Cristiano Ronaldo, Raphael Varane and Jadon Sancho push Manchester United's wage bill to all-time high

The huge costs involved in signing Cristiano Ronaldo, Raphael Varane and Jadon Sancho have been laid bare with the trio expected to add another £65 million to Manchester United’s wage bill this season, according to the club’s chief financial officer.

United’s wage bill for last season increased by almost 14 per cent to £322.6m as a result of an uplift in player salaries following the club’s return to the Champions League.

It means wages now account for a record-high 65 per cent of turnover after revenues dropped to £494.1m, their lowest level for six years, for the 12 months to June 30, 2021 as a result of the impact of the Covid-19 pandemic.

United have traditionally worked towards a wage/turnover ratio of 50 per cent but, even if revenues soar this season following the return of fans to Old Trafford, that ratio is expected to stay around the 65 per cent mark for the 2021/22 campaign given the impact of Ronaldo, Varane and Sancho’s salaries.

Cliff Baty, United’s chief financial officer, said the club were forecasting a wage increase of “around 20 per cent” for this season, the equivalent of £64.52m.

Ronaldo’s projected £19.7m move from Juventus made the five-time World Player of the Year the highest paid footballer in Premier League history, with his overall package understood to be worth more than the £560,000 a week Alexis Sanchez stood to earn during his ill-fated spell at Old Trafford.

France defender Varane - who signed from Real Madrid for an initial £34.2m - has a four-year contract worth around £400,000 a week and England winger Sancho joined from Borussia Dortmund in a £72.9m deal. United also signed veteran goalkeeper Tom Heaton as back-up to David De Gea and Dean Henderson.

“In terms of costs, we’d expect wages to increase by around 20 per cent which reflects the increased investment in the squad following the summer transfer window,” Baty told an investor call in the wake of the release of United’s accounts for 2020/21.

United’s £322.6m wage bill for last season was still below Manchester City, whose last published accounts for 2019/20 revealed a wage bill of £351.4m, the highest in the Premier League.

Although United’s summer investment was a reflection of the club’s determination to win a first Premier League title since 2013 and left Ed Woodward to declare that they are “more confident than ever that we are on the right track”, the executive vice-chairman also sounded a warning over wage inflation.

“It is not an accident that we have been able to invest this summer at a time when many clubs have been retrenching,” Woodward said. “This reflects the strong commercial model we have built over many years, ensuring that our spending is always underpinned by revenues that we generate ourselves.

“However, while we are confident in our relative strength, it remains clear that football as a whole faces major financial challenges caused by years of material inflation in wages and transfer fees, exacerbated by the impact of the pandemic. We are committed to working within the Premier League, the ECA and Uefa to promote greater financial sustainability at all levels of the game.”

Richard Arnold, United’s group managing director, said: “While every signing we make - and some are better know than others - has a positive impact on fan engagement and a positive effect on the activity that we do, that’s putting fuel into a well-run engine and we’re renowned in the sports industry for doing a good job of maximising the commercial opportunities that come to us. But our focus is on signing players who can deliver on the pitch and then to maximise that opportunity afterwards.”

United secured new commercial deals with Ecolab and the Renewable Energy Group as well as renewing a partnership with DHL. But they have still to announce a replacement partner for Aon, whose £180m, eight-year deal to sponsor the club’s training ground and training kit ended this summer and was United’s third biggest commercial contract after the Adidas kit and TeamViewer shirt deals.

United posted net losses of £92.2m last season, although this was largely attributable to the accounting impact of a £66.6m non-cash write off caused by the UK corporation tax rate rising above the US rate. Operating losses for the year were £36.9m and the club’s net debt stood at £419.5m. Sponsorship income fell £42.5m, primarily due to there being no summer tour.

But those losses and the hit to matchday income were largely offset by an 81.7 per cent jump in broadcast revenues to £254.8m owing to the return of Champions League football and 10 matches being carried over from the delayed 2019/20 campaign into the first fiscal quarter of last season. Despite the impact of the pandemic, shareholders - made up predominantly of the Glazers - were paid dividends totalling £10.7m for the year.