Calculating the Financial Cost of Manchester United Not Making Champions League

Manchester United's excellent performance against Tottenham Hotspur on Sunday raised fans' hopes of Champions League qualification.

But what would the cost be if United were to fail to return to Europe's elite club competition?

In the first quarter of their financial year, the Red Devils' revenue fell by 10 per cent, per Sky News. The club's statement to investors said that the 21.8 per cent drop in matchday income and 13 per cent fall in broadcast revenue was "primarily due to non-participation in the Champions League."

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This revenue fall amounted to £9.8 million over three months. The results for the second quarter, which covered the three months ending December 31 2014, showed a similar trend. Overall revenue fell 14 per cent, with broadcasting revenue down 39.4 per cent on the previous year, as reported by the Mirror.

Presumably, although the figures have not yet been released, there will be further losses of matchday and broadcast income during the quarter covering up to March 31. After all, United have only failed to qualify for the knockout stages of the competition twice in the past 10 seasons.

In one of those seasons, they made the Europa League. It is important to note that the figures above account for a season devoid of any European football.

The Europa League may not have the financial impact of the Champions League, but matchday revenue losses in particular would be offset somewhat should United qualify for the second-tier competition.

There are, of course, so far unquantifiable costs associated with missing out on the Champions League. The first, is that United would presumably become less attractive to sponsors. Football finance blogger Andy Green wrote about the potential cost of United failing to qualify for this season's Champions League in January 2014.

When considering commercial sponsorships, Green wrote:

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Where United may be vulnerable if the current slump persists, is the very fact that the club has pushed the boundaries when it comes to sponsorship.

Manchester United have identified numerous industry 'verticals' where football clubs have never attempted to find commercial sponsors, hence the official 'office equipment supplier,' 'medical systems partner,' 'savoury snack partner,' 'motorcycle partner in Thailand.'

These deals are unproven for the 'partners' and may be more vulnerable if the football club isn’t on the top stage for several seasons.

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Thus, the implication is that there could be lost revenue from existing sponsors and a loss of potential earnings from new "verticals."

One sponsorship deal we know for sure would be affected by a lack of Champions League football is United's massive kit deal with Adidas. Mark Ogden of The Telegraph wrote in July 2014:

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Manchester United must return to the Champions League before the end of the 2016-17 season or face the prospect of a 30 per cent reduction in their £75 million-a-year kit deal with Adidas.

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Failure to qualify this season would not bring that clause into immediate effect, but it would ramp up pressure on the following season.

A further hard-to-quantify cost may be found in the transfer market. It is inherently a matter of speculation, given direct comparison is impossible, but it is easy to imagine that United may end up paying a premium on player costs if they fail to qualify for the Champions League.

Any potential summer signings who would miss out on at least a season of first-class European club football may need extra financial incentives to arrive at Old Trafford. To be clear, this is speculation, but there is a logic to it that is reasonably compelling.

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There is also a potential long-term financial impact of not being able to attract first-choice options to United due to a lack of Champions League football, although last summer's high-profile acquisitions allay that concern somewhat.

They do not allay it entirely, though. Missing out on the Champions League once looks like a blip. Twice begins to look like a pattern.

With all this said, the new domestic television deal will see United benefit substantially. On February 15, Martin Samuel wrote in the Daily Mail that:

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The grand plan requires Champions League football, but United feel that the new television contract, coupled with their powerful commercial arm, gives them the ability to overtake Real Madrid as the richest club in the world. At that moment, they will at last be able to resist raids on their staff—and perhaps mount a few of their own.

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Hopefully, this will all be academic and United will manage to finish fourth or higher in this season's Premier League. If they do not, the financial costs could be substantial.

However, given that United will remain a financial force, the higher costs may not be be paid by the money men but by those who value United's success on a more emotional level.