By David Owen
September 25 – On the pitch, City were the better team, hands down; in financial terms, however, United retained Mancunian bragging rights last season, even if the gap is narrowing.
Results for the year to June 30, published today, showed a pre-tax profit of £26.1 million for the club from the red half of Manchester, down more than £30 million from the previous year.
With revenues up 1.5% to £590 million, the explanation for the drop in profits lay in increased costs, with operating expenses climbing by £52.7 million to £564 million and employee benefit expenses by more than £32 million to £295.9 million. This compares with aggregate payroll costs of just under £260 million for Manchester City.
Subdued growth in broadcast revenue was not a surprise, but the famed United commercial revenue machine also seems to be finding it more difficult these days to churn out significant growth. Overall commercial revenue was little better than flat at £276.1 million, after growth of just 2.7% the previous year. Sponsorship revenue contributed £173.2 million of this figure.
Net debt climbed significantly from £213.1 million to £253.7 million, due to a reduction in cash. The club underlined that the “gross dollar debt principal remains unchanged”. Scrutiny of the balance-sheet indicated borrowings at June 30 of around £495 million, with cash at £242 million, down from £290 million.
The club, controlled by the Glazer family, said that two semi-annual dividends of nine US cents a share were paid during the year. The shares were extremely buoyant during the summer.
For the present year, the club expects revenue of £615 million to £630 million and adjusted ebitda, a measure of profitability, of between £175 million and £190 million. Adjusted ebitda in the latest figures was put at £177.1 million.
A non-cash tax accounting write-off, related to the recent cut from 35% to 21% in the US federal corporate income tax rate, contributed to a sharply increased tax expense of £63.4 million and an overall loss for the latest year of £37.3 million.
Ed Woodward, executive vice chairman, said all at the club were “working tirelessly to add to Manchester United’s 66 and [manager] José [Mourinho]’s 25 trophies”.
He went on: “Last season we had more academy graduate minutes on the pitch than any other Premier League club. Our increased revenue expectation for the year demonstrates our continued strong long-term financial performance which underpins everything we do and allows us to compete for top talent in an increasingly competitive transfer market.”
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