Manchester United Has Quarterly Profit Thanks to Tax Credit

Manchester United Plc, the record 19-time English soccer champion, posted a fiscal first-quarter profit, made possible by a 26.5 million-pound ($42 million) tax credit.

Net income was 20.5 million pounds, or 13 pence a share, in the three months ended Sept. 30, compared with a net loss of 5 million pounds, or 3 pence, in the year-earlier period, the company said today. Revenue rose 3.4 percent to a record 76.3 million pounds as the team entered 10 new sponsorship deals and hosted nine Olympic soccer matches at its Old Trafford stadium.

The results are the first to cover the team’s time as a publicly traded company after the initial public offering on the New York Stock Exchange in August. The float allowed the owners, the U.S.-based Glazer family, to raise $233.3 million by selling 10 percent of the 134-year-old club at $14 per share, below the initial marketed range of as much as $20.

The shares declined 7.3 percent before today and were little changed at $13.00 at 11 a.m. in New York trading.

“Manchester United had a record first quarter, driven by our commercial operation, which continues to experience extremely strong global revenue growth in new media and mobile, retail merchandising and sponsorship,” Executive Vice Chairman Ed Woodward said in the earnings statement.

Debt Reduced

Gross debt declined 17 percent to 359.7 million pounds, while cash and equivalents fell 19 percent to 52.5 million pounds, the team said. United bought and retired 62.6 million pounds of senior secured notes. It had said it would use half the proceeds of the IPO to reduce debt.

United holds a two-point lead on title-holder Manchester City in the Premier League, and has also qualified for the knockout stages of the Champions League after winning all four group games it’s played. Last season it failed to advance into the latter stages, hurting its stadium and broadcast income.

The team has been boosted by its commercial division. Revenue rose 24 percent to 43 million pounds following deals with companies such as Japan’s Shinsei Bank Ltd. and Toshiba Medical Systems after the signing of Japanese midfielder Shinji Kagawa before the season. A deal with Japanese drinks manufacturer Kagome was struck by staff at a new Hong Kong sales office that opened in August, Woodward said on a conference call.

Chevrolet Deal

United also benefited from its first payments from a record $559 million deal with General Motors Co., whose Chevrolet brand will sponsor the team’s jersey from 2014. Match-day income rose 13 percent to 19.6 million pounds mainly because the team hosted nine matches during the London Olympics.

Those gains were offset by a 37 percent fall in broadcast income to 13.7 million pounds. United appeared in two fewer live Premier League games on U.K. television and one fewer Champions League match because of a calendar change. Broadcast income per Champions League match will be reduced this season to 25 percent from 40 percent of the U.K. market pool because of the Red Devils’ second-place finish in the Premier League last season and Chelsea’s European Cup win.

The owners spent 3.1 million pounds, equivalent to the income from hosting one match, on professional adviser fees related to the float. It added 65 employees, boosting the total to 735 as staff was added to sell sponsorship and to service existing clients.

Before the tax credit the team had a little-changed loss of

6.1 million pounds for the first quarter. The team said the credit is related to a corporate restructuring and that it has at least 60 million pounds more of unrecognized tax credit available.

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