This is an updated version of an article originally published earlier this year.
Manchester United’s disappointing season could be more than just an issue for manager Erik ten Hag — it would also affect the club financially if they fail to qualify for any of UEFA’s three competitions.
Champions League is always the target at the outset — even more so with the increased revenue to gain from UEFA’s new-look premier competition from next season — but that is already out of the equation with Ten Hag’s side unable to finish in the Premier League’s top four and England failing to gain a fifth place.
However, even qualifying for next season’s Europa League or Conference League, UEFA’s second and third-tier tournaments, is looking 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 clubs in the Champions League get?
Approximately €2.1billion (£1.8bn; $2.3bn) is shared between participating clubs each year as part of the Champions League’s current revenue distribution model.
Twenty-five per cent is paid out as a flat starting fee to clubs in the group stage, 30 per cent is paid related to performances in the competition and another 30 per cent is paid according to each club’s 10-year coefficient. The final 15 per cent is paid according to the size of their domestic TV markets.
Last season, winners Manchester City received the most prize money at €134.9million while Real Madrid, who were the defending champions and lost to City in the semi-finals, took the second-most at €118.8m.
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 (though they were eliminated at the group stage), having competed in the Europa League in 2022-23, United’s broadcast and matchday revenue streams have seen increases of £52million and £23.8m ($65.8m and $30m) respectively in the six months to the end of 2023 compared to the same period last season.
United were knocked out in Champions League group stages this season (PETER POWELL/AFP via Getty Images)
Those increases are only slightly offset by a rise in United’s wage bill, which has increased by £25.8million this season.
To mitigate the impact of missing out on the Champions League, the majority of United players receive a 25 per cent wage cut if they fail to qualify. After last season’s third-place Premier League finish, those salaries were restored to their original level.
Whereas United spent £159.6million on wages in the six months to the end of 2022, they spent £185.4m in the same period in 2023.
United actually earned a respectable €32.6million from UEFA last season — the most of any Europa League team, despite going out in the quarter-finals.
And yet, respected football finance analyst Kieron O’Connor, who runs blog The Swiss Ramble, expects United will receive €60.2million from UEFA for this year’s Champions League campaign, even though they did not reach the ongoing knockout rounds.
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 the formats of UEFA’s club competitions. United, of course, will not be there.
UEFA expects its revamp to boost revenues significantly, estimating a total income of around €4.4billion (£3.8bn; €4.8bn). Around €2.5bn of that will be distributed to clubs competing in the Champions League, with the remainder paid to those in the Europa League and third-tier Conference League.
A greater proportion of the Champions League money will be shared equally across all participating clubs and paid out on a performance-related basis, with less going according to a club’s coefficient and share of the broadcasting market.
Clubs with a strong coefficient and from a valuable TV market may end up taking a slightly lower cut of a larger pool of money than under the current system. But a strong performance in the competition itself will still be richly rewarded.
Sadly for United, they have not qualified for this first season of the expanded competition and so 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 simplest starting point is what qualification as one of the 36 competing clubs will bring: a cheque for €18.6m, up from the €15.6m this season.
How much the end-of-season balance is topped up is then shaped by performances:
- Every win in the league phase is expected to bring €2.1m, with a draw worth €700,000.
- The higher you finish in the 36-team league, the more you can expect.
- Finishing top will bring in the region of €10m, with a sliding scale of merit payments.
- Clubs in the top eight will get an additional €2m as a bonus for qualifying for the knockout stages.
- €1m will go to those finishing ninth to 16th.
The 16 teams ranked ninth to 24th will go into a play-off to decide who progresses to the round of 16 for an additional €11m.
- Making the quarter-finals will bring €12.5m, the semi-finals €15m and the final €18.5m.
- The winning team can expect another €6.5m, plus a further €4m for reaching the UEFA Super Cup final in 2025.
These staggered instalments bring increases from the current sums, using a performance-related pot that is forecast to stand at €915m. The kitty for performance-related payments this season was only €600m.
The unknowns come from how much a club stands to make from the new value pillar. How each club is ranked and rewarded will not be known until the make-up of the 36 teams is complete. A position will be decided by where a club is based and how much that country contributed to media revenues (formerly the market pool calculation), as well as where the club is ranked in UEFA’s coefficient.
There will be a European part and non-European part, splitting revenues from the two markets, but topping both ranking tables will likely bring in around €45m.
Manchester City and Liverpool will be close to the top of those distribution metrics, owing to their European performances in recent seasons, but Aston Villa, like Newcastle this season, can expect a more modest windfall.
Villa, who United beat in February, are closing in on a Champions League spot (Shaun Botterill/Getty Images)
Villa are currently ranked 81st in the UEFA coefficient. Villa’s ranking in the value pillar, should they hold on to fourth position in the Premier League, would be enhanced by England being among the biggest contributors to the overall media revenue pot.
“The value pillars are still be decided but each club will get a ranking within that which will dictate how much money they get,” Dr Dan Plumley, a sports finance expert and lecturer based at Sheffield Hallam University, told The Athletic. “The Premier League is still likely to win in that argument because of their strength in the market pool.
“If you were to win everything in the revamped format — taking into account all your league fixtures, being top of market pools and going all the way — I’ve got the numbers around the €161million mark based on UEFA’s guidance.
“The baseline, ballpark sum for an English club is minimum £50m, the sum we’ve usually attached to Champions League qualification, but there will be scope for more next season. It’s going to be more lucrative because of changes to the distribution and the English clubs will continue to win because of their position in the market pool.”
The last official UEFA numbers on record 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 €70m if they were to progress automatically to the last 16 next season. And all for playing eight matches.
And what is the cost of missing out on the Europa League and Conference League?
Remuneration from the Europa League and Conference League will also bring the chance to increase revenues next season.
The total money paid out to Europa League clubs next term will be €565m, up from €465m this season. That could bring a club close to €40m in prize money.
Being part of the league phase would bring in €4.31m with clubs receiving €450k per win and €150k per draw.
The Conference League, meanwhile, is forecast to begin with a central pot of €285m, up from €235m. Clubs would get €3.17m for reaching the league stage with €400k per win and €133k per draw.
West Ham United’s victory in the 2022-23 competition brought them prize money of €22m when going all the way. A club the size of Manchester United could make more than in matchday revenue if they end up in a competition they might rather avoid.
West Ham took home €22m for winning last season’s Conference League (Alex Grimm/Getty Images)
How does this impact United’s FFP?
Clearly, qualifying for the Champions League would have been beneficial for United’s compliance with financial fair play (FFP) regulations. But has failing to qualify put them at risk of a breach?
United fell foul of 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 break-even test.
Clubs in European competition were not subject to the same break-even test this year as UEFA migrated to new rules, but the test will be in force again next season, alongside UEFA’s new squad cost ratio.
United have also preached caution over their compliance with the Premier League’s profitability and sustainability rules (PSR), which allow clubs to lose no more than £105million over a three-year monitoring period.
They have lost a lot of money in recent years but, from next season onwards, the £150million pre-tax loss suffered during the 2021-22 season will no longer be part of either UEFA’s or the Premier League’s monitoring periods.
With that £150million loss out of the equation, so long as they do not post a similarly huge deficit at the end of this season, United should have more FFP headroom going forward. Qualifying for a UEFA tournament would certainly help, though.
(Top photo: Michael Regan/Getty Images)