Famously stingy and cost-cutting Ineos have added another expense to their balance sheet by sacking Ruben Amorim, and Sir Jim Ratcliffe has an £85m headache as a result.
For a regime that has talked about streamlining costs and making the business efficient, this is now the second time in a year they’ve sacked a manager after giving him a contract.
Erik ten Hag was a costly error, and Ruben Amorim is set to be the same after getting sacked with 18 months left on his contract.
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GRV Media’s Head of Football Finance and Governance content, Adam Williams, spoke to United in Focus to lay out the details of the financial hit coming Ineos’ way.
Ruben Amorim’s compensation explained after Man Utd sack
United’s financial situation is tricky as it is, without having to pay off managers who already cost the club millions in revenues, either by poor finishes in the league or losing European finals.
That’s the reality Sir Jim Ratcliffe faces, and Williams explains that the overdraft fund money for Ineos is quickly running out, and with that, the margin for error.
He said: “The cost of sacking him will hit the bottom line – that’s the club’s profit or loss for the financial year – immediately. Anyhow, United will be okay with PSR and the new SCR rules.
“United’s main issue in recent times has been cash flow, not PSR. That is why they have increased their overdraft and relied on external funding from Sir Jim Ratcliffe, rather than being able to fund their spending from their own revenues.
“There were some fairly reliable reports that Amorim was earning £6.5m annually. He has 18 months remaining on his deal, so from that we can say roughly that he might be due around £9.75m in compensation.
I think the actual value of his termination package will be lower because there will have been performance-related stipulations in his contract, perhaps even a pre-agreed settlement and so on. So that is probably a maximum rather than a minimum.
“They had about £85m left on their overdraft, per their last set of quarterly financial reports. Yes, there will be an increase on costs this year after another year of big spending in the transfer market, but they should still have plenty of room for manoeuvre for a one-off expense like this.
“United can’t afford to keep getting it wrong. The fact that Ratcliffe has had to put in £300m-plus and they are relying on debt tells you that under-delivery on the pitch has a financial impact.
“But Amorim wasn’t the right man for the job, and given that each place in the Premier League is worth about £3m, the cost of inaction outweighs the one-off cost of dismissing a manager if it turns things around.”
Ineos have already cost the club a lot of money
Comparing Ineos to the Glazers would be ignorant at best, and dishonest at worst, but their initial two years at the club have been a disaster from a financial POV.
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As explained above, Ratcliffe has invested nearly £300m in the club, which is £300m more than the Glazers ever did, but their decisions are costing the club.
Extending Ten Hag and then firing him cost millions; the same will be repeated with Amorim, and backing Amorim to create a bomb squad left them scrambling to find buyers last summer for players at a fair value.
For a club that was already delicately placed financially, this kind of “learning on the job” is simply not sustainable.
Sooner rather than later, Ineos need to get it right, because the club, as it stands, is snowballing towards financial disaster.
Amorim’s sacking and the costs attached to it are another cut on a bleeding club.
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