Christopher Nkunku and Alejandro Garnacho swap can unlock over £786m PSR budget for Man United and Chelsea
01/28/2025 02:45 PM
Football is an increasingly commodified game, and the owners of Manchester United and Chelsea view talents like Alejandro Garnacho and Christopher Nkunku through the cold lens of asset management.
In the world of football finance, this has always been the case, of course. The nature of accountancy means footballers are treated as intangible assets on a balance sheet and traded as such.
But in the Profit and Sustainability Rules (PSR) era, more fans are also talking about players like Garnacho and Nkunku as though they are abstract nodes of capital in the world’s most complex game of Monopoly.
There is scope for endless arguments about whether this is a cultural or a systemic problem within football, or indeed if it is a problem at all for supporters to think how their club owners think.
Yes, in an ideal world, Chelsea and Man United fans would be able to get on with watching their teams compete on the pitch without the phrase ‘amortised book value’ ever registering on their radars.
But Premier League football is big business now and knowledge is power when owners attempting to gaslight fans about how PSR really works and their broader plans as custodians of their clubs.
Significantly, there has been a huge deal of disinformation and hearsay about Chelsea and United’s respective PSR positions throughout the January window.
The Premier League announced that non of its members had breached the spending rules for 2023-24 earlier this month, meaning both clubs are in the clear as far as retrospective action is concerned.
Chelsea meanwhile are negotiating a financial settlement with the Premier League over historic PSR breaches dating back to the Roman Abramovich era.
Given that those breaches – which Todd Boehly and Behdad Eghbali’s staff uncovered in due diligence ahead of their takeover – could have been punished with a points deduction, a fine would represent a big win.
Both United and Chelsea, however, are not out of the woods yet when it comes to PSR.
Chelsea’s exorbitant spending in recent years hasn’t yielded a points deduction because the club’s army of accountants have pulled off intra-company asset sales and other financial card tricks.
For example, if it wasn’t for the sale of two hotels at Stamford Bridge and the women’s team to another BlueCo-owned company, they would be hundreds of millions over the limit.
United meanwhile only dodged a breach for the PSR assessment period up to 30th June 2024 because of £40m worth of lost income they attributed to the pandemic.
Now, in a cash grab that would make the Sheriff of Nottingham blush, Sir Jim Ratcliffe has warned United fans that more ticket price rises are coming because they are in “danger of failing to comply with PSR”.
That comes after the Ineos billionaire made hundreds of employees redundant, cancelled perks as trivial as the staff Christmas party, and removed Old Trafford concession prices for kids and seniors mid-season.
Among bedrock fans, the goodwill Ratcliffe garnered after taking the wheel from the Glazers – who still own 49.9 per cent of the club’s equity and 69 per cent of the voting rights – is being rapidly eroded.
The narrative that the club now appears to be promoting in briefings to the press is that PSR is entirely dictating their transfer strategy too.
In reality, however, the truth is more nuanced, as a potential swap deal involving Garnacho and Nkunku illustrates.
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Nkunku-Garnacho swap could create huge PSR leeway for Chelsea and United
First, some admin: A club’s profit-and-loss account (which is the basis for PSR) and cash flow are two different things.
If United are experiencing PSR issues that are impacting their recruitment and retention budget, there are dozens of financial levers they could pull before raising ticket price rises.
For example, if Chelsea meet United’s £50m valuation of Garnacho this January, the Red Devils could make £500m worth of signings and it would have a net neutral effect on PSR. Yes, you read that right.
In football club accounts and for the purposes of PSR, profit on player sales is based on the fee received for the player minus his amortised book value.
As an academy product, Garnacho has no book value as United paid no fee for him, so a £50m sale would be pure profit.
They would also register that profit straight away, whereas any fees paid for new signings would be amortised. Typically, this is over a period of five years, which is the maximum allowed under PSR.
However, United are halfway through the season, only half of of a new signing’s annual amortisation charge would hit in the current financial year.
Essentially, if United started at zero for PSR sold Garnacho for £50m tomorrow then spent £500m on new signings the following day, they would be back at zero again.
For Nkunku, the calculation is a little more complex given that Chelsea paid a fee for him 18 months ago.
However, TBR Football has run the numbers and a sale at £65m would allow them to make £286m worth of signings and keep Chelsea at a net neutral outlay as far as PSR is concerned.
In a quasi-swap deal between United and Chelsea – in which the two transactions go through separately – it would theoretically allow the clubs to spend £786m this January.
That is, minus the initial amortisation charge for either player, which for all intents and purposes would not make a material impact on either club’s profit-and-loss account this season.
Does this mean Chelsea and Man United can spend what they like before deadline day?
In theory, yes. In practice, it’s different story
The calculation doesn’t account for wages paid to new signings, of course which would impact PSR this year. Also, it isn’t a free hit as you are effectively borrowing from next season’s PSR calculation.
However, it does illustrate how there is almost always short-term manoeuvres a club can make to free up more PSR leeway, even if it isn’t as dramatic as a £786m signing spree.
A Nkunku-Garnacho quasi-swap swap deal would, for example, generate more than enough short-term PSR leeway for United not to have to increase prices for fans mid-season.
If the clubs are tapering their spending and increasing the burden on match-going fans because of cash flow, that is a separate matter. And for United, cash flow is real concern.
But they have a responsibility to communicate that honestly to supporters, not blame PSR.
