The figures suggest that Liverpool and other teams will face similar problems in the coming months as clubs struggle to remain competitive while having to make do with considerably less money.
The impact of the coronavirus pandemic on the top tier of English football has become clear after Manchester United posted a gloomy financial result in the fourth quarter and at the end of the year.
Manchester United released its fourth quarter financial results this afternoon and Liverpool will follow with interest
For the fiscal year, United incurred a loss of £23.2 million, which was heavily impacted by a significant decrease in broadcast revenues, which was over 41.9 percent, a decrease of £101.0 million mainly due to the non-participation in the UEFA Champions League and the postponement of ten home and away matches in connection with the 2019/20 competitions, which will be played at the beginning of the next fiscal year.
The former Deputy Chairman of Trafford, Ed Woodward, conveyed the news to investors via telephone conference on Wednesday noon. The headline was that United’s revenues had declined by 19 percent to £509 million and net debt had increased by £270.5 million to £474.1 million at June 30, 2020.
Commenting on the call, Woodward told investors: “We are looking back today at one of the most extraordinary and challenging seasons in recent history and I am proud of the way the club continues to respond.
The interruption to the broadcasting schedule due to the season break caused by the coronavirus pandemic has meant a loss to United of around £14 million in Premier League rebates to broadcasters, something that Liverpool must also take into account.
The increase in debt – something that dwarfs most United fans over the ownership of the Glazers – was due to a £256.1 million and equivalent in deferred sponsorship payments, lack of match day revenue and an unfavourable GBP: USD exchange rate as well as uncertainty over the return of fans to Old Trafford and a £56.4 million increase in net investment in intangible assets compared to the previous year, with the acquisition of player registrations for Bruno Fernandes and Donny van de Beek playing a major part in this.
“However, the past year has also shown the fundamental strength and resilience of the club, the special role that sport plays in our societies and the significant influence that the club can have in our communities during this period of adversity.
“There are still great challenges and uncertainties ahead as the coronavirus pandemic continues to disrupt our way of life around the world. This disruption is clearly visible in the financial results we are announcing today, and we expect the impact to remain visible for some time to come.
United’s Chief Financial Officer, Cliff Baty, also painted a bleak picture of the Premier League games that continue to be played behind closed doors, telling investors that the club has lost around £40 million because fans were unable to attend.
In addition, Liverpool had the advantage of Champions League participation and associated revenue – the Reds booked over £100 million during the 2018/19 championship win – but the move into the new year and matchday revenue is likely to suffer for some time to come, and sponsors who are nervous about their commitment to a competition that could be discontinued in the middle of the season would be foolish to rely on such a payday again.
Liverpool entered the pandemic on a more solid basis and felt encouraged enough to pull the trigger on business for Thiago Alcantara, Diogo Jota and Kostas Tsimikas when it was said that the uncertainty surrounding the pandemic would put considerable spending on hold.
Back in June, Deloitte Football had predicted that an immediate return of the Premier League’s biggest clubs to pre-COVID revenue was on the cards, but given the continuing uncertainty about when football can return to normality, this now seems ambitious.
The recent move by the Big Six on Project Big Picture and their alleged involvement in discussions about a European Premier League all suggest that the clubs know that they need to significantly increase their revenue streams in the midst of such an unprecedented financial climate.
Liverpool is not burdened with debt, and the FSG has taken a cautious approach during the pandemic, which they will ultimately find in comparatively better shape when they present their balance sheets in the new year.
For United, their lack of investment and underperformance are now coming to the fore during the pandemic.
When Leicester City won the Premier League in 2016, its profits were around £20 million. The following year, when they finished 12th, it was around £80 million due to their participation in the Champions League, which shows how important revenue from top European football can be.