Premier League football clubs Arsenal and Manchester United have reported further financial difficulties, with the latter recording a net debt of £455.5 million in 2021.
Three-time UEFA Champions League winners Manchester United recorded a £64.2 million year-on-year increase in net debt in its second quarter results, which has been largely attributed to the financial impact of COVID-19.
A lack of ticket sales has led to the club’s matchday revenue decreasing by 95.5% in the final three months ending on 31 December, representing a drop of £31.6 year-on-year to £1.5 million.
Meanwhile, commercial revenue fell from £70.6 million to 62.6 million, including sponsorship earnings, which recorded a 16.2% decline over the prior year quarter to £37.8 million.
In contrast to matchday income, this has largely been attributed to the impact of the club’s shirt sponsorship extension with American car manufacturer Chevrolet.
The sponsorship arrangement with Chevrolet was extended to December 2021, having been due to expire at the end of the 2020/21 season, after the Red Devils encountered difficulties in finding a new sponsor.
At the time of the Chevrolet announcement in October 2020, it was also revealed that the club’s net revenue had fallen by 20% from the previous year, with ‘the impact of deferred sponsorship payments of £80 million’ given as one of the primary reasons.
However, Executive Vice-Chairman, Ed Woodward, has remained hopeful, pointing to the easing of UK lockdown restrictions as ‘the light at the end of the tunnel’ for sporting organisations.
The American businessman has also mentioned ‘three monetisation routes’ – fan engagement, in-market commercial operations and a partnership with the Alibaba Group – being pursued by the team as a means of breaking into the lucrative Chinese sports market.
In addition, broadcasting revenues for the club have also soared from £64.7 million in the same period in 2020 to £108.7 million, largely due to the club competing in the highly profitable Champions League instead of the group stages of the Europa League during the 2020/21 season.
An increase in total revenue from £168.4 million to £172.8 million – a rise of 2.6% – was largely driven by media rights earnings.
Arsenal’s financial situation has also been impacted by its European status. The club has stated that its exit from the Europa League in the Round of 32 in 2020 – in comparison to the previous year which saw the club appear in the final against London rivals Chelsea – contributed to a drop in broadcasting revenue from £183.025 million to £118.948 million.
The fourteen-time FA Cup champion and current silverware holder saw its total revenue from to £344.527 million from £395.559, whilst matchday revenue declined from £96.244 million to £78.743 million.
As with northern rivals Manchester United, these losses can generally be seen as a consequence of the COVID-19 pandemic, in particular the absence of ticket-buying spectators.
“The impacts of the pandemic have extended into season 2020-21 and are ongoing. Matches continue to be played without fan attendance and consequently the club is operating without one of its key revenue streams,” the club said in a statement.
“Since the year end, the Group has refinanced its stadium finance bonds and undertaken a range of cost-cutting measures. These steps will ensure the club is well placed to respond once the situation starts to improve.”
As with the Red Devils, the Gunners’ financial figures also contain some positive findings, with commercial revenue increasing to £142,277 million from £110,875 million, a likely result of a new kit contract with Adidas and a renewal of its primary sponsorship agreement with stadium-naming rights holder Emirates.
Further losses have been offset by a large loan of £120 million acquired through the Bank of England’s COVID Corporate Financing Facility (CCFF), whilst a voluntary 12.5% wage reduction by first team players also reduced costs.