Manchester United confirmed on Tuesday the financial cost of former manager David Moyes failing to get the team to qualify for the 2014-15 Champions League tournament: It looks as though the damage will be at least £43 million ($US67 million.)
The club confirmed it expects revenues will fall this in this fiscal year between £38 million ($US59 million) and £48 million ($US75 million) — drops of between 8.77% and 11% on last year’s total revenue figure of £433 million ($US678 million).
Manchester United reported Tuesday that its revenue fell 9.9% to £88.7 million ($US138.8 million) in the three months to the end of September, a drop reflective of its first absence from the Champions League in two decades, which hit income from broadcasting and matchday ticket sales.
If the revenue drop-off continues at the same 9.9% downward run-rate it has this quarter, that would mean not qualifying for the Europe’s prize football tournament would cost the club around £43 million ($US67 million). However, the impact could be even more than that as the tournament was only in its early qualifying stages during the financial reporting period. Clubs obviously receive more in broadcasting and matchday revenue as well as bonuses from sponsors the further they progress through the competition.
The drop in revenue this quarter was somewhat suppressed by a 6.6% lower wage bill (down to £49.4 million/$US77.3 million) than the same period a year ago, despite the club signing a number of new players including Daley Blind, Angel di Maria, Marcos Rojo, and Radamel Falcao on loan during the latter stages of the summer transfer window. However, the club also said farewell to a number of highly-paid players this season including Ryan Giggs, Danny Welbeck, Nemanja Vidic and Rio Ferdinand.
Adjusted EBITDA for the period was down 8.6% to £20.3 million ($US31.8 million). Adjusted net profit for the period was up 90.9% to £4.2 million, while adjusted diluted earnings per share were up 89.1% to £2.59 million ($US4.06 million).
Sponsorship revenue was also up 2.4% on the previous quarter one year ago. During the first quarter the club signed the largest ever football kit manufacturer sponsorship deal with Adidas, which equals £750 million ($US1.17 billion) over 10 years and will become active in August 2015. It also announced five additional sponsorship deals in the quarter: Nissin and Abengoa, Association of Football Federations of Azerbaijan, Maybank and Gloops.
Overall, commercial income accounted for 64% of total revenue (up from 60.8% in 2013), broadcasting 19% of total revenue (down from 19.6%) and matchday 17% (down from 19.6%).
On a call with analysts, Manchester United highlighted the US as a “developing market” for soccer where the club is likely to see “meaningful growth” in the future as interest in the sport in the region is on the up. The club’s executive chairman Edward Woodward said he expects to grow revenues in the US through content, broadcast rights and merchandise going forward.
Manchester United, now managed by Louis van Gaal, is currently seventh in the Premier League — outside of the Champions League qualifying spots for next season.
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