Manchester United Has Fourth-Quarter Loss on Trophy Failure

Manchester United Plc had a fiscal fourth-quarter loss as the 19-time English soccer champion played fewer matches in finishing without a trophy for the first time since 2005.

The net loss was 15 million pounds ($24.4 million), or 10 pence a share, in the three months ended June 30, compared with a net loss of 501,000 pounds in the year-earlier period, the company said today in an e-mailed statement. Revenue declined 25 percent to 74.5 million pounds as the team failed to advance in the Champions League and F.A. Cup.

Today’s results are United’s first since its August initial public offering, where its U.S. owners raised $233.3 million by selling 10 percent of the 134-year-old team at $14 per share, below the initial marketed range of as much as $20. The shares declined 7.4 percent before today.

“The team’s performance is central to this business,” Executive Vice Chairman Ed Woodward said on a conference call with analysts. “It allows us to get the great partners.”

Match-day revenue decreased 35 percent to 18.9 million pounds as the team played two fewer home games, and broadcast income fell 37 percent to 27.5 million pounds mainly because the team failed to make the knockout stages of the Champions League. Commercial sales rose 5.2 percent to 28.1 million pounds.

The shares fell 31 cents, or 2.4 percent, to $12.65 shortly after noon in New York trading, giving the team a market value of $2.1 billion.


Fiscal-year revenue fell to 320.3 million pounds from 331.4 million, the first decline since the Glazers bought the club in

2005. United is forecasting 2012-13 revenue of between 350 million pounds and 360 million pounds, with earnings before interest, taxes, depreciation and amortization of between 107 million and 110 million pounds.

The estimates assume that the team recovers from last season’s failure to advance in all competitions and makes the quarterfinals of the Champions League and domestic cups.

The club is trying to regain its Premier League title, which it lost on the final day of last season to crosstown rival Manchester City on goal difference. United has nine points after four games this season, a point and a place behind leader Chelsea. It opens its Champions League campaign against Turkey’s Galatasaray at Old Trafford tomorrow.

United sold shares in New York after initially exploring raising as much as $1 billion by listing in Singapore. Some supporters have criticized the team’s owners, the Florida-based Glazer family, for profiting from the IPO. The owners took half the proceeds and used the other to pay down debt related to the 2005 leveraged buyout. The team said its gross debt is 436.9 million pounds.

Family Control

The team floated only Class A shares, allowing the Glazers almost 99 percent control through their ownership of Class B shares, which carry 10 times the voting power of each share sold.

“Manchester United’s failure to score in the public markets reminds investors that winning teams don’t make winning investments,” said Sam Hamadeh, chief executive officer of PrivCo, a New York-based firm that analyzes private companies’ financial data, in a note on Sept. 7. PrivCo estimated the team’s fair value share price at $4.97 a share.

Record nine-time European champion Real Madrid announced last week it became the first sports team to breach the 500-million euro ($653.9 million) revenue mark in a single year. The Spanish league winner said it got 514 million euros for the year ended June 30, 2012.

United’s sales are among the highest in soccer, doubling since the Glazers bought the team. The club reorganized its commercial sales operation in 2008, and since then revenue from sponsorship has risen to more than 100 million pounds a year. That will be boosted after United signed a record $559 million jersey sponsor agreement with General Motors Co.’s Chevrolet brand in August.

Getting Started

“We’re only getting started in this area of our business,” United’s Commercial Director Richard Arnold said in an Aug. 16 interview after the team unveiled bookmaker Bwin as its latest partner. “We’ve been investing heavily in this area over recent years and we’ve been able to see that momentum.”

A week after floating, United broke with a tradition of buying young players likely to increase in value by spending as much as 24 million pounds on 29-year-old Arsenal striker Robin van Persie. The Dutchman has scored four goals in four league games after manager Alex Ferguson convinced him to sign for the Red Devils. Some fans groups claimed the move was to pacify supporters opposed to the listing.

“We’re not stupid,” Chief Executive Officer David Gill said in an interview after this season’s Champions League draw in Monte Carlo. “Why would Alex want to do something which is sop for the IPO? We’re doing it to improve the team all the time.”

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