Champions League exit costs Manchester United
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Your support makes all the difference.Manchester United are counting the cost of last season's shock early exit from the Champions League, announcing the double whammy of a pre-tax loss of £4.7m and sharp revenue decline.
The company, which recently listed in New York, posted a 3.3 per cent fall in revenues to £320m, a drop of 3.3 per cent over the year to the end of June. It also turned a £12m profit in 2011 into a pre-tax loss. Only a one-off tax credit of £28m pushed the club into the black after tax.
Lower TV revenue and gate receipts resulting from the Champions League elimination in the group stages and to a lesser extent the club's early exit in the FA Cup, accounts for the poor numbers.
The wage bill has also risen by close to 10 per cent in the past year. The blow to the bottom line was softened by greater commercial activity – the club have 34 partners which brought in £117m over the year to the end of June, up £13m on the previous 12 months.
A £10m training kit sponsorship was signed with DHL, while a $559m (£344m), seven-year shirt deal with General Motors has been signed.
In total, Manchester United have 34 commercial sponsors and partners which makes them the most marketed club in the UK with rivals such as Arsenal – who have only two such deals in place – left far behind.
"There is no doubting that Manchester United is a good business, but as these results show, everything depends on the performance of 11 individuals on a pitch," David Bick, the chairman of Square One Consulting and a football finance expert, said.
"Their business model doesn't just rely on qualifying for the Champions League but having a good run in that competition.
"If they have a bad season profits can be wiped out"
In a stock exchange statement, the club forecast revenues of £350m-£360m for the 2013 financial year, but this was dependent on it reaching the quarter finals of both the Champions League and FA Cup.
Last month, the Glazer family floated about 10 per cent of the club they acquired for £790m in 2005 on the New York Stock Exchange.
Analysts have said 11 per cent of Manchester United's shares are in the hands of short sellers – a far higher proportion than the average for the S&P 500.
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