When Sir Jim Ratcliffe’s minority investment in Manchester United was announced on 24 December 2023, many fans thought it an early Christmas present. Presented as a locally born lad and lifelong fan, he was a multibillionaire and was putting some of his hard-earned (but not hard-taxed) money into the club.

Ratcliffe’s investment gave him control of the football operation and in the mind of many fans the post-Ferguson slump in major trophies was coming to an end. Enterprising Mancunians started selling Muga (Make United Great Again) baseball caps, the club defeated Manchester City in the FA Cup final and the good times were about to roll again … until they didn’t.

Stories started to circulate and were then confirmed about significant job losses. There were cuts to staff benefits, working from home was banned and high‑profile former managers and players had their roles terminated or fees reduced. This was seized upon by many in the United fanbase, whose opinions of the majority shareholder owners, the Glazer family, oscillated between loathing or extreme loathing, as evidence that Offshore Jim meant business, even if “difficult decisions” had to be made.

The job cuts were communicated as essential to reduce costs as critics of the Glazers pointed out correctly that the club had the highest number of staff of any Premier League club. This, however, ignored that United also had the biggest stadium, a large communications team owing to having arguably the biggest brand and interest from media outlets, and their own TV channel, as well as the increased compliance costs of running a business registered in the Cayman Islands and traded on the New York stock exchange.

Yet despite the high number of staff, United pay only £55 in wages for every £100 of revenue, the third-lowest in the Premier League, and way below the £70 advisory line that Uefa has advocated.

On 26 November 2024 United published a press release in which the club predicted an Ebitda (earnings before interest, tax, depreciation and amortisation) profit of £145m-£160m for the financial year ending 30 June 2025, after having the Premier League’s highest such profit measure the previous year. It predicted annual revenue of £650m-£670m from commercial, broadcasting and match-day sources, including new and renewed sponsorships.

Then this week it emerged there would be further job cuts of about 200 staff. The Guardian was told Ratcliffe believed the redundancies were necessary to help the club avoid going bust.

The same club that was sending out messages to investors of high Ebitda profits had two months later sent a letter to the fan groups The 1958 and Fan Coalition 1958 that it had made pre-tax losses of more than £300m over the past three years and was in danger of breaching profitability and sustainability rules (PSR), which allow losses of £105m over three years, if action were not taken.

Decisions to increase members’ match-day ticket prices to £66 with no reductions for seniors or children, increase parking charges for disabled fans and scrap the steward-of-the-match £50 award have been deemed necessary, with a few nudge-nudge wink-wink comments laying the poor financial performance at the hands of the Glazers without naming them.

Can a business make both a profit and a loss? Ask an accountant what a profit figure is for a business, and they will nervously adjust their clothing, scan the office for bugging devices and then whisper out of the side of their mouth: “What do you want it to be?”

The problem is there are various definitions of profit and therefore a business can legitimately highlight one if trying to impress investors and utilise another figure if trying to justify decisions to fans.

One of the major contributors to the difference between the two figures identified above is the elephant in the room at United: that of player recruitment.

Since the dream team of Sir Alex Ferguson and David Gill stepped down in 2013, United have spent £2.1bn on players – quantitatively at the upper end of the Premier League, qualitatively less so.

The club has, like most others, bought players on credit, paying in instalments, and this has resulted in it owing other clubs £414m in transfer fees, according to the most recent accounts, putting it second only to Chelsea in terms of sums due. This creates a fiscal drag because outstanding instalments on old transfers have to take precedence over signings.

The exit door at Old Trafford has equally been performing poorly. For every £100 that Chelsea have made in player-sale profits since Ferguson retired, United have made £20. Player-sale profits contribute towards PSR calculations and United are by far the poorest performers of the “Big Six” in this regard.

Under Ratcliffe other big‑ticket items have contributed towards losses. Paying Newcastle a multimillion-pound release fee for Dan Ashworth then sacking him five months later, triggering Erik ten Hag’s contract option then sacking him and his entourage soon after at a cost of £10.4m, and then paying Sporting £11m in compensation for Ruben Amorim and his staff can be laid at the door of Ineos, along with almost £250m spent on player transfers that have the club 13th in the Premier League.

The Glazers, too, have contributed to the losses in the past three years. In the 2024 accounts there is £34.6m for: “Costs related to strategic review and share sale agreement with Trawlers Limited” – the company through which Ratcliffe bought his stake. This is the Glazer family making hundreds of millions of pounds from the sale of shares to Ratcliffe and United picking up the cost.

The accounts also show operating expenses of just under £340m in each of the past two years in relation to amortisation (whereby the fee paid for a player is spread evenly over the length of their contract) and “other operating expenses”. The club describes those expenses as being for costs such as catering, policing, stewarding, cleaning and visitor gate share for domestic cups.

Add those figures to the wages paid to players and staff (£364.7m in 2023-24) and even United’s huge revenues (£661.8m in 2023-24) lead to a loss. And that is before factoring in more minor operating expenses and the £20m or so paid each year to service the debt loaded on to United by the Glazers when they bought the club.

The good news for United fans is that the club is generating plenty of cash from day-to-day activities, so pinning the latest redundancies on fears it could go bust is unjustified. Almost as unjustified as Ineos’s decision to target staff and their job losses as a means of improving the club’s finances.

Kieran Maguire is an associate professor in football finance at the University of Liverpool and the co-host of The Price of Football podcast