Man Utd future depends on Champions League qualification

Manchester United could face an uncertain financial future if they fail to qualify for the Champions League at the end of this season. The current state of the club's accounts means that a crisis could quickly follow if they can't satisfy sponsors’ contractual demands and performance expectations.

Some sponsors are finding out that, in the absence of silverware, there is little to be gained from a mid-table slog and participation in the Europa League. The club generates huge revenues, but due to the nature of the business it squeezes out little profit. Most of the income services wages, debt and transfers. There is only a small safety net.

For the Glazer ownership, the inherent worth of the club is that it is a trophy asset. In the coming months it could become an atrophy asset. United languish outside the Champions League places and, while Chelsea cling on to the top four, Solskjaer has been unable to mount a serious spell of pressure upon them .

Missing out on qualification would see the club take an immediate £20 million ($26 million) hit from clauses in their Adidas deal. However, there are other contracts worth hundreds of millions that will come up for renewal in the coming years and there are other more glamorous, more successful teams who would gladly take them from United.

Three weeks ago, accountancy firm Deloitte published its yearly Football Money League , and made a point that should concern United's fans, owners and players. As a result of losing Champions League football for a second consecutive season, there will be a decline in forecasted revenue to around £560-580m ($731-758m), which is down from last year's £627m ($819m).

Ultimately, it may be finances that spur United into some corrective course of action. The club has a £200m ($261m) overdraft due in 2025, a bond of around half a billion dollars due in 2027 and a couple of hundred million dollars due in 2029. For now, that can be easily serviced and refinanced if revenues simply remain static. But even that outlook is no longer a certainty. Lenders might press United for higher interest rates, or ask for a lower level of wages in proportion to revenue. Either of these would theoretically worsen United’s performance on the pitch.

Ed Woodward’s financial success came from making sponsorship deals around the world, to maximise local and global exposure in return for millions. Without it, there would have been no way to pay out dividends to the Glazer family, pay back the interest and principal on the takeover debt, and to finance the great transfer splurges that have got United nowhere. The sponsors handed over the cash, and until Jose Mourinho’s final season they probably got their money’s worth.

Unless high salaries for players and transfer spending is significantly reduced, profit will be wiped out and the ability to service debt will be made far harder. If United cannot offer new players higher salaries, they will then have to rely on their currently non-existent transfer expertise. That could lead to a rapid decline in performance on and off the pitch.

Bruno Fernandes may not be exactly the right player for United, but he shows industry, passion and attacking threat. However, his arrival might simply pave the way for the exit of Paul Pogba, again linked with a move to Real Madrid and Juventus. The dreadful return on investment from a mismanaged player, and the desperate pursuit to haggle over his potential replacement, embodies the disorganised recruitment strategy at United - the very thing they spend most of their free cash on.

Profligate at one turn and parsimonious the next - the crucial thing for the Glazers’ ownership of United is they have never embraced the concept of value. The less they spend, the more expensive it will cost if they ever deign to fix it. The alternative does not bear thinking about for United fans - if revenue does plummet, then the only options for the Glazers will be to strip back even further.

Due to executive vice-chairman Woodward’s approach to transfers since the appointment of Louis van Gaal, problems with the cost of the playing staff have been rolled over until now when they threaten any manager who takes over from Solskjaer.

When Daley Blind was bought from Ajax for a reasonable £20m ($26m) in 2014, he was given a rumoured £140,000-a-week salary ($183,000) - not bad for a utility player. Marcos Rojo is on more than that now, yet he is playing on loan for Estudiantes . United are shelling out yet more than that - £200,000 ($260,000) a week - to enjoy watching Alexis Sanchez bulk out the squad for Inter.

Add to that players whose performances have not warranted their huge contracts, like Phil Jones, Jesse Lingard and Luke Shaw, and it becomes obvious that United have been wasting money hand over fist on salaries. Their wage bill is the most expensive in league history at £232m ($303m) a year.

Statistically, the highest paid squad tends to be the best performing. It is a testament to player, manager and executive that they are demonstrating the most pronounced era of underperformance in the history of the Premier League, and the true cost and impact of this is still to be felt.