Manchester United face sanction and new challenge from PSR if they fail to qualify for Champions League

Manchester United could face further concerns over the Profits and Sustainability Rules (PSR) if they fail to qualify for next season's Champions League.

The club's latest annual report revealed the devastating financial impact that awaits them should they miss Europe's top competition for the second consecutive season.

Erik ten Hag's team are already in danger of falling outside the top four again after having another shaky start to the season.

united man They are in 13th place in the standings and six points behind fourth place. Chelseaafter Sunday's terrible 3-0 defeat at home to Tottenham.

The Red Devils have never gone two consecutive seasons without appearing in Europe's top club competition in the Premier League era, but doing so would present challenges to the club's finances and hopes of attracting top-level talent.

Failure to finish in the top four would see United lose lucrative funds generated from broadcast money and match day revenue.

It would also cost United £10m due to a penalty clause under their new deal with kit suppliers Adidas, scheduled for 2025/26 and beyond for any future season in which they are not in the Champions League.

Manchester United's last brush with the Champions League came just over a year ago, but a succession of disappointing performances saw them crash out at the bottom of their group.

Their run to the quarter-finals of the competition in 2019/20 exposed the huge drop in revenue compared to United's Europa League campaign in the 2022/23 season, which saw a drop of almost £40m .

The club's annual report points out that salary increases within the squad depend on whether or not they are in the Champions League to somehow safeguard their finances.

The report says: “Failure to qualify for the Champions League would result in a substantial reduction in revenue for each season in which our men's first team did not participate.

“To help mitigate this impact, the majority of playing contracts for our men's first team include increases in remuneration that are contingent on participation in the group stage of the Champions League.

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“Furthermore, due to the prestige associated with participation in European competitions, particularly the Champions League, failure to qualify for any European competition could negatively impact our ability to attract and retain talented players and coaching staff, as well as fans, sponsors and other business partners.”

United reported a loss of more than £113m last season, taking their three-year losses to a whopping £254.7m, surpassing the Premier League's PSR limit of £105m.

They were able to make appropriate adjustments to the losses to work in their favor by including expenditure in other areas of the club, including the refurbishment of the club's Carrington training base and the £50m Old Trafford tunnel upgrades.

United also received help in its efforts to comply with the PSR receive permission to claim a Covid subsidy for a total of £40 million for the 2021/22 season.

The Covid claim was by far the highest of any Premier League club for that season and double the amount of the other 19 top-flight clubs combined.

The amount claimed is partly due to the cancellation of the club's summer tour, which remains a huge source of income.

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