By David Owen
November 12 – Manchester United continue to show the financial effects of their attempts to restore their dominance of the English club game, in spite of scoring a near 40% jump in first quarter revenues. A hike in costs, plus a financial hit on transfer dealings as manager Louis van Gaal and colleagues attempt to create a team worthy of the United brand, meant that pre-tax profits in the three months to September 30 were down 36% on a year earlier at £5.2 million.
Net debt also rose, to £286.2 million, an increase attributed in part to the recent strength of the US dollar. Net finance costs were actually down nearly 30%, at £4.3 million, thanks to a refinancing.
Unusually for a football club in 2015, United, whose shares are traded on the New York Stock Exchange, has taken to paying a dividend to its shareholders, including the Glazer family. For the first quarter, a payment of 4.5 US cents a share was approved.
Revenues reached a record £123.6 million. While broadcasting and matchday revenue benefited from the club’s return to the Champions League, the particularly lucrative commercial revenue stream was boosted primarily by the start of United’s new £750 million 10-year kit deal with Adidas.
Net cash generated from operating activities in the first quarter was, however, less than half the corresponding 2014 figure, at £35.7 million, due mainly to “the timing of sponsorship payments”.
Operating expenses jumped 15% to £106.7 million, with employee benefit expenses growing by more than 19%. Even so, operating profit before player trading reached £16.9 million, against a £4.1 million loss a year earlier.
While the club understandably highlighted a list of big name player signings that includes World Cup-winner Bastian Schweinsteiger, Memphis Depay and Anthony Martial, its transfer dealings weighed significantly on the bottom-line, contributing a £7.4 million loss, compared with an £18.3 million profit 12 months ago.
This more than £25 million negative swing was a big factor in the £2.9 million profit decline, with the pre-tax figure restricted to £5.2 million, against £8.1 million the previous year.
Ed Woodward, executive vice chairman, said the club’s “record first quarter revenues and EBITDA demonstrate the continued strength of our businesses”.
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