Manchester United face penalty and fresh PSR challenge if they fail to qualify for Champions League
10/01/2024 08:56 AM
Manchester United could face further Profit and Sustainability Rules (PSR) concerns should they fail to qualify for next season's Champions League.
The club's latest annual report revealed the devastating financial impact awaiting them in the event of missing out on Europe’s elite competition for the second-consecutive season.
Erik ten Hag's side are already in danger of finishing outside of the top four again having made another stuttering start to the season.
Man United find themselves slumped 13th place in the league table, and six-point adrift of fourth-placed Chelsea, following Sunday's dreadful 3-0 defeat at home to Tottenham.
The Red Devils have never gone two consecutive campaigns without appearing in Europe’s top club competition in the Premier League era ,but doing so would present challenges to the club's finances and hopes of attracting top-tier talent.
Failing to finish in the top-four would see United lose out on lucrative pursestrings brought about by broadcasting money and match-day revenue.
It would also cost United £10million due to a penalty clause under their new deal with kit suppliers Adidas, set for 2025/26 and beyond for any future season they are not in the Champions League.
Manchester United's last brush with the Champions League came just a year ago but a succession of underwhelming displays saw them crash out in the group stage at the bottom of their group.
Their run to the quarter-finals of the competition in 2019/20 laid bare the huge dip in revenue compared with United's Europa League campaign in the 2022/23 season which saw a drop of almost £40m.
The club's annual report points out that salary increases within the playing squad are dependent on whether they are in the Champions League to somewhat safeguard their finances.
The report states: "Failure to qualify for the Champions League would result in a material reduction in revenue for each season in which our men's first-team did not participate.
"To help mitigate this impact, the majority of playing contracts for our men's first team include step-ups in remuneration which are contingent on participation in the group stage of the Champions League.
"Moreover, because of the prestige associated with participating in the European competitions, particularly the Champions League, failure to qualify for any European competition could negatively affect our ability to attract and retain talented players and coaching staff, as well as supporters, sponsors and other commercial partners."
United reported a loss in excess of £113m for last season, taking their three-year losses to a whopping £254.7m, taking them over the Premier League's PSR limit of £105m.
They were able to make suitable adjustments to the losses to work in their favour by the inclusion of spending on other areas of the club, including the refurbishment of the club's Carrington Training base and the £50m tunnel improvements at Old Trafford.
United were also helped in their efforts to comply with PSR by being granted permission to claim a Covid allowance totalling £40million for the 2021/22 season.
The Covid claim was by far the highest of any Premier League club for that season and double the amount of the other 19 top-flight club's combined.
The amount claimed was in part due to the cancellation of the club's summer tour, which remains a huge source of revenue.
