Manchester United’s troubles with Profit and Sustainability Rules coming into this window always made it tricky for them to work well.
Considering those circumstances, the club has done a remarkable job so far of strengthening the Man United squad with four additions.
However, further incoming are expected at Old Trafford, and Erik ten Hag and his Man United coaching staff have also made it clear they won’t stand still as the window ticks to a close.
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They need to sell to buy now but finance expert Adam Williams explains that this is not as difficult as it looks, as just Scott McTominay’s transfer will boost United’s budget this window by £125 million, more than enough money to buy not one, but even two players and still stay in the green.
Scott McTominay’s transfer fixes everything
Going into the last few days of the transfer window, Manchester United have put up multiple players for sale for the right price.
Facundo Pellistri’s transfer is done, and he has already made his debut for Panathinaikos under fellow countryman Diego Alonso.
Thereafter, the likes of Jadon Sancho, Hannibal, and Victor Lindelof are also on the market.
If United manage to somehow offload all of those players, then they might well finish the window with three new players, an unthinkable scenario.
However, finance expert Adam Williams explains they might not have to be that drastic anyway, with a single sale sorting out their finances with a £125 million boost.
That sale is of Scott McTominay, for whom a bid from Napoli, worth around £25.4 million has been accepted, plus a future sell-on clause.
Williams explains: “In PSR, a player’s sale is offset against their book value, which is the amortised cost of their transfer fee. The book value is calculated by dividing the initial transfer fee by the contract length and deducting the amortisation already accounted for, based on the years completed.
“Say, if you signed a player for £50m on a five-year deal. In the first year of the deal, his book value is £50m, the second £40m, the third £30m, and so on.
“To calculate the profit on his sale, you subtract his book value from the sale price. If you sell him for £45m in year three, you book a £15m profit in terms of PSR – £45m minus £30m equals £15m.
“But as academy players like McTominay don’t cost anything in the first place, the whole fee is profit with no book value deduction. So Man United would get £25m of PSR headroom straight away if they sell the player.
“What’s more, because received fees are received upfront whereas outgoing fees are amortised over up to five years, £25m in pure profit allows you to make £125m of new signings with a neutral net impact on your PSR calculation this year.
“It is by no means a free hit – you still have to bear the full cost of your £125m outlay over the next four years. But it can give a club breathing space in the short term.”
Youth academy farm?
Williams says that it is a negative consequence of PSR that youth academies have become a farm for clubs to sell players so they can book pure profit.
Of course, McTominay’s case is a bit different since he’s been developed and established as a proper first-team player who just happens to be expendable now.
It is in stark contrast to many clubs that bring youngsters in purely with the intention to sell them later when their sale value exceeds their book value.
Williams said: “We’ve seen the likes of Eddie Howe and Enzo Maresca talk about how selling academy players is incentivised under PSR.
“I don’t think that’s the right way to look at it. It sounds like excuse-making for clubs who have left themselves no other option but to sell players who will generate pure profit.”
Unlike the clubs/managers mentioned above, United have prioritised bringing through the youth players to play for the first-team, which has led them to become an attractive destination for talented wonderkids like Chido Obi-Martin.
They have also done right by McTominay who leaves only after United’s asking price of £25 million is met, otherwise Erik ten Hag had already stressed that he values McTominay’s skill set.
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