Tuesday 25 July 2017

Manchester United performing better off the field than expected with $570m revenue forecast

United have raised guidance on revenue and profit
United have raised guidance on revenue and profit

Simon Peach

Manchester United are performing better than expected off the field and are now predicting record revenues of up to £570m this year.

Jose Mourinho's men sit sixth in the Premier League and have the Europa League final against Ajax to look forward to next week.

But, despite league struggles and being without Champions League football, United have raised guidance on revenue and profit for the year ending June 30, 2017.

United have increased projected revenue in their third-quarter results to between £560m to £570m - a £30m rise on the second quarter prediction.

The club achieved a record profit of £191.9m last year and, despite big-name acquisitions and the lack of Champions League football, are on course for earnings before interest, tax, depreciation and amortisation of between £185m to £195m.

United executive vice-chairman Ed Woodward said: "As we near the end of the season, I am delighted we have picked up two trophies so far, and look forward to competing for a third in the Europa League final, the only trophy we have never won.

"We are forecasting better full year financial performance than expected and as such have raised our revenue and profit guidance for the year.

"We look forward to a strong finish to 2016-17, both on and off the pitch."

Total revenue for the fiscal third quarter ending March 31, 2017 was £127.2m, with a net income loss of £3.8m compared to a £13.7m profit over the same period last year.

Staff costs rose 18.3pc on the previous year quarter and net debt is £366.63m, representing a £17.6m increase over the year.

United chief financial officer Cliff Baty said: "The increase in net debt... was entirely driven by the impact of foreign exchange movements on our US denominated debt. Our long-term debt remains unchanged in US dollar terms.

"Following the progress of the team in both domestic cup competitions and in reaching the Europa League final, together with lower staff costs, we would now expect full-year results to be above our previously stated guidance for fiscal 2017."

Baty, speaking on United's third-quarter earnings conference call, outlined the impact of failing to win the Europa League, thus missing out on Champions League qualification.

United's kit deal with Adidas would take a £21m hit next term - a 30pc reduction on the £70million they could receive - should they miss out on a Champions League return.

Baty says United would expect revenues in the competition of £40m to £50m compared to £15m to £20m should they play in next year's Europa League.

Next week's winner will get prize money of €6.5m, the runner up €3.5m, with United's chief financial officer confirming there are clauses built into contracts to soften the impact of missing out on the Champions League.

"Clearly the Champions League has greater revenues," Baty said.

"But we do have a design, sort of an offset, within salary costs and our bonus structure, which attempts to sort of dampen the impact between being in the Champions League and being in the Europa League."

Press Association

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