the moment.
Man Utd is one of if not the most high profile company in their portfolio. It’s clear they have to cut costs – and it’s clear from these figures how much they have to do that.
What do these figures mean for Manchester United’s plans to revamp the infrastructure and investment in the next few years?
They go ahead as planned, but it is naive to think those plans won’t be heavily affected by the club’s finances.
Omar Berrada, the Man Utd CEO, said: “Our redevelopment of the Carrington Training Complex remains on track. We continue to work towards a decision on the future of Old Trafford as part of a wider regeneration programme.”
All of that depends on how healthy Manchester United’s finances are… so watch this space.
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