Thames Under Pressure to Find a Rescue Plan After KKR Pulls Out
Thames Water is running out of options for the equity funding it desperately needs after preferred bidder KKR & Co. pulled out of a rescue deal.
Thames is now focusing on talks with senior creditors, including Silver Point Capital and Elliott Management, who had been preparing their own plan. Moving forward with this option hinges on finding an agreement with the regulator Ofwat.
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New York Times
33 minutes ago
- New York Times
Jesus, Cuiabano and Jair Cunha: What could the three Brazilians bring to Nottingham Forest?
When Leo Bonatini signed on loan from Wolverhampton Wanderers in January 2019, it was a landmark moment for Nottingham Forest — the striker became the first Brazilian to play for the club. It prompted a ripple of excitement among the fanbase, who were excited to see if he would bring a touch of South American magic, just as he had done at Molineux, where he had been part of the Wolves side that won promotion to the Premier League in 2017-18. Advertisement Six years after Bonatini departed under a cloud — having made only two starts and three substitute appearances, without scoring a goal, in his five months in Nottingham — Brazil has become a regular and valuable source of signings at the City Ground. If their current pursuit of Botafogo trio Igor Jesus, Cuiabano and Jair Cunha goes to plan, the tally of Brazilians signed by the club since Bonatini will reach 13. Forest have agreed a combined fee of £40million ($54.3m) with Botafogo, the reigning South American champions after winning the Copa Libertadores last November; that includes £20m for striker Jesus, who is under contract with the Rio de Janeiro club until 2027. Owner Evangelos Marinakis' relationship with John Textor, the American businessman who is the majority owner and chairman of Eagle Football Holdings Limited — which is currently a shareholder in Crystal Palace, France's Lyon, Botafogo and RWD Molenbeek in Belgium — might be a useful asset for the club this summer, with Lyon interested in both Danilo and goalkeeper Matt Turner, having signed Moussa Niakhate and Orel Mangala from Forest last year. If everything falls into place — and depending on whether Lyon push, as expected, to sign Danilo — Nuno Espirito Santo's squad could include as many as seven players from Brazil. According to Transfermarkt, there were 33 Brazilians playing in the Premier League last season — more than any other foreign nationality, with France next on 25. At Forest, they will hope their latest trio of new additions have the same impact as men such as Murillo, Danilo, Felipe and Renan Lodi have done in the Garibaldi red shirt — and not the likes of Andrey Santos, Gustavo Scarpa (below) and Rodrigo Ely, who failed to make much of an impression. Botafogo will play their first group game in the Club World Cup a week on Monday, against Seattle Sounders of MLS. After that, they face Paris Saint-Germain, the new European champions, and Champions League regulars Atletico Madrid. Jesus, Cuiabano and Jair Cunha are expected to remain with them for the tournament. But, next season, Brazilian players could be at the heart of Forest's squad. Advertisement With defender Morato and goalkeeper Carlos Miguel already on the books, Nuno could, in theory, field an all-Brazil back five, with Cuiabano a flexible left-back, wing-back or winger and Jair Cunha a central defender. The club's research has been enough to convince them that, in Jesus, they will be signing a player who can have a long-term impact at the other end of the pitch. Forest believe the 24-year-old has the potential — as Murillo has done — to grow and evolve with them; to become a better, more valuable player. He has already won four senior caps. In Brazil — and at the City Ground — there is a sense they have got themselves a very good deal overall. But, among the three newcomers, it is Jesus who is regarded as being equipped to make an immediate impact. 'He is a complete striker. When you look at his numbers, you might not understand what a good player he is, because he has only eight (Serie A) goals since joining Botafogo,' says Sergio Santana, who writes about Botafogo for Brazil's biggest newspaper O Globo. 'But the numbers do not show how important he is. He is a player who contributes on and off the ball. He can drift to the left or the right, he will drop deeper to get on the ball, he will fight with the opposition defenders. 'He is an amazing player. He signed on a free transfer, when his contract finished in the UAE. He was a hidden gem.' Jesus scored 34 goals in 66 appearances across four seasons in the UAE Pro League, with that number rising to 46 in 92, across all competitions. In his final season (2023-24) there with Shabab Al Ahli, he netted 17 times in his 26 games. He was a key figure as they finished second to Al Wasl. Botafogo now stand to make a swift £20million profit on him, although they will be losing an important influence. 'Chris Wood has had an amazing season. But Jesus is a different player. He is more of a mobile forward,' says Santana. 'He will get himself into wide areas, he will play off the last man. He works hard off the ball, as well as on it. He will provide a new option; a new kind of character and approach to the team.' Advertisement Artur Jorge led Botafogo to a historic league and Copa Libertadores double last season, before departing to join Qatari side Al-Rayyan. His replacement, Renato Paiva, was appointed in February for the start of the 2025 campaign. 'Botafogo had a very poor start to the season — the coach left and the club took two months to appoint a replacement,' says Santana. 'That time was trouble. All of the team started badly. But Jesus, he has found his feet. In the game against Universidad de Chile (in the Copa Libertadores group stage on May 28) he was amazing after the team had been reduced to 10 men (Cunha was the man sent off). He led the team. He basically said, 'Give the ball to me and I will get the win for you.' He scored, and they won 1-0. 'He can have an instant impact at Forest, because of the character he is, the kind of player he is. He can also become even better.' Forest have been watching Jesus since last season. Conversations were had about a potential move in January. But now they look likely to get their man. They hope he is capable of coping with the intensity of Premier League football and he will be expected to challenge Wood for his place, but he is also a player who can make a difference in other positions when coming off the bench. In Cuiabano, Forest will be signing a player with the physical attributes to thrive in the English top flight. He is regarded primarily as a left-back or wing-back but has been used regularly as a winger during his nine Serie A appearances of the 2025 season so far. The 22-year-old began his career with fellow Brazilians Gremio, joining their youth setup in 2014. MLS sides Orlando City and Charlotte had been keeping an eye on his progress, but it was Botafogo who signed him in April last year. He has subsequently made 50 appearances in all competitions, scoring six goals. 'Cuiabano is a very strong, physical player. He is quick, quick, quick — rapid,' says Santana. 'He is most naturally a left-back, but he has played many games recently further up the pitch. He has done very well there, because it makes the most of his strengths. He is very good offensively. He is very much like (Ecuador international Pervis) Estupinan at Brighton. Advertisement 'He is not always the strongest defensively, but he can deliver a very good cross and his shooting is a strength that he has improved on.' Cuiabano is considered one of the hardest-working players on the training ground; a player who sets the bar with his professionalism. 'Brighton were interested in him, and I understand why,' says Santana. 'It would not be crazy for him to get into the Brazil national team. Carlo Ancelotti is new in the role (he was appointed Brazil coach last month) but Cuiabano must be in contention.' At just 20 years old — and having made only 17 first-team appearances for Botafogo and 20 before that with fellow Brazilians Santos, largely in the second division after coming through their academy — Cunha will very much be a signing for the future. But standing at 6ft 5in (196cm), he is already imposing in the same way as Morato, Nikola Milenkovic and Murillo. 'Jair is one of the most promising players in Brazil,' says Santana. 'He is very good on the ball, he can use both feet, even though he is right-footed. He is very strong technically. He does make the kind of mistakes that young players do. But he has explosive talent. If the environment is right for him to grow and learn, he can be very good. I am sure he can learn a lot from Murillo.' Following his arrival from Brazil's Corinthians in August 2023, Forest fans quickly came up with a fond chant for Murillo, which begins 'He's from Sao Paulo, he wears the red and white' before, um, going on to mock local rivals Derby County in less family-friendly fashion. They may soon need to find their musical creativity again if these new arrivals from Brazil have similar impact.
New York Times
36 minutes ago
- New York Times
Every Premier League club's PSR situation: Who can spend and who should worry
As one Premier League season ends, another begins. The 20 clubs who will do battle in the world's richest league come August were known over 24 hours before the most recent iteration ended, with Sunderland's last-minute Championship play-off final win completing the 2025-26 set. While the fixtures might have finished for a couple of months, the intrigue hasn't. The transfer window is now open as a result of the Club World Cup and, save for a five-day break starting next week, will run through to 7pm BST (2pm ET) on Monday, September 1; the fixtures are out on Wednesday, June 18. Advertisement The nature of how football finance interacts with the actual football can be perplexing at the best of times, and in recent years has given rise to a pseudo-deadline day: June 30 has become an important date for most Premier League clubs. That is the end of the 2024-25 accounting period for 15 of next season's Premier League clubs. The exceptions are Arsenal, Liverpool, West Ham United (whose big day was May 31), Burnley, Sunderland (both July 31). Wolves recently moved theirs from May 31 to June 30, so their 2024-25 accounts span 13 months. That date has become ever more crucial as profit and sustainability rules (PSR), which place limits on clubs' financial losses, have bared their teeth; last June saw several clubs engage in a slew of last-minute deals to avoid breaching the Premier League's regulations. To that end, The Athletic has crunched the numbers across next season's top-flight clubs in an attempt to determine just where each of them stand at the outset of this transfer window and ahead of that June 30 deadline. Other than recently-relegated Ipswich Town, and, to a certain extent, Aston Villa, no clubs in England provide PSR calculations publicly. So the figures which follow are estimates: not unequivocal truth, but sufficiently considered to give a decent idea of everyone's position right now. What the below aren't are estimates of how much a club can spend this summer. Instead, as PSR calculations are based, and focused, upon limiting how much clubs can lose, we've provided a headline estimate of the amount each could lose before tax in 2024-25 while avoiding a PSR breach come that deadline. That estimate draws from figures released for the 2022-23 and 2023-24 campaigns, with the most recent one completing each club's three-year PSR cycle. From there, we've considered whether that level of pre-tax loss is likely or not and, stemming from that, whether we can expect that club to be busy before this month's end. Arsenal's pre-tax loss totalled £69.8million across the past two seasons. Of that, £35.2m in depreciation is deemed an acceptable expense under the Premier League's (and European governing body UEFA's) PSR regime, reducing the club's loss in their calculation to £34.6m before any further allowable costs on youth development, community expenditure and spending on the women's team. Advertisement Set against a £105million loss over three seasons, they'd have substantial headroom, but clubs only enjoy that limit if owners inject equity (of up to £90m) over the relevant PSR cycle. Arsenal's sole equity injection of the 2022-25 period was a £5.4m capital contribution in 2023, so their PSR loss limit is only £20.4m — the £15m lower limit available to all clubs, plus that capital contribution. Even so, we still expect few problems, and project Arsenal could lose around £97million in 2024-25 without breaching PSR. They lost just £17.7m in 2023-24, and while operating losses were £50.3m then, they made over £50m profit on the sales of Emile Smith Rowe and Eddie Nketiah in 2024-25, as well as a decent amount on Aaron Ramsdale. What's more, Champions League revenue was in the £100million region, leaving few worries about compliance this summer. Villa's last-day loss at Manchester United was a blow both on and off the field. Hopes of another run in the Champions League were left in tatters, and Villa will have to make do with eking what they can from the Europa League's much smaller prize pot next season. Problematically for Unai Emery's men, UEFA's financial rules don't change dependent on which of its three competitions you play in. Villa will therefore have to comply with its squad cost ratio rule even as they generate less in European income; this rule is one Villa are already believed to have breached in 2023-24, when they were in the Conference League, and are in ongoing discussions with UEFA over a financial settlement. UEFA also imposes lower loss limits on competing clubs, as well as requiring adjustments for any quirky player-swap deals between clubs like several Villa partook in last June, ostensibly to ensure domestic PSR compliance. Advertisement If there's trouble abroad, then there's plenty at home again, too. Villa have lost £206.2million pre-tax in the past two seasons, the highest deficit in the Premier League in that time. Helpfully, they actually disclose PSR-related costs in their accounts (albeit not the actual calculation), so we're able to get a better idea for them than most clubs on how much they can deduct in terms of what football's governing bodies deem 'good' costs. Even with some chunky deductions in their PSR calculation, we project Villa can only lose £15million in 2024-25 and remain in line with Premier League rules. Big sales of Moussa Diaby and Jhon Duran have helped, as has the £70million in Champions League prize money alongside whatever other income uplifts Villa saw from last season's run to the quarter-finals, but their position still looks on a knife-edge, not least as they continued to spend in 2024-25 and committed hefty wages to January loanees including Marcus Rashford and Marco Asensio. Villa will need to be active sellers this month once again. Bournemouth's recent transfer spending was only made possible by them being allowed to retain a £71.4million loan write-off within their PSR calculation, without which they'd have been in breach of Premier League rules. That write-off enabled the club to post a £44.5m profit in 2022-23, a figure which will drop from their PSR calculation in the 2025-26 season. Bournemouth then lost £66.2million in 2023-24 as a result of hefty spending, with little in the way of player sales to bring losses down. The club's allowable costs for PSR purposes are minimal too, so their PSR loss won't have been much lower than the pre-tax figure. Continuing that trend would have put them at risk of breaching this year, but considerable progress on the selling side has eased those worries. Bournemouth had already banked £35.1million in player sale profits even before Real Madrid buying Dean Huijsen, officially completed on Sunday, generated just shy of another £40m in profit for the club's bottom line. Advertisement Add increased Premier League prize money — we project they earned £16million more that way in 2024-25 than a year earlier, as their final placing improved from 12th to ninth — and they'll be comfortably better off than the £35m pre-tax loss we believe they could make while staying within league rules. After two years of profitability, Brentford slipped back into the red in 2023-24 — but only marginally so. The west London outfit have little to worry about from a PSR perspective; going into 2024-25, their net pre-tax result was a £1.3million profit over the prior two. Brentford's wider operations include lower allowable costs than many of their Premier League peers — their academy, for example, is only Category 2, which costs less to run than a Category 1 equivalent — and they've received no recent equity funding to bump their loss limit up, but on depreciation alone in the past two seasons they had £14.1million of costs they could drop from their PSR calculation. Extrapolating that and making reasonable estimates on other allowables paints a pretty clear picture: Brentford have no PSR troubles. After a stellar improvement in Premier League prize money last season, alongside the £40million sale of Ivan Toney in August, they may well have returned to the profitability they enjoyed in their first two years in the Premier League. Wherever the bottom line lands at the end of June, they'll be a fair distance from the £58million we project they could lose and still avoid a PSR breach. Behind Chelsea, Brighton were the second-highest transfer spenders in Europe last summer, parting with just under £200million on new players. Despite that, they had, and have, little to fear when it comes to PSR. Such has been the impressive running of Brighton, their combined pre-tax profit over the past two seasons was a whopping £208.4m. That is before any deductions that can be made for PSR purposes. With depreciation costs alone running at around £8million per year, and a Category 1 academy in tow, we project Brighton could lose £295m in 2024-25 before running afoul of Premier League financial rules. That's with a lower loss limit of just £15million, too. Advertisement Brighton have received no explicit equity funding from owner Tony Bloom in recent years, though he did restructure £200million of debt owed to him such that it can be converted to equity at his discretion. That boosted the equity element of Brighton's balance sheet by £156.1m; if we took that as 'secure funding' under its PSR meaning, the club would enjoy the maximum loss limit and we project they could lose a whopping £385m in 2024-25 and still comply — by far the highest such figure in the division. For a while one of England's most consistently profitable clubs, Burnley have become loss-making since their December 2020 takeover, recording a combined deficit of £64.4million in the past two accounting years. Their PSR position is subject to a couple of quirks; not only does their accounting year finish at the end of July, but their recent bouncing between leagues (two relegations and two promotions in four seasons) means their allowable loss limit for 2024-25 sits at a maximum of £61m. Or it would do, but Burnley have received no equity funding in recent years. As a result, their loss limit over the three-year PSR cycle to the end of next month is £15million and, at initial glance, that looks a difficult mark for them to hit. Not only do the club have those £64.4m losses to include, but the size of expenditure they can deduct for PSR purposes is minimal compared to many. Burnley's depreciation bill in 2023-24 was just £2.6m, and they only this month achieved Category 1 academy status; lower-ranked academies cost less to run. We project Burnley need to turn a profit in their 2024-25 accounting year, putting the required sum at around £20million. That's around a £48m swing from 2023-24, and would need to be achieved in a season where their broadcast income was slashed on the back of relegation. Fortunately, Burnley were active sellers last summer, generating post-July 2024 proceeds on player sales of £87.7million. That should, we expect, prove just about enough to get them to the profitability they need to be at. They'll also benefit from being able to exclude the extra costs incurred by promotion in their 2024-25 PSR calculation. Section 6, Appendix B of the EFL's rules allows clubs to recognise promotion bonuses in the season after they go up. That rule is missing from the Premier League's regulations, and The Athletic has confirmed no exclusion will be allowed under its PSR next season (the costs will remain in the 2024-25 accounting period for any PSR calculations submitted to the Premier League). For EFL PSR, which Burnley are governed by to the end of July, the bonuses are pushed into the 2025-26 season. PSR-busting tactics at Stamford Bridge have gained plenty of headlines in recent seasons, and for good reason. Through the intra-group sales of hotels, car parks and even their own women's team, Chelsea have turned a rather tricky PSR position into one whereby they enjoy mammoth headroom — at least domestically. Advertisement Chelsea's pre-tax result across 2022-23 and 2023-24 was profitable at £38.3million, even before any costs are deducted from their PSR calculation — and the deductions they can make are chunky. That sale of the women's team means they won't benefit from any cost deductions in that respect in 2024-25, but they're hardly necessary in terms of current compliance. Based on our projections, Chelsea could lose £300m and comply with Premier League PSR. They'll lose a lot, but nowhere close to that much. The picture is rather different in Europe, where UEFA strips out intra-group sales. Chelsea are already in talks over a financial settlement for a breach based on their accounts for 2023-24, and another hefty loss in the last one won't smooth their position there. The club's return to the Champions League next season will at least help for 2025-26. The newest name on the FA Cup have endured a half-decade of losses since 2020, and Palace entered the 2024-25 season with two-year combined pre-tax losses of £65.3million. The south London side have received plenty of equity funding in recent years, so their PSR loss limit is the maximum £105m allowed, and they're unlikely to hit that level of three-year loss even before we deduct allowable expenditure on the likes of infrastructure, youth and community development and their women's team. While the club strengthened last summer, the fees on new players were outweighed by sums received from selling Michael Olise, Joachim Andersen and Sam Johnstone. Per Palace's latest accounts, their net incomings from transfers after June 2024 were £38.7million. Given they've always stayed well within their PSR limits in years where they haven't sold players for much, it's clear Palace will come nowhere close to the £90m loss we believe they could make and still remain PSR-compliant for 2024-25. Everton's issues with PSR compliance have been legion in recent years — including points deducted — and despite improvements off the field, not least the club finally being taken over by The Friedkin Group in late 2024, they're not fully out of the woods yet. That's despite them completing a deal to buy loanee Carlos Alcaraz before May's end; that date would have seen his transfer fee jump up, and, from a PSR perspective, signing him so late in the current accounting period won't have too great an effect on the bottom line. Advertisement In the prior two seasons, the club lost a combined £142.3million before tax, and we know from previous disclosures that 2022-23's PSR loss was £62.7m, against a pre-tax loss of £89.1m. That left them needing a PSR loss of below £38m in 2023-24, which they managed, but not with a great deal of headroom. Accordingly, with those figures still part of their calculation, we estimate Everton need to keep 2024-25's pre-tax loss below £39m. The operating loss pre-player sales for 2023-24 was £82.3m, so even the big sale of Amadou Onana to Aston Villa last July mightn't have been enough on its own to bring them to where they need to be. Prize money from the Premier League likely only ticked up a small amount, and while the lack of legal battles has saved money, Everton's PSR compliance looks to be a close-run thing again, at least to the end of June, albeit one we believe they'll be just about OK on. After this month, that £62.7m PSR deficit from 2022-23 will disappear from view. Fulham were close to a PSR breach in 2022-23, the first season of their current stint in the Premier League, ultimately avoiding one via some Covid-19-related deductions as well as costs incurred on the redevelopment of Craven Cottage's Riverside Stand. Since then, the club have sailed away from both the lower reaches of the table and regulatory trouble, and with 2024-25 being the first year in which they benefit from the full £105million PSR loss limit (as all three of the seasons in their 2022-25 PSR calculation were spent in the Premier League), Fulham should have few worries this time around. Combined pre-tax losses in the previous two seasons total £58.5million, and we estimate that, after removing allowable costs, Fulham could lose up to £77m for 2024-25 and remain compliant. That looks unlikely, even with underlying operating losses as high as £64.9m a season ago. Advertisement This time around, Fulham have enjoyed greater Premier League prize money (we reckon they've seen an over £10million increase), higher player-sale profits (another £10m or so) and, crucially for a club with a history of low gate receipts in a ground that holds less than 30,000 people, the benefits of more premium offerings for matchday attendees. Leeds United's return to the top tier at the second time of asking brought thousands onto the city's streets and, you suspect, relief in the boardroom. The Yorkshire club spent heavily on trying to avoid relegation and, when that failed, on getting back to the Premier League as quickly as possible. In the previous two seasons, Leeds' pre-tax loss totalled £94.5million, which isn't great when we consider the 2022-25 PSR cycle will include two years of EFL loss limits. In all, they can only lose £61m over the three-year period and remain compliant. A £2.5m 'Cost of Living Allowance', introduced by the EFL for the 2024-25 season as a deduction in clubs' PSR calculations, will help towards meeting that sum (fellow promoted sides Burnley and Sunderland will benefit from it too). From a PSR perspective, after taking into account the relevant deductions, including the one above, we estimate Leeds could lose around £42million for 2024-25 and stay within financial rules. Usefully, as detailed in our Burnley section, promotion bonuses (totalling £19.2m, per Leeds' accounts) won't be included in their current PSR calculation. As well, the sales of Georginio Rutter, Crysencio Summerville and Glen Kamara generated around £70m in sales proceeds (the profit figure is lower). The recent sale of Rasmus Kristensen to Eintracht Frankfurt provided further profit. Their 2023-24 operating loss before player sales was £76.3m, and broadcast income fell last season by around £8m due to a reduced parachute payment. Getting the pre-tax loss down to the £42m mark we've estimated looks a bit of a squeeze, but The Athletic understands Leeds aren't in the position of needing to sell before the end of June. If they do, it will be because the deal makes sense, regardless of its timing. Chairman Paraag Marathe has previously stated his hope that Leeds have 'a PSR issue every year, because everything we do is going to be about maximising our ability to be as competitive as we can be'. They will be close to the limit this month, but should be just about fine. Despite breaking even since Fenway Sports Group bought the club in October 2010, Liverpool's pre-tax result for 2023-24 was their worst ever — £57.1m was shipped, which on top of a £9m deficit a year earlier put the club's combined loss at £66.1m for the first two years of the current PSR cycle. Liverpool haven't been funded by equity recently, so their losses are limited to £15million over three seasons. They do, however, have chunky allowable costs. The club's infrastructure accounts for around £16m in annual depreciation charges, while they also run one of the more expensive youth setups in England. Advertisement We estimate Liverpool could have lost £75million in their 2024-25 accounting period (which ended on Saturday) and still have been compliant with Premier League rules. In reality, with booming revenues and player sale profits of £41.9m (around double the size of 2023-24), Liverpool were considerably more likely to have been profitable last season than to have strayed anywhere close to their loss limit. City's January transfer splurge added over £20million in transfer fee amortisation — and unknown amounts in wages — to their 2024-25 costs, in the same season their earnings from Europe dropped significantly after they exited the Champions League in the first knockout round. Not that there's any cause for concern in a PSR sense. City have booked significant pre-tax profits in recent years, and lost prize money from last season at home and in Europe will be, at least in part, offset by monies from this summer's Club World Cup. City's profits over the previous two seasons total £154.1million, and that's before allowable costs are deducted. So profitable have the club been that ownership has had little need to inject equity. That means City's PSR loss limit for the current cycle is just £15m, but no matter. We project they could lose close to £300million for the season just ended and be fine, PSR-wise. As detailed by The Athletic, Manchester United's PSR position is calculated using the accounts of Red Football Limited (RFL), rather than Manchester United plc (RFL is a subsidiary of the plc entity). That's a pretty big factor, as in recent years the pre-tax result of those companies has diverged significantly. In 2023-24, Manchester United plc lost £130.7million before tax; for RFL, the deficit was just £36.2m. Per UEFA's most recent European Club Finance and Investment Landscape report, pre-tax loss figures for United were €22m (£19m at the exchange rate used in the report) in 2022-23 and €42m (£36m) in 2023-24 — an exact mirror of the pre-tax results in RFL's accounts. The difference stems partly from RFL including none of the costs borne by the plc as part of Sir Jim Ratcliffe's share purchase in February 2024, but also from the structure of loans within the wider Manchester United group. RFL's bottom line benefited from booking interest income on intra-group loans owed to RFL by entities further up the corporate chain, as well as recharging staff time to elsewhere in the business (sources have told The Athletic this time comprised plc-related business undertaken by executives, such as investor relations, rather than football-related activities). Foreign exchange differences in RFL were more favourable than at the plc level, too. Based on RFL's loss figures, it's a struggle to see how there were ever any PSR worries at the club — though that's only true once Ratcliffe's arrival was accompanied by equity investment, which raised United's three-year PSR loss limit from £15m to £105m. There is also the complication whereby we do not know exactly which costs United were required to add back into their PSR calculation. Both the Premier League and UEFA use a 'reporting perimeter' that requires you to include all costs 'in respect of (that club's) football activities', including any amounts that occur under the auspice of other legal entities. According to Old Trafford sources, for the purposes of their PSR calculation, United are required to strip out any foreign exchange differences and the impact of intra-group loan interest. That means United's pre-tax loss in its PSR calculation is larger than that shown in RFL's accounts, though still below the loss in the plc entity. RFL's pre-tax loss across the 2022-23 and 2023-24 seasons was £55.1million, and United's loss limit across the three-year PSR cycle is £105m following Ratcliffe's injections of equity in 2024. After taking into account allowable costs, and adjusting for exchange differences and the intra-group interest, we reckon United could lose around £141m in 2024-25 and still comply with Premier League rules. In other words, they'll be fine this summer, however surprising that may seem. Newcastle's PSR troubles this time a year ago were well documented, and led to the sales of Elliot Anderson and Yankuba Minteh for roughly £60million in profit, without which the club would have breached financial rules in 2023-24. The club's position is rather less squeezed this summer; indeed, coach Eddie Howe has already stated '(PSR) issues aren't there for the coming window'. That's certainly true looking ahead to next season, when 2022-23's £71.8million pre-tax loss will drop out of Newcastle's PSR calculation. Up to the end of this month, that sum remains in there, alongside the £11.1m lost the previous season. We estimate Newcastle can lose up to £83m in 2024-25 and remain compliant. Before player sales, Newcastle have lost just shy of £70million in each of the prior two seasons, so doing that again in the latest one would run them pretty close to their limit again. Continued commercial income improvements will help, though a curious potential issue is one they'll benefit from next year: Champions League qualification means booming revenue in 2025-26, but staff bonuses likely crystallise in 2024-25. Even so, we expect Newcastle should indeed be OK at the end of June. The sales of Miguel Almiron and Lloyd Kelly to suitors abroad should bring the bottom line below £83million. Had Newcastle been subject to UEFA's lower loss limits it would have been a tighter squeeze — not least because Europe's governing body requires adjustments to the profits recognised on the 2023-24 sales of Anderson and Allan Saint-Maximin — but that PSR regime won't be a consideration until next season. Forest's PSR troubles were played out rather publicly in 2023-24, as the club copped a four-point deduction for overspending following their 2022 promotion. In the end, it made no difference to their league position that year, but some of the signings which contributed to that punishment have repaid the hassle to Forest several times over — their 10-spot jump up to finish seventh last season has, by our reckoning, generated an extra £34.2million in Premier League prize money. Forest actually booked a £10.1million pre-tax profit last season, the byproduct of recording over £100m in profit on player sales. That swung a chunky £75.3m operating loss into the black, though with little in the way of big departures in 2024-25 we can expect them to fall back into loss-making territory. Still, the significant improvement in domestic prize money should ensure they fall a decent way short of the £85million we project they could lose for the season without breaching PSR. Sunderland spending the past eight years out of the Premier League means they're the only club in the 2025-26 competition who won't have the opportunity to benefit from at least one PSR year with an upper loss limit of £35million; instead, each of the three years within their PSR calculation are capped at an upper limit of £13m, or £39m in total. In fact, Sunderland's PSR limit is even lower than that, as they've received no equity from ownership in recent years. To that end, their limit across the 2022-25 cycle is just £15million. For many Championship clubs that would be troublesome, but Sunderland have managed to get out of the second tier within three seasons of their 2022 promotion back to it — so before losses racked up too heavily. The club's pre-tax loss across 2022-23 and 2023-24 was a combined £17.6million and after even some pretty stingy deductions — the club operate a Category 1 academy, and we've likely underestimated the cost of doing so — we reckon Sunderland's PSR result over those seasons was actually £5m in the black. For the season just ended, we estimate Sunderland could lose up to £33million and remain PSR compliant. They will, therefore, be fine. They sold Jack Clarke for a sizeable profit last summer and then their play-off final hero Tommy Watson for a further £10million in a deal announced in April, and had generally been at the low end of Championship operating losses in recent years. Promotion bonuses would worsen the bottom line, but, as detailed above, Sunderland won't need to include those in their 2024-25 PSR submissions to the EFL. At first glance, Tottenham might appear ripe for PSR trouble. Once routinely profitable, they've booked five consecutive pre-tax losses — £120.7m in the previous two years which will therefore be included in their 2024-25 PSR calculation. Yet all of those worries are swept away in an instant when we consider that, in those same two seasons, Spurs incurred £141.6m in depreciation and non-player amortisation costs, principally on their state-of-the-art new stadium. Removing those costs puts them into the black from a PSR perspective, even before any further deductions. Once those are included, and we again account for the near-£70million annual depreciation cost, we estimate Tottenham could lose over £250m in 2024-25, probably around £277m, and still remain PSR-compliant. Even as their Premier League prize money has tumbled by virtue of a 17th-place finish in the 20-team division, the loss will be nowhere near that sort of figure. Spurs' bigger issue this summer was finding the actual cash to spend, though qualification for the 2025-26 Champions League as winners of the Europa League has eased some of those worries. West Ham generated an impressive £57.2million pre-tax profit in 2023-24, driven by the near-£100m profit recognised on the sale of Declan Rice to Arsenal in the early stages of that financial year. Their two-year pre-tax result leading into last season was therefore profitable, to the tune of £38.9m. West Ham's allowable PSR loss dwindled over the intervening months, as their last equity injection came during 2021-22, a period which drops off this next three-year calculation. That means they can only lose up to £15million in the three seasons spanning 2022-25, once allowable costs are removed. Even so, they are in little danger — and, with their accounting year-end falling on May 31, their lack of activity recently is reflective of as much. We estimate West Ham could have lost £95m in 2024-25 and remained PSR-compliant. In February, Wolves took the step of shifting their accounting year-end date from May 31 to June 30. That's a move which previously might have been seen as a club bringing their accounting dates into line with peers; now, rightly or wrongly, it comes with the added connotation of being seen as required in order to ensure a PSR breach is avoided. Wolves lost £81.5million across 2022-23 and 2023-24 and, while the latter figures were improved (the loss reduced from £67.2m to £14.3m) they still carried an operating loss, before player sales, of £73.3m. They also don't appear to have full use of the maximum £105m three-year loss limit. The club's only known equity injection across this and the previous two seasons was a £79.7m capital contribution from owner Fosun in 2023-24 — which would mean their maximum PSR loss is pegged at £94.7m. The club required the sale of Ruben Neves this month two years ago to ease PSR concerns then, but the recent departure of Matheus Cunha doesn't look to have been a regulatory necessity. We estimate Wolves could lose £56million in 2024-25 and stay within Premier League rules. Set against £70million-plus operating losses, that would be problematic, but the club banked £65.3m in player profits last summer, primarily on the sales of Maximilian Kilman and Pedro Neto. Cunha's departure tips that figure over the £100m mark, and there's little need for them to look to sell anyone else this month. (Top photos: Getty Images)
New York Times
43 minutes ago
- New York Times
Manchester United, Red Football Limited and the battle to stay PSR compliant
This past week, many supporters of rival Premier League clubs have watched Manchester United agree a £62.5m deal with Wolverhampton Wanderers for Matheus Cunha, then make an opening offer worth up to £55m for Brentford's Bryan Mbeumo, and asked one very simple question. Given they just posted their lowest top flight league finish since 1974, failed to qualify for Europe and, according to part-owner Sir Jim Ratcliffe in March, could have gone bust by Christmas if not for cost-cutting measures, how are United not in danger of breaching the Premier League's profit and sustainability rules (PSR)? Advertisement United are on the record regarding their concerns over compliance with PSR, introduced in 2015 in an effort to prevent clubs overspending and encountering financial difficulty. In January, in a letter to fan group The 1958 responding to criticism over mid-season ticket price increases, United issued a statement said they were 'in danger of failing to comply with PSR/FFP requirements in future years' unless action was taken. But there was not quite the same sense of jeopardy upon release of the club's latest full-year financial results in September, when chief executive Omar Berrada said that United remain 'committed to and in compliance with' both the Premier League and UEFA's financial sustainability regulations. In the end, Berrada's confidence was well-placed and United were not charged by the Premier League with breaching 2023-24 PSR. Then, in the very same round of interviews as his infamous 'going bust' remarks, Ratcliffe suggested it would not be an issue moving forward either, claiming that United are 'comfortably in the middle' on spending limits. 'We are not going to breach PSR,' he told BBC Sport. So, are United at risk or not? The picture, as ever, is complicated but the answer may lie in the consolidated group accounts of a hitherto little reported company called Red Football Limited. Red Football Ltd, which was registered at the UK's Companies House in February 2005 shortly before the Glazers' takeover, is a subsidiary of Manchester United plc, the club's ultimate parent company which is listed on the New York Stock Exchange and publishes quarterly financial results. Sources familiar with details of United's financial situation, speaking anonymously due to the sensitivity of the information, have confirmed to The Athletic that Red Football Ltd's accounts are those submitted to the Premier League and UEFA for testing against spending regulations. Advertisement The Premier League declined to comment when contacted by The Athletic. In a statement, UEFA said: 'UEFA doesn't comment on Financial Sustainability matters or the situation of specific clubs unless a decision has been made and communicated by the relevant independent bodies.' While the plc is registered in the Cayman Islands, Red Football Ltd is registered in the UK at Companies House. And crucially, according to Premier League's rules, clubs can only submit the accounts of a UK-registered company for testing against PSR. Historically, there has been little significant difference between Red Football Ltd's accounts with those of the Cayman-registered plc. Last season, however, that changed, with some large disparities between some key figures in the two sets of accounts. The starting point for the Premier League's PSR calculation is a club's pre-tax profit or loss. Clubs are allowed to lose a maximum of £105million ($142m) over a three-year period, after deductions are applied for spending on women's football, academy, community work and other beneficial causes. United's pre-tax loss at plc-level was a staggering £130.7m during the 2023-24 season alone, exacerbating concerns over a potential regulatory breach. But Red Football Ltd's was far smaller — just £36.2m, a difference of £94.5m compared to the plc. That figure is corroborated by UEFA's most recent European Club Finance and Investment Landscape report, which lists United's 2023-24 pre-tax loss as €42m (£36m), in line with Red Football Ltd's accounts. This has implications for United's compliance with the Premier League's spending rules. Whereas the plc's combined pre-tax losses over 2023-24's three-year PSR cycle stood at £311.9m, Red Football Ltd's were only £200.6m — a £111.3m difference. Any estimate of United's PSR position is just that — an estimate. Industry insiders stress that determining what exactly goes into and is taken out of a PSR calculation can be problematic. Advertisement Both the Premier League and UEFA use the concept of a 'reporting perimeter', which requires clubs to include all costs 'in respect of football activities', which can encompass amounts that come under the auspices of other legal entities. But the differences between Red Football Ltd and the plc's accounts point to how a club that has recorded five consecutive years of significant losses is yet to breach the top flight's spending rules. One of the biggest differences between the two companies' figures last season was in exceptional items, which stood at £47.8m in the plc's accounts as a result of costs associated with Ratcliffe's investment. These costs were not passed down to Red Football Ltd, however. Exceptional items only amounted to £4.5m on the subsidiary's books — £3.6m of which was compensation paid to management and senior staff upon leaving the club. It was widely assumed that costs related to Ratcliffe's share purchase had to be allowed for in United's PSR calculation, as their inclusion would likely have led to non-compliance. But their absence from Red Football Ltd's accounts suggests that they were never part of the equation. Red Football Ltd also benefited from an additional £10.5m in 'centralised services recharged to other group undertakings' during 2023-24 — in other words, recharging staff time to elsewhere in the business. United sources say this is related to executives conducting business related to the NYSE-listed plc, such as investor relations. Not all differences between the accounts benefit United's PSR calculation, though. Another key difference was finance costs — essentially, the interest the club incurs by borrowing money. This figure stood at £61.4m at plc level but only £21.1m in Red Football Ltd's accounts, a difference of £40.3m. Meanwhile, the accounts of Red Football Ltd's immediate parent company — Red Football Joint Venture Limited (RFJVL) — show £42.8m in finance costs. Advertisement RFJVL sits above Red Football Ltd in United's corporate structure, outside of the accounts sent to the Premier League and UEFA, though potentially inside the reporting perimeter. RFJVL had not incurred any finance costs over the previous decade until last season. This change appears to be due to a formalising of intercompany balances owed to Red Football Ltd and a subsidiary by RFJVL, a move which converted those balances into interest-bearing intra-group loans in December 2023, shortly before Ratcliffe's minority investment was agreed. Red Football Ltd subsequently benefited from this formalisation, earning £25.1m in interest income from intra-group loans. And while that income nets out at plc-level, the interest costs incurred in RFJVL give rise to income in Red Football Ltd. That helps explain Red Football Ltd's lower pre-tax loss — however, United sources have told The Athletic that the interest income arising from intra-group loans is stripped out of the club's PSR calculation, and the real cost of the club's debt (as seen in the plc accounts) is instead reflected. Furthermore, foreign exchange differences — such as the £12.4m gain in Red Football Ltd's 2024 accounts — are also excluded for PSR purposes. As a result, the gap between the pre-tax loss in United's PSR calculation and that seen in the plc accounts is not so vast as it would be if Red Football Ltd's bottom line was used unadjusted. Old Trafford sources believe that United's treatment of costs is appropriate under the letter and the spirit of the rules and consistent with the practice of other clubs. When approached for comment, United referred back to Berrada's previous statement alongside the club's 2023-24 full-year results: 'The club remains committed to, and in compliance with, both the Premier League's profit and sustainability rules and UEFA's Financial Fair Play regulations.' Other Premier League clubs have assigned costs to separate companies within their wider corporate structure. When Chelsea were sold in May 2022, former club directors received a collective £49.75m for services in relation to the club sale. Those services were deemed outside the terms of the directors' club employment contracts, and were paid by Blueco 22 Limited – now Chelsea's parent company. Such costs were therefore kept off the club's books and out of its PSR calculation. Advertisement On the flipside, the previously mentioned 'reporting perimeter' employed by football's governing bodies seeks to ensure all football club-related costs are captured in PSR submissions, even if they take place elsewhere in the corporate structure. Per the UEFA report cited earlier, Manchester City's wage bill in the 2023-24 season was £475.8m – £63.2m higher than the staff costs disclosed in the club's accounts. If any of United's football-related costs occur outside the Red Football Ltd group, the rules dictate they still need to be included within the club's PSR submissions. The upshot is that United have had and should continue to have more PSR headroom to play with than previous estimates based on the Cayman-registered plc suggest. The Premier League's 2024-25 PSR test will be based upon the financial years ending June 30 2023, 2024 and 2025. After two lots of full-year accounts up until June 2024, Red Football Ltd's combined pre-tax losses stood at £55.1m — well below the £105m limit, even before applying any deductions. An estimate by The Athletic based on assumptions relating to deductions and add-backs suggests that, according to Red Football Ltd's figures, adjusted to exclude finance income from intra-group loans and any foreign exchange differences, United could lose around £141m in 2024-25 alone and still remain PSR compliant. From July 1 onwards, a new PSR cycle will begin, taking in the financial years ending June 30 2024, 2025 and 2026. While clearly too far out from the summer of 2026 to make any reasonable estimates, Red Football Ltd's £36.2m pre-tax loss in the first of those three years is again significantly below the £105m limit before acceptable deductions. Concerns over United's compliance with the Premier League's rules can largely be put to one side then, but that does not mean the club can throw caution to the wind. United would also typically need to comply with UEFA's financial fair play rules, which carry a stricter limit on allowable losses — usually €60m (£50.5m, $68.3m) over three years, after similar acceptable deductions. After failing to qualify for Europe this season, United will not be tested under UEFA's rules. That does not mean they can spend freely, though. Money spent this summer will count towards UEFA's three-year cycles for tests in 2026-27 and 2027-28, when United will hope to be back in European competition. Clubs do not just need enough regulatory breathing space in order to spend, they also need cold, hard cash — something that has been in relatively short supply at Old Trafford over the past couple of years. According to United's second quarter results, the club had £95.5m in cash and cash equivalents in the bank at the end of last year. That is despite Ratcliffe injecting £238.5m in cash since becoming a minority shareholder just 10 months earlier. Advertisement Years of spending like a Champions League club without playing Champions League football is beginning to catch up with United, and though far from the only club to stagger their transfer spending in instalments, a tab of more than £300m for players already on their books is beginning to bite. In an interview with The Overlap in March, Ratcliffe revealed that even if the club made no new signings this summer, they would 'write a cheque for £89m' for players they have already signed, citing Antony, Jadon Sancho, Rasmus Hojlund, Casemiro and Andre Onana as examples. That £89m cheque would, in theory, almost wipe out United's current cash pile at a stroke. United's third-quarter results will be released on Friday, covering the three months up until the end of March, and will give greater clarity on their cash situation heading into the summer. There have already been clues that resources need to be carefully managed. During talks for Cunha, Wolves were willing to accept staggered payments but rejected United's proposal to pay in five separate instalments, insisting on three equal £20.8m payments over two years in accordance with the player's release clause. Negotiations with Brentford for Mbeumo will also be instructive on that front. When short of cash in the past, United have typically dipped into their revolving credit facility, under which they can borrow up to £300m. United already owed £210m on this facility as of the end of last year, meaning there was still capacity to loan a further £90m. Friday's third-quarter results may reveal whether they have availed themselves of that opportunity ahead of an important summer. As Ratcliffe might say, though, there is no such thing as a free lunch. Any drawdowns on the credit facility will add to United's debt pile, which at last count stood at £731m, and will eventually need to be paid back or refinanced. That is why money generated through player sales will still play an important role in United's summer and why there was a possibility that a mega-money offer from Al Hilal for captain Bruno Fernandes could be entertained. But when it comes to the Premier League and UEFA's spending rules, those with knowledge of United's financial situation are relaxed about their PSR position heading into the summer. From looking at Red Football Ltd's figures, it is easier to see why — even if many rival fans may remain sceptical. Additional reporting: Laurie Whitwell (Top photos: Avram Glazer and Sir Jim Ratcliffe; Nicolo Campo/LightRocket, Kevin C. Cox via Getty Images; design: Eamonn Dalton)
