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Manchester United revenues down over Champions League failure

Tue 18th Nov 2014 | Money & Finance

Manchester United today announced a 9.9% fall in their latest financial results for the 2015 fiscal first quarter ended 30 September 2014.

Total revenue to September 30 is down to £88.7m and reflects the cost of the club's failure to qualify for the Champions League.

Manchester United executive vice chairman Ed Woodward said: “While we recognize that the 2014/15 fiscal year financial results will reflect our absence from the Champions League, we signed the largest kit sponsorship deal in the history of sport in the first quarter and, with that concluded, we are excited to focus our efforts on the meaningful growth opportunities in sponsorship, digital media and retail and merchandising.”

Total revenue to Sept 30 down 9.9% to £88.7m.

Broadcasting revenue down 13% to £16.8m.

Matchday revenue down 21.8% to £15.1m.

Commercial revenue down 5.2% to £56.8.

United expect overall revenue for 2014-15 to be between £385m and £395m. Last year it was £433m.

Key Financials (unaudited)

£ million (except adjusted diluted earnings per share)

 

Three months ended
30 September

 

 

 

 

2014

 

2013

 

Change

Commercial revenue

 

56.8

 

59.9

 

(5.2)%

Broadcasting revenue

 

16.8

 

19.3

 

(13.0)%

Matchday revenue

 

15.1

 

19.3

 

(21.8)%

Total revenue

 

88.7

 

98.5

 

(9.9)%

Adjusted EBITDA*

 

20.3

 

22.2

 

(8.6)%

 

Profit/(loss) for the period (i.e. net income)

 

8.9

 

(0.3)

 

N/A

Adjusted profit for the period (i.e. adjusted net income)*

 

4.2

 

2.2

 

90.9%

Adjusted diluted earnings per share (pence)*

 

2.59

 

1.37

 

89.1%

 

Gross debt

 

362.2

 

361.0

 

0.3%

Cash and cash equivalents

 

90.3

 

83.6

 

8.0%

 

Revenue Analysis

Commercial

Commercial revenue for the quarter was £56.8 million, a decrease of £3.1 million, or 5.2%, over the prior year quarter.

  • Sponsorship revenue for the quarter was £46.3 million, an increase of £1.1 million, or 2.4%, over the prior year quarter primarily due to an increase in shirt and other sponsorships, partially offset by reduced tour revenue.
  • Retail, Merchandising, Apparel & Product Licensing revenue for the quarter was £7.8 million, a decrease of £2.9 million, or 27.1%, over the prior year quarter, primarily due to reduced Nikeguaranteed revenue due to non-participation in the UEFA Champions League in the current season.
  • Mobile & Content revenue for the quarter was £2.7 million, a decrease of £1.3 million over the prior year quarter, due to the expiration of a few of our mobile partnerships.

 

Broadcasting

Broadcasting revenue for the quarter was £16.8 million, a decrease of £2.5 million, or 13.0%, over the prior year quarter, primarily due to non-participation in the UEFA Champions League in the current season.

Matchday

Matchday revenue for the quarter was £15.1 million, a decrease of £4.2 million, or 21.8%, over the prior year quarter, primarily as a result of non-participation in the UEFA Champions League and one fewer domestic cup home game.

Operating expenses

Total operating expenses for the quarter were £92.8 million, an increase of £2.6 million, or 2.9%, over the prior year quarter.

Employee benefit expenses

Employee benefit expenses for the quarter were £49.4 million, a decrease of £3.5 million, or 6.6%, over the prior year quarter due primarily to lower player wages.

Other operating expenses

Other operating expenses for the quarter were £19.0 million, a decrease of £4.4 million, or 18.8%, over the prior year quarter due to a reduction in domestic cup gate-share costs, as a result of playing one less home cup game, and favourable movements in foreign exchange.

Depreciation & amortization

Depreciation for the quarter was £2.3 million, an increase of £0.3 million, or 15.0%, over the prior year quarter. Amortization for the quarter was £21.2 million, an increase of £9.3 million, or 78.2%, over the prior year quarter. The unamortized balance of players’ registrations at 30 September 2014 was £291.7 million.

Profit on disposal of players’ registrations

Profit on disposal of players’ registrations for the quarter was £18.3 million compared to £1.0 million in the prior year quarter.

Net finance costs

Net finance costs for the quarter were £6.1 million, a decrease of £3.7 million, or 37.8%, over the prior year quarter. The decrease was primarily due to a £3.0 million foreign exchange loss on retranslation of US dollar bank accounts in the prior year quarter.

The club started hedging the foreign exchange risk on a portion of contracted future US dollar revenues using our US dollar borrowings, net of a portion of our US dollar cash as the hedging instrument from the prior year second quarter. As a result, foreign exchange gains or losses arising on re-translation of our US dollar borrowings and a portion of our US dollar cash balances are now initially recognized in other comprehensive income, rather than being recognized in the income statement immediately.

Tax

The tax credit for the quarter was £0.8 million, compared to a credit of £0.2 million in the prior year quarter.

Cash flows

Net cash generated from operating activities for the quarter was £72.9 million, an increase of £49.7 million over the prior year quarter, primarily due to favourable movements in working capital.

Capital expenditure on property, plant and equipment for the quarter was £1.9 million, a decrease of £2.2 million over the prior year quarter.

Net player capital expenditure for the quarter was £55.9 million, an increase of £29.1 million over the prior year quarter.

Net cash generated from financing activities for the quarter was £4.6 million, compared to net cash used of £0.1 million in the prior year quarter.

Image: Action Images / Lee Smith

Posted by: Kev Howland 

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