How much would Manchester United be hurt financially if they fail to qualify for Europe?

This is an updated version of an article originally published earlier this year.

Manchester United’s disappointing season could be more than just a problem for manager Erik ten Hag – it would also affect the club financially if they fail to qualify for any of UEFA’s three competitions.

The Champions League is always the target early on – even more so with the increased revenue to be gained from UEFA’s new premier competition next season – but that is already out of the equation with Ten Hag’s side unable to finish top of the Premier League. four and England failing to win a fifth place.

However, even qualification for next season’s Europa League or Conference League, UEFA’s second- and third-tier tournaments, looks less likely.

So how much of a financial hit would United take if they failed to qualify for Europe?

Man United, Ten Hag and European qualification

How much money do Champions League clubs get?

Around €2.1 billion (£1.8 billion; $2.3 billion) is shared between participating clubs each year as part of the Champions League. current income distribution model.

Twenty-five percent is paid as a flat-rate starting fee to clubs in the group stage, 30 percent is paid for performance in the competition and a further 30 percent is paid according to each club’s 10-year quota. The final 15% is paid based on the size of their domestic TV markets.

Last season, winners Manchester City received the most prize money at €134.9m, while defending champions Real Madrid, who lost to City in the semi-finals, came second with €118 .8 million euros.

How much of a difference does this money make to United?

Every year in their annual report, United warn that failure to qualify for the Champions League will “result in a material reduction in revenue”.

Thanks largely to their return to the Champions League (despite being knocked out in the group stage), after competing in the Europa League in 2022-23, United’s broadcast and matchday revenue streams saw increases of 52 million pounds and 23.8 million pounds ($65.8 million). and $30 million, respectively) in the six months to the end of 2023 compared to the same period last season.

United were knocked out in the Champions League group stage this season (PETER POWELL/AFP via Getty Images)

These increases are only slightly offset by an increase in United’s wage bill, which has risen by £25.8m this season.

To soften the impact of missing out on the Champions League, most United players take a 25% pay cut if they don’t qualify. After finishing third in the Premier League last season, those wages were restored to their original level.

While United spent £159.6m on wages in the six months to the end of 2022, they spent £185.4m in the same period in 2023.

United actually earned €32.6m from UEFA last season – the most of any team in the Europa League, despite going out in the quarter-finals.

And yet respected football financial analyst Kieron O’Connor, who runs The Swiss Ramble blog, expects United to receive €60.2m from UEFA for this year’s Champions League campaign, even if they didn’t make it the knockout rounds in progress.

Does the new Champions League format change things?

From the start of next season, the Champions League will be expanded to a 36-team tournament from the current 32 as part of changes to UEFA’s club competition formats. United, of course, will not be there.

UEFA expects its upgrade to significantly increase revenue, estimating a total revenue of around €4.4bn (£3.8bn; €4.8bn). Of this, around €2.5 billion will be distributed to clubs competing in the Champions League, with the rest paid to those in the Europa League and the third-tier Conference League.

A larger proportion of Champions League money will be split equally between all participating clubs and paid based on performance, with a smaller amount based on club coefficient and broadcast market share.

Clubs with a strong quotient and in a valuable TV market may end up taking a slightly smaller cut from a larger pool of money than under the current system. But a strong performance in the competition itself will still be richly rewarded.

Unfortunately for United, they did not qualify for this first season of the expanded competition and therefore miss out on these financial gains.

United co-owner Sir Jim Ratcliffe (right) and INEOS head of sport Sir David Brailsford (Bradley Collyer/PA Images via Getty Images)

What is the cost of missing out on the new Champions League?

The easiest starting point is what qualifying as one of the 36 competing clubs will bring: a check of €18.6m, up from €15.6m this season.

How much the end-of-season balance is topped up is then determined by performance:

• Each win in the league stage is expected to bring in €2.1 million, with a draw worth €700,000.
• The higher you finish in the 36-team league, the more you can expect.
• Completing the top will bring in around €10 million, with a sliding scale of merit payouts.
• The clubs in the top eight will receive another 2 million euros as a bonus for qualifying for the knockout stages.
• 1 million euros will go to those who finish 9-16.

The 16 teams ranked 9-24 will enter a play-off to decide who advances to the round of 16 for an additional €11 million.

• In the quarter-finals, 12.5 million euros will bring, the semi-finals 15 million euros and 18.5 million euros in the final.
• The winning team can expect another €6.5m, plus another €4m for reaching the UEFA Super Cup final in 2025.

These staggered installments bring increases from current amounts using a performance-related pot, which is expected to reach €915 million. The kitty for performance-related payments this season was just €600 million.

The unknowns come from how much a club can earn from the new value pillar. How each club is ranked and rewarded will not be known until the line-up of the 36 teams is finalised. A position will be decided based on where a club is located and how much that country contributed to media revenue (formerly the market pool calculation), as well as where the club is ranked in the UEFA coefficient.

There will be a European side and a non-European side, splitting the revenue from the two markets, but topping both rankings is likely to bring in around €45 million.

Manchester City and Liverpool will be near the top of these distribution metrics due to their European performances in recent seasons, but Aston Villa, like Newcastle this season, can expect a more modest gain.

Villa, who beat United in February, are closing in on a Champions League place (Shaun Botterill/Getty Images)

Villa are currently ranked 81st in the UEFA coefficient. Villa’s ranking in the value pillar, should they maintain their fourth position in the Premier League, would be improved by England being among the biggest contributors to the overall media revenue pot.

“The value pillars are still being decided but each club will be given a ranking which will dictate how much money they will receive,” said Dr Dan Plumley, sports finance expert and lecturer at Sheffield Hallam University. The Athletic. “The Premier League is likely to win this argument because of their strength in the bottom of the market.

“If you were to win everything in the revamped format – taking into account all your league games, topping the market groups and going all the way – I have the numbers around the €161m mark based on UEFA guidelines.

“The benchmark for an English club is a minimum of £50m, the amount we usually attach to qualifying for the Champions League, but there will be room for more next season. It will be more profitable because of the distribution changes and the English clubs will continue to win because of their market position.”

The latest official figures recorded by UEFA come from the 2022-23 season, when Manchester City’s first Champions League title returned them just under €135m.

Any English club, theoretically ranked in the top half of UEFA’s value pillar, will earn at least €70 million if they automatically progress to the last 16 next season. And all because I played eight matches.

And what is the cost of losing the Europa League and Conference League?

The pay from the Europa League and Conference League will also bring the chance to increase revenue next season.

The total amount paid to Europa League clubs next term will be €565m, up from €465m this season. This could bring a club close to €40 million in prize money.

Being part of the league phase would bring €4.31 million, with clubs receiving €450,000 per win and €150,000 per draw.

Meanwhile, the Conference League is forecast to start with a central pot of €285m, up from €235m. Clubs would receive 3.17 million euros to reach the league stage with 400,000 euros on victory and 133 thousand € on draw.

West Ham United’s victory in the 2022-23 competition earned them €22 million in prize money when they went all the way. A club the size of Manchester United could earn more than their matchday revenue if they end up in a competition they could avoid.

West Ham took home €22 million for winning the Conference League last season (Alex Grimm/Getty Images)

How does this affect United’s FFP?

Clearly, Champions League qualification would have been beneficial for United’s compliance with Financial Fair Play (FFP) regulations. But did the lack of qualification put them at risk of infringement?

United broke FFP rules last season after a year without Champions League football and were fined €300,000 for what the club described as a “minor” breach of UEFA’s profitability test.

Clubs in the European competition were not subject to the same break-even test this year as UEFA migrated to new rules, but the test will be back in place next season alongside UEFA’s new team cost report.

United also preached caution over meeting the Premier League’s profitability and sustainability (PSR) rules, which allow clubs to lose no more than £105m over a three-year monitoring period.

They have lost a lot of money in recent years, but from next season the £150m pre-tax loss incurred in the 2021-22 season will no longer be part of either UEFA or the Premier League’s monitoring periods.

With that £150m loss out of the equation, as long as they don’t run as big a deficit at the end of this season, United should have more FFP space going forward. However, qualifying for a UEFA tournament would certainly help.

(Top photo: Michael Regan/Getty Images)