Feb. 12 (Bloomberg) -- Manchester United Executive Vice-Chairman Ed Woodward acknowledged the team’s “disappointing” league position even as English soccer’s defending champion posted higher earnings on record sales.
Adjusted profit for the three months to Dec. 31 was 19.8 million pounds ($32.7 million), or 12.08 pence per share, compared with 19 million pounds, or 11.60 pence, in the year-earlier period. Higher sponsorship income helped to boost total revenue 12 percent to 122.9 million pounds.
The record 20-time English champion’s form has dipped this season under new manager David Moyes, after Alex Ferguson retired following a 26-year tenure. It stands seventh in the Premier League after eight defeats from 25 matches and has been knocked out of the F.A. Cup and League Cup.
“We once again achieved a record revenue quarter with strong contributions from our commercial and broadcasting businesses despite the current league position, which everyone from the team manager down has acknowledged is disappointing,” Woodward said in a statement. “We continue to see meaningful opportunities to grow our commercial business, which bodes well for the long-term stability and financial strength of our business.”
Manchester United Plc’s shares were down 3.4 percent at $14.71 at 10:55 a.m. in New York trading.
United could miss out on next year’s UEFA Champions League for the first time since 1995-96 if its results don’t improve. Since 1991 it has never finished lower than third in England’s top tier.
Last month United signed Spain’s Juan Mata from Chelsea for a team record 37.1 million pounds. Woodward said the club may have to spend again to become more competitive.
“We are focused on strengthening the squad,” Woodward said during a teleconference following the earnings announcement, adding that the club is “moving in the market in a way that perhaps we haven’t seen in recent years.”
The profit figure was adjusted for factors related to the club’s initial public offering in 2012, the repurchase of senior secured notes and other items, the company said today in a statement. In unadjusted terms, profit rose to 19 million pounds from 16.2 million.
Sponsorship revenue rose 39 percent to 29 million pounds, the club said, on “higher renewals and the activation of new global and regional sponsorships.” Total commercial income was 19 percent higher at 42.3 million pounds.
Broadcasting revenue increased 19 percent to 46.9 million pounds, while matchday income fell 3.7 percent to 33.7 million pounds. Staff costs rose 17 percent to 51.6 million pounds, “primarily due to the impact of player acquisitions and renegotiated player contracts.” Gross debt fell 2.7 percent to 356.6 million pounds.
Manchester United’s shares have fallen 16 percent since early December. The company started trading on the New York Stock Exchange in August 2012 after an initial public offering that priced the shares at $14.
The club’s 13-year jersey deal with Oregon-based Nike Inc., worth 303 million pounds, expires next year. Adidas AG, Puma SE and Warrior Sports, a unit of New Balance Athletic Shoe Inc., have all expressed an interest in replacing Nike, according to the Independent newspaper.
United, bought by the U.S.-based Glazer family in 2005, is one of sport’s most recognized brands. The club says it has 659 million followers around the world.
The 135-year year old team was recently passed by Bayern Munich as soccer’s third-richest club by sales, according to Deloitte LLP. Even so, it is “well placed” to regain the spot after this season on increased broadcast and sponsorship income, the consulting firm said. Real Madrid and Barcelona top Deloitte’s annual rankings.
United has reached the last 16 of Europe’s Champions League and will play Olympiacos of Greece. Tonight it’s away to second-placed Arsenal in the Premier League.
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