By David Owen
September 10 – A substantial reduction in finance costs has enabled Manchester United, in danger of becoming the fallen giants of English football, to bounce back into profit in its latest financial year, in spite of a profoundly disappointing season on the field of play.
The Old Trafford club, which recently hired Dutch World Cup coach Louis van Gaal prior to embarking on a spending spree in an effort to revive its fortunes, reported a pre-tax profit of £40.5 million for the year to June 30, against a loss of £8.8 million the previous year. This is a bigger profit than any Premier League club managed in the previous two seasons.
But today’s figures also give a foretaste of the negative impact that this season’s lack of European football will have on business performance. This comes in the club’s forecast for fiscal 2015, when it expects revenue of £385 – 395 million and adjusted ebitda [earnings before interest, tax, depreciation and amortisation] of £90 – 95 million. These compare with 2014 figures of a record £433.2 million and £130.1 million respectively.
Ed Woodward, executive vice chairman, said the club was “very proud” of its 2014 results and “very excited” about the future.
“With Louis van Gaal at the helm as manager, and the recent signing of some of the world’s leading players to further strengthen our squad, we…believe it’s the start of a new chapter in the club’s history,” he said. “Louis’s footballing philosophy fits very well with Manchester United and he has an impressive track record of success throughout his career, winning league titles with every club he has managed.”
The key year-on-year change with regard to the return to profit was a 61% reduction in net finance costs, from £70.8 million to £27.4 million. Gross debt was down 12% from £389.2 million to £341.8 million. Cash and cash equivalents fell nearly 30% to £66.4 million.
Matchday revenue was static, but commercial and broadcasting income continued to forge ahead, by 24% and 34% respectively. The club also has the benefits of a landmark 10-year, £750 million kit deal with Adidas to look forward to.
On the cost side, operating expenses climbed 20% to £372.3 million, with employee benefit expenses racing through the £200 million barrier to £214.8 million. Though this represented an increase of 19%, it was comfortably below the £233 million wage costs of local rivals Manchester City in 2012-13.
The club disclosed that it made a £7 million profit on the disposal of players’ registrations. Exceptional items were £5.2 million, “primarily related to compensation payments on loss of office to the former manager and certain members of the coaching staff” – a reference, presumably, to Van Gaal’s ill-fated predecessor, David Moyes and his team.
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