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Manchester United Post Increased Commercial Revenues

Tue 18th Sep 2012 | Money & Finance

Manchester United’s commercial revenues grew by 13.7% according to the latest results published today overtaking its broadcasting and matchday revenues.

The club’s results for the year ending 30th June 2012 published today show that commercial revenue for the year increased 13.7% to £117.6 million driven by the addition of several new global and regional sponsorships.

However, total revenues were down 3.3% to £320m from the previous year (2011).

United’s sponsorship revenue increased 14.9% to £63.1 million whilst retail, merchandising, apparel and product licensing revenue increased 8.0% to £33.8 million.

In addition new media and mobile revenue increased 20.3% to £20.7 million with the club now boasting a Facebook following of over 26.5m fans.

Ed Woodward, Executive Vice Chairman commented on the results stating: “We are delighted to announce our first results as a NYSE listed company; fiscal 2012 was the best year ever for Manchester United’s commercial business.

“Our world-record $559m shirt sponsorship deal with Chevrolet and the Premier League’s new £1bn a year UK television rights deal (a 70% increase) highlight the outstanding growth prospects for the future.

“We also expect a substantial increase in the value of the Premier League’s international television contracts scheduled to be announced later this year.”

United’s broadcasting revenues decreased 11.3% to £104.0 million primarily as a result of elimination at the group stages of the Champions League. For the fourth quarter, revenues decreased 37.4% to £27.5 million as no participation fees were earned compared to Champions League participation fees from the quarter-final, semi-final and final in the fourth quarter of the prior year.

In addition, United earned minimal revenues from the FA Cup following their fourth round exit, compared with reaching the semi-final in the previous year.

Matchday revenues for the year decreased 10.9% to £98.7 million as a result of playing four fewer home games compared with the prior season when they also received a share of the gate receipts from the Champions League final and FA Cup semi-final, both of which were held at Wembley Stadium.

Total operating expenses increased 4.6% for the year to £285.1 million, primarily due to an increase in football player and staff compensation as they continue to invest in the team; together with an increase in costs related to additional non-player headcount driven by the continued growth of their commercial operations.

Net finance costs for the year decreased 3.5% to £49.5 million primarily due to a £6.4 million decrease in interest payable on bank loans and senior secured notes following the repurchases of senior secured notes (which were subsequently retired as part of the IPO process) and a £16.9 million decrease in interest payable and accelerated amortisation of debt issue costs on the payment in kind loan repaid in fiscal 2011.

The club’s much maligned borrowings were £436.9 million at 30 June 2012 compared to £458.9 million at 30 June 2011, and since the year end United have used the net primary proceeds from the IPO to reduce their U.S. dollar denominated senior secured notes.

Posted by: Aaron Gourley

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