Manchester United Profit Triples as Finance Costs Drop
Manchester United, which fired its coach during a disappointing season, said fiscal third-quarter profit tripled as the English soccer team’s revenue rose 26 percent and finance costs declined.
Net income for the three months to the end of March was 11 million pounds ($18.4 million), compared with 3.6 million pounds in the year-earlier period. Revenue increased to 115.5 million pounds from 91.7 million and finance costs declined to 6 million pounds from 18.6 million.
While the record 20-time English champion has been linked with Netherlands national team coach Louis van Gaal as a replacement for the fired David Moyes, it didn’t comment on its manager’s job in today’s statement. Ed Woodward, its executive vice chairman, said the club generated record revenues as all businesses “delivered impressive year over year growth.”
“This puts us in a healthy financial position to continue to invest in the squad,” he said in a statement. “Everyone at the club is working hard to ensure the team is back challenging for the title and trophies next season.”
Moyes, 51, was picked by fellow Scot Alex Ferguson as his successor last May and was dismissed April 22, four games before the end of United’s worst Premier League season. At the time the team had lost 11 of its 34 league games under the new coach, a year after winning a record 20th English title. It went on to finish seventh.
United’s slump meant it failed to qualify for the elite Champions League for the first time in 19 years, an absence that will hurt its finances. The competition earned the club 35.6 million euros ($49 million) in prize money in 2012-13 as well as extra ticket and corporate hospitality sales.
On a conference call, Woodward estimated that missing European competition would cost the club in the “mid-30 million” pounds and said the club would go into the player transfer market to get back into the elite competition.
While “some financial cracks have appeared, the general direction is towards growth,” Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, said in a note. “The lack of Champions League football at the club will be costly financially and reputationally, whilst the managerial situation remains, for the moment at least, unresolved.”
Hunter added that while the figures were “flattered” by an increase in broadcast revenue, “there is little doubting the overall strength of the marketing machine. In its commercial unit, the growth in sponsorship in particular further evidence of the power of the brand globally.”
Sponsorship revenue rose 43 percent in the quarter to 30.7 million pounds. Commercial revenue was 42.8 million pounds, an increase of 19 percent. Broadcasting income was up 64 percent at 35.6 million pounds, with matchday revenue growing 9 percent to 37.1 million pounds.
Operating expenses for the third quarter were 91.5 million pounds, up 16 percent, with staff costs of 53.4 million, an increase of 19 percent, “primarily due to the impact of player acquisitions and renegotiated player contracts.”
Bought by the U.S.-based Glazer family in a leveraged takeover in 2005, Manchester United is one of sport’s most recognized brands. It’s soccer’s fourth-richest club by sales, according to Deloitte LLP.
Gross debt fell 4.3 percent to 351.7 million pounds at March 31.
Van Gaal has been named in media reports including the Evening Standard as poised to succeed Moyes.
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