While Arsenal will spend more than £200 million ($254 million) on team signings this summer to announce to the Premier League powerhouses their intention to continue to catch champions Manchester City in the new season, Manchester United, with a budget of just 120 million pounds this summer, must spend wiser.
According to the Daily Mail, the Reds were told they had only £120 million ($152 million) available to buy new players this summer, giving head coach Erik Tenhach a headache as he tried to bring in signings to make up for the squad shortfalls and build on last season's third place.
The transfer fee budget constraints are largely due to the Premier League's profitability and sustainability rules, which do not allow clubs to lose more than £15 million ($19 million) over a three-year rolling period.
There are a number of other reasons why United's spending will be limited this summer, from the Glazer family's huge debt to the club, to overpaying buying fees in previous transfer windows, and not selling players at reasonable prices, particularly compared to their Premier League BIG6 rivals.
Too much money is spent on players like Harry Maguire and Anthony
Although Sir Alex Ferguson has yet to win a Premier League title or even launch a decent title challenge since Sir Alex Ferguson retired in 2013, United have spent huge sums of money on transfers over the past decade. The problem is that they make a lot of mistakes in the transfer market and pay too much for underperforming players.
The first was the deal to buy Harry Maguire for £80 million ($102 million) in 2019, which remains a world record transfer fee for a defender, especially now that the defender is only a fringe player in the team. Paying Jarfu £85 million ($105 million) to sign compass striker Anthony, who scored just four Premier League goals last season, also looks like a mistake, as does spending £74 million ($94 million) to sign Jayden Sancho.
Even success stories like Casemiro and Bruno Fernandes have cost the club considerably. This explains why Manchester United spent a total of £1.67 billion ($2.12 billion) on players between 2013 and 2022, the second highest expenditure in the Premier League. They trail Chelsea's £2 billion ($2.5 billion) spending over the same period.
Manchester City spent £1.65 billion ($2.1 billion) on players, but was adequately compensated by winning six Premier League titles and eventually landing in the Champions League last season. Liverpool, which have reached the Champions League final three times since 2018 and won the title in 2020, spend well below the two Manchester clubs at £1.14 billion ($1.4 billion).
Sales revenue is minimal
Not only do United spend a lot of money on signings, but they also get little in return on selling players, and often generously offer large new contracts to players who end up leaving for free. Phil Jones, Nemanja Matic, Ander Herrera, Juan Mata and Paul Pogba. and the award of David De Gea to a four-year, £375,000 weekly contract in 2019.
According to football financial analyst Kieran Maguire, the Reds rank lowest in the Premier League BIG6 in terms of player sales, earning just £133 million ($169 million) since 2013.
This is in stark contrast to Chelsea, which has earned £706 million ($896 million) from selling players, offsetting huge spending over the past decade. Hazard was sold to Real Madrid in 2019 for £142 million ($180 million), where he contributed significantly to the Blues' revenue.
£900 million interest payments on debt
In Manchester United's financial management, the most difficult for fans to accept is that they spent £906 million ($1.15 billion) on interest on debt incurred when the Glazer family leveraged the club in 2005.
The debt that the American family has to the club has been a major factor in the wave of protests from fans against the club's owners, which intensified last season, with fans chanting "We want Glazer out" every time the team scored at Old Trafford.
Interest payments on loans severely erode the club's operating profit, reducing the amount they can spend under the rules of profitability and sustainability.
Due to the lack of shares, there is little room for manoeuvre
One way to bypass the rules of profitability and sustainability is for clubs to inject money in the form of stock. Clubs can bear up to £90 million ($114 million) in losses, with a total allowable loss of £105 million ($133 million).
But since Manchester United is listed on the New York Stock Exchange, issuing additional shares is difficult and expensive. The Glazer family has not injected any equity into the club since taking control of Manchester United in 2005, meaning the total amount they could lose over a rolling three-year period cannot exceed £15 million ($19 million)
Huge payroll bills – but going down
Another factor affecting profitability and sustainability in Manchester United's huge total expenditure is the club's huge salaries.
Manchester United's salary expenditure in 2021-22 was the highest of any Premier League club, at £384 million ($487 million), but the fact that they ended up sixth while posting their lowest points in 30 years is even more embarrassing for fans. The return of Cristiano Ronaldo is a big reason for this, but his departure in November 2022 led to a drop in the club's salary expenses last season. Manchester United are not required to pay prize money for Champions League qualification, leading to a further drop in that number, although their return to Europe's top competition next year means the figure will rise again.
Rice and Kane are too expensive
Manchester United's £120 million budget goes a long way towards explaining why they have never seriously competed to sign Declan Rice or made an offer for the England midfielder, as Manchester City and Arsenal have done. Rice will join Arsenal for a total of £105 million ($133 million).
It was also their fact that they ruled out signing Harry Kane, who was considered the club's number one target, and Ten Hach also admitted to wanting to sign him.
The club has now spent half of its budget to sign Mason Mount for £60 million ($76 million) (including surcharges), which looks like another inflated fee considering the midfielder has only one year left on his contract with Chelsea.
The Reds will have to think very carefully about their next move, whether it's Inter goalkeeper Andrea Onana or Atalanta striker Rasmus Hoylund, although they will be able to increase their summer window transfer budget by selling players such as Harry Maguire, Jaden Sancho and Dean Henderson.