Manchester United have a major decision to make on the future of manager Erik ten Hag as the end of a difficult season draws closer.

New co-owner Sir Jim Ratcliffe and his Ineos group are beginning to transform United's footballing operations with several big changes already made. Omar Berrada will arrive as the club's new CEO this summer whilst Jason Wilcox has joined as technical director from Southampton.

United are also looking to agree compensation with Newcastle United for sporting director Dan Ashworth who is currently on gardening leave. And the future of Ten Hag hangs in the balance amid a campaign which currently sees them sit seventh in the Premier League after crashing out of Europe in the group stages. They also narrowly avoided a humiliating collapse against Coventry City in the FA Cup on Sunday.

One careful consideration that has to be made by United is the league's Profit and Sustainability Rules (PSR) with sacking Ten Hag and his coaching staff set to cost around £10 million, according to the Times. Rules state clubs are only allowed to lose £105m across a rolling three-year period, or £35m each season.

Punishments for breaking PSR have included points deductions with both Everton and Nottingham Forest punished this season. However, Chief Business of Football Writer for Reach PLC Dave Powell has shared why the situation at Old Trafford differs from other clubs.

“It is important to look at Manchester United’s position a little differently when it comes to PSR," he said. “The £105m upper threshold limit is only allowed based on £90m of owner funding over the three-year period, so £30m per year, and that can arrive through either converting debt into capital or through an equity injection.

“The Glazer family haven’t provided owner funding, which means that for the most recently assessed three-year period the lower limit of a £15m loss, £5m per season, is what the club has been working under. Through Sir Jim Ratcliffe’s acquisition of a stake in the club, there is the potential that the next assessment period could allow for the upper threshold.

“In the event that Erik ten Hag is sacked, there is a cost burden that must be borne during the accounting period in which it takes place. As a publicly traded company that produces quarterly reports to shareholders and is listed on the New York Stock Exchange, the impact of any such moves for United would be seen well in advance of the usual year it takes for normal accounts to be filed by UK companies.

“United’s PSR position at the end of the 2022/23 accounting period saw them achieve a PSR profit of around £15m. That was after significant allowable deductions through depreciation, amortisation, women’s football, community activities and youth development helped address the combined £205m pre-tax loss. Also included was the £79m for the impact of Covid across the averaged 2019/20 and 2020/21 seasons, as well as another £40m pandemic impact for 2021/22.

“That means that United had some room for manoeuvre, even at the lower threshold, when they headed into the 2023/24 accounting period. If they felt the need they would have the financial ability for a pay-off, and they would also have the option to aid their PSR position were the ownership willing to provide secure funding to increase the threshold.

“It is likely a strategic decision related to football that would be impeding any call on the manager’s future at Old Trafford rather than concerns over the PSR position it would leave them with.

“Manager sackings will continue to be impactful with regards to financial controls when the Premier League moves over to a squad cost ratio in line with UEFA’s from 2025 though, with relevant wages (players and manager), amortisation costs, severance payments, and intermediary calculated against operating revenue and the best player trading profit year of the last three.”