Manchester United released their financial report for the second quarter of the year.
A significant drop in revenue was revealed last week, as well as profit amid growing concerns over their financial stability.
The club announced that revenues had fallen 12% to £198.7 million for the quarter.
While operating profit had plummeted by 88.7% to just £3.1 million, compared to £27.5 million in the same period last year.
United have already warned fans they could be at risk of breaching the Premier League’s Profit and Sustainability Rules (PSR).
Which may well result in a points deduction.
In addition to financial struggles, the club reported a loss of nearly £16 million due to foreign exchange losses on “unhedged US dollar borrowings.”
Manchester United may receive ‘unique allowance’ from Premier League
Former Manchester City financial adviser Stefan Borson believes United’s exposure to currency fluctuations could have a major impact on their PSR standing.
“Because United have a lot of US-denominated debt, if the exchange rates change and the dollar strengthens against the pound.
“United will then make a big accounting loss based on that movement,” Borson told Football Insider.
“United deal in pounds, they report their earnings in pounds.
“They could hedge all of their exposure to dollars, but they choose not to. That means they are exposed if there is a big move.”
The strength of the US dollar has contributed to United’s increased losses in the last quarter.
Therefore, further complicating their financial position.
“There’s nothing they can do about it, but it does mean their losses are quite high for the quarter,” Borson explained.
“The question is whether that has an impact on the PSR calculation.
“On the face of it, it should – and that could make it even harder for them to comply with the rules.”
However, Borson also suggested United may be granted a “unique allowance” from Premier League to exclude currency-related losses from their PSR calculations.
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“It’s possible United have another unique allowance from the Premier League to exclude it,” he told Football Insider.
“But then they’d have to exclude any profits if the pound strengthens,” he said.
“We don’t know for sure, but if this is in the mix and the dollar remains strong – United may take another hit.”
Meanwhile, Sir Jim Ratcliffe and INEOS continue to push cost-cutting measures, including redundancies.
All in an effort to restore profitability after five consecutive years of losses.
Ratcliffe could also demand additional shares in United to help finance the club’s proposed stadium redevelopment.
A redevelopment that could cost upwards of £2 billion.
The club is currently considering whether to expand Old Trafford or build an entirely new stadium.
Financial responsibility for the project rests on United’s shoulders.
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