February 26 – The headlines from the release of Manchester United’s second quarter financials are that the club’s net debt has increased by £73.6 million to £391.3 million, and that total revenues have dropped by 19.3% to £168.4 million.
The figures don’t make happy reading for investors but then investing in football clubs comes with the element of chance around playing performance. And in Man Utd’s case the result is the simple deduction of about £70 million from the accounts for the club’s failure to make it into the Champions League.
But the club said it is still on course to deliver £560-580 million of year end revenue and a profit of and £155-165 million before tax and other deductions
The club feels that it has addressed the cause of that failure to qualify for the Champions League and it cost them £19.6 million in compensation to Jose Mourinho and “certain members of the coaching staff for loss of office” in last year’s accounts. But even post-Mourinho the club have not been entirely convincing in their challenge for a Champions League place though could be helped significantly in that cause by their Man City neighbours if their UEFA ban is upheld at CAS.
Ed Woodward, executive vice chairman, the subject of sustained fan abuse over playing performance, is nevertheless expectant of silverware in what is still seen as a rebuilding process.
“We are pushing for a strong finish in the Premier League, the Europa League and the FA Cup as we enter the final third of the season. We have continued to make progress on our squad rebuild, with many changes in terms of players that we have brought in and players that have come through our Academy; the foundation for delivering the long-term success that we are all working towards is in place as we implement our plan and our footballing vision with Ole,” said Woodward.
Looking at revenue lines, the £39 million drop in broadcasting revenue for the quarter – down to £64.7 million – dominates. But elsewhere the club’s revenue is reasonably solid. Sponsorship was £45.1 million, an increase of £4.8 million, while retail revenue dropped only slightly. Match day revenue took a bigger hit, dropping £5.9 million, or 15.1%, against the prior year quarter, but this is attributed to two fewer home games.
The open benefit of not playing in the Champions League is that player salaries are reduced. The club reported employee benefit expenses for the quarter were £70.9 million, a decrease of £7 million (9.0%) over the prior year quarter.
Small solace for fans and investors.
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