On May 12, 2024, Manchester United hosted Arsenal at their aging stadium, Old Trafford.

And it rained…

Rain in Manchester is hardly news.

But it doesn’t normally gush through the stadium roof, soaking supporters who have paid a small fortune to sit inside what the club still calls, with a straight face… the “Theatre of Dreams.”

To be fair, Old Trafford is more than 100 years old. It is an extraordinary, electric place. Home to many of my happiest memories, and those of millions of others. It is also now home to the ‘forth largest waterfall in England.’

And now to put my CFO hat on… It is also a very old industrial asset that require serious maintenance CapEx.

For 20 years, Manchester United’s capital allocation priorities lay elsewhere. Interest. Dividends. To a lesser extent, new players. The stadium got what was left. And what was left was not enough. Old Trafford has not undergone a major redevelopment since 2006. Without investment on anything close to the scale required, it has fallen into serious disrepair.

I actually wrote about this in a piece about balance sheet adjustments in M&A.

But deferred maintenance CapEx does not disappear… it compounds. The backlog is now so large that restoring Old Trafford to its former glory may be less economic than replacing it entirely.

That all changed with Jim Ratcliffe’s 2024 £1.2bn purchase of 25% of the club. That deal earmarked $300m of Ratcliffe’s money “to enable future investment into Old Trafford.” Ratcliffe called it a “no brainer” to renovate or rebuild the “run down and neglected” stadium. How he’d do that wasn’t clear, but it was clear it would be a priority once Ratcliffe got involved.

In March 2025, Manchester United announced its ambition to build a new 100,000-seat stadium next door. The estimated price tag is £2bn. It would be the largest stadium in Britain and, the largest CapEx project ever attempted by a football club.

The questions kind of write themselves… Is a new stadium commitment now, really the right financial decision? What happens to Old Trafford? What return could possibly justify £2bn of investment? And, most importantly, how on earth can an entity already over-burdened with debt afford to build it?

Every finance team has its own version of a £2bn CapEx decision. Yours may have fewer zeros, but it’s the same problem: a number too big to get wrong, resting on a sales assumption that is bound to be wrong, you just don’t know which way.

The sensitivity analysis will take too long. So, you approve on conviction and vibes and hope the assumptions hold water…

Summation models it all in minutes. Each scenario explained and traced back to the source row, ready before the board sits down and shuffles their papers.

At global sports platform Fanatics, that uncovered $10m value in growth and savings last year. That number has more than doubled this past quarter

As a quick recap, this month we are doing a four-part CFO deep dive into the business of Manchester United. 

In week one we broke down the complex 20-year capital structure history and what that means for today’s balance sheet.

Last week we got deeper into how the economics of a football club P&L actually work, and how Manchester United were able to defy financial gravity with climbing revenue despite awful on-pitch performance for so long.

This is part three, and we are going inside how Manchester United might make a £2bn CapEx decision to solve a problem like Old Trafford.

And this piece gave me an excuse to conduct some absolutely essential, non-negotiable field journalism earlier this summer, as I took the latest generation of Secret Manchester United fans on a pilgrimage:

And for this week’s piece, I am, once again, joined by my friend and expert sports biz CFO Jason Hershman to help counter balance my hopeless bias on all things Manchester United.

So, lets dive into how the Manchester United board ended up at a decision to commit to a £2bn stadium rebuild.

Jason: While there are endless permutations in the detail, when you step back, there really were only two options for the board:

Option 1: Patch up the current ground  at a cost of £1bn to £1.2bn and add 12,790 seats (to 87,000 total), but temporarily lose seats (and therefore income) during the construction works when Manchester United would need to play at a temporary home, or…

Option 2: Start fresh on adjacent land for £2bn with a free hand to build a bigger stadium (100,000 seats) and adjacent commercial empire. And without the ongoing maintenance CapEx challenge of the old stadium.

I would expect on the spreadsheet, at least, option 2 was the no-brainer.

Jason: The club needed a plot sitting under a working rail freight terminal, owned by the infrastructure giant Brookfield. United offered £40m to £50m for the plot. Brookfield wanted £400m.

Economists call this the hold-up problem; the land isn’t worth £400m to anyone on earth by any measure. But United had already announced the stadium, hired the people, and gotten fans excited. Brookfield, in other words, was charging for how badly (they thought) United needed it, not what it was worth on the open market.

But United had an ace up the sleeve. In June 2026, the club simply walked away and bought a different site 350 meters up the road from Blackstone’s logistics arm for an undisclosed sum, and redrew the whole plan.

(SCFO: It’s a wonderful example of BATNA (Best Alternative to Negotiated Agreement) in practice. BATNA is the king in any big negotiation like this. Brookfield assumed United had a weak BATNA and tried to exploit their desperation. But United’s next best alternative was much stronger than expected. Nice to see the club look like the smartest folk in the room for once.)

Jason: The two most recent stadium builds in the UK are Tottenham Hotspur Stadium and Everton’s Hill Dickinson Stadium. What these builds have in common is that neither were on-time nor on-budget. (SCFO: To be fair, that’s common with every big CapEx project I’ve ever seen, not just football stadiums).

Let’s focus on Spurs, with nearly a 3x cost over-run: Early estimates targeted a £400m stadium when the project was first conceived. Upon delivery, that price tag had ballooned by £800m. 

Some of the blowout is attributable to macro factors, with a weak pound and raw material inflation during the construction phase driving a large price variance on the project. 

However, some of the other delays just speak to how difficult it is to manage a mega-project like this. Design and scope changes, such as the retractable grass pitch, as well as construction delays from system failures extending their costly temporary stay at the National Stadium Wembley. These kinds of time and cost overruns seem inevitable in projects of this size.

Jason: Oxford professor Bent Flyvbjerg, who studies these kinds of megaprojects, estimates that only 8.5% come in on-time and on-budget. When you’re talking about the largest project in European Sport, it doesn’t seem like great odds.

United’s initial estimate for the stadium seems in-line with Spurs ultimate cost: £20k/seat for United versus £19k for Spurs. 

(SCFO: I really worry, hearing that. Steel prices must be close to twice what they were when Spurs were building. We are in a totally different cost environment. Sure, there is some absorption benefit through the higher capacity, but we should assume the construction cost prices to be much higher on a brick-for-brick basis.

Let’s take a more recent comparison; Everton’s Hill Dickinson Stadium (opened just last year). They spent £800m on a 52,888 capacity stadium, which was a 60% overspend. They came up against complex engineering and infill work at a historic site and scope adjustments… the kind of issues you might find with a former industrial plot like the one United bought. Assume a similar overspend on the Old Trafford project and the cost could reach the £3bn range.

Jason: One bright spot to the Tottenham Hotspur Stadium build was the financing. Spurs were able to ladder private placement bonds over 30 years with a <~3% weighted-average coupon. 

And yet they’ve lost money every season since, £120m of it in 2024/25 alone. The interest and depreciation on a billion-pound building swallowed the new revenue whole. The best-run stadium project in modern English football turned a reliably profitable club into one that loses nine figures a year, and did so on debt three full points cheaper than anything United can find today.

Jason: OK, so let’s take a look at the other side of the equation. How should we think about the incremental revenue streams this will generate:

And clearly matchday revenue would increase. To make it more tangible, assume the 2024-25 season was played at the new stadium so we can see the incremental changes.

Old Trafford already throws off £160m a year in matchday revenue. United would then earn an extra £55m from the increase in seating alone at current prices. On top of that, each £15 uplift in revenue per attendee yields about £45m in incremental revenue.

Jason: Well, it’s not clear. But what is true is that the board has plenty of ways of increasing match day revenue yield per seat without attacking ticket prices.

With over 20,000 additional seats, there is the potential to significantly increase the mix of luxury seating and hospitality. And with better restaurants and hospitality, plus the surrounding entertainment district, this should encourage supporters to spend more time in and around the stadium on matchday. Especially tourist fans. (SCFO: Yes, I was at one game last season and I sat next to a family of four who had flown in from China just for the game.)

More time at the stadium generally results in more spend. Altogether, this could provide about £135m in incremental revenue, boosting matchday by 84%.

Jason: Naming rights on United’s stadium could be anything from £25m-£50m/yr. They key will be finding an appropriate partner that the fans will feel befits the Manchester United’s new cathedral of football.

Similarly, the stadium’s unique size will make it the ‘Wembley of the North’ and become an immediate destination for all of the biggest stadium touring events. Together, these new opportunities could provide another £83m in incremental revenue at the midpoint.

From a profitability standpoint, since the revenue uplift is predominantly coming from yield and since the naming rights are 100% flow-through, estimated incremental EBITDA margins are quite high:

Jason: That’s an interesting question because Manchester United has been relatively mum about the financing details. Collette Roche, the United exec running the stadium development, has explicitly said they have all the funding options available including debt, equity, and other investors. 

This is what the menu of options looks like:

Of course, it’s going to need to be some mix of the above, and some are much more likely than others.

For example, Ratcliffe has repeatedly said that the new stadium will be entirely financed privately, without government funds, after facing backlash for floating the idea that UK taxpayers could pick up part of the tab.

Additionally, there has been talk of converting the old stadium into the home pitch for the Women’s team to preserve the statues and iconography around Old Trafford. (SCFO: That’s interesting. Probably not the best short term financial play, but as support for Women’s football in the UK grows, that could be a source of meaningful future matchday revenue in the long term.)

Naming rights to the stadium seem inevitable too. In our projections above, we estimated naming rights at £37.5m/year, predominantly based on BBC estimates from before the new stadium deal was announced. Whether you view those rights payments as being a financing contribution to reduce the cost of building the stadium or part of the revenue/payback size of the equation depends on how and when they are paid.

Finding a clean comp for naming rights deals isn’t easy because many bundle with stadium naming rights, training kit, and front of shirt deals. United already has Adidas contracted through 2035 for kit and SnapDragon for front of shirt. Arsenal's recent Emirates renewal, which includes front of shirt, training kits, along with stadium naming rights, runs a reported £70m a year; Manchester City's Etihad deal is worth about £15m a year in naming rights specifically (against an £80m total sponsorship package). 

Another scheme that Manchester could use are private seat licenses (PSL). These are common in the US, but less so in Europe. Here, fans are not buying tickets themselves, but rather the right to buy tickets to a specific seat.  

Barcelona raised €100m (£70m) via PSLs covering a 30-year term on 475 (or 4.9%) of its 9,600 premium seats, for example. This is obviously speculative, but if United cleared the same price for 4.9% of the estimated 15,500 luxury hospitality seats in the new stadium, it would collect in the neighborhood of £95.9m.

Surrounding commercial development is certainly part of the Trafford Wharfside Masterplan. There is plenty of space, and vision for an extensive complex for shopping, restaurant, entertainment, and possibly even residential.

Having built their wealth in real estate, the Glazers might choose gto capture the surrounding development revenue privately rather than through the club, mimicking the SoFi Stadium model, which was done by the owner’s private entities, not the team.

SCFO: This is interesting because there are so many different ways to structure it. Does that land get leased to a third party to develop in exchange for an upfront payment. Are the Glazers involved? Or does the whole complex development end up in an SPV.

As a CFO that would open new funding routes, and make it cleaner and attractive for new investors. As a fan, it would worry me creating a PropCo/OpCo split like that. There are many examples of where that has gone very wrong for football clubs. What about the numbers on the debt side? What is the capacity and possible cost?

Jason: We can look at borrowing either group-level debt, like Spurs and Everton did, or debt linked directly with the stadium. Either way isn’t pretty.

If United was to borrow £2bn against the stadium, combined proforma debt ratio would sit at around 8.3x EBITDA, equal to the Spurs Covid peak. That’s too high. Even at 6% (SCFO: no chance of a rate that low, lol), the interest alone is £120m a year, and it gets £20m worse with every point on top.

Let’s look at an assumption for the incremental EBITDA and interest side-by-side. 

SCFO: I think what we can conclude from that is that it just won’t be possible to debt fund the total stadium build cost under the current entity perimeter. Too much brought forward debt and too messy. If this stadium is debt funded, it will need to be much more structured I think. Either some kind of SPV, or more likely a significant equity raise to make it work.

Jason: For argument’s sake, let’s assume United presents its stadium plan to lenders, who insist that the post-stadium entity not exceed 4.0x gross debt. In that instance, United could only finance around 25% of the stadium, with the remaining ~£1.5bn funded through an equity raise based on current share price. 

While this plan would dilute current shareholders by 33.7%, some sort of equity issuance may be the only relief for United’s already stretched balance sheet.

Thanks Jason. It’s reassuring that there is actually a pretty high floor in the level of incremental EBITDA this stadium rebuild could deliver. Selling the additional seats will be no problem, there is plenty of time to find a naming rights partner, I’ve no doubt this stadium will be a destination for events, and they’ll find lots of other creative ways of monetizing the complex.

In fact, I would have much more confidence in the revenue uplift for this project, than most other big CapEx projects I’ve seen. That’s the power of a big brand I guess.

Where things are a lot less certain:

So, here’s the punchline. We know the Glazers are real estate people. We also know they have owned the club for over 20 years, have made a tremendous gain on their equity, and are very unpopular with the fans. What exactly are they waiting for to exit?

Maybe (and I’m hoping here) they want to be able to sell their majority stake with a concrete stadium rebuild plan part of the sales pitch. Exit planning (especially for a one-of-a-kind asset like Manchester United) is all about storytelling, and what better story than an oven ready plan to build one of the best sports complexes in the world paired with one of the greatest brands in sport.

But that raises another question… how do you value Manchester United? Who might the buyers be? That is what we’ll tackle next week in the final part of this four-week series.

This week’s analysis is powered by Summation. You can click on any chart in this post to get a replay of it all.

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