Latest Results Confirm Strength of Manchester Utd. - 07/04/03

Although they show a 34 per cent fall in pre-tax profits in the six months to 31 January, the latest results for Manchester United emphasise the strength of the club. In its comments on the results, Investors Chronicle noted , 'It's a sporting brand with global appeal, as well as a highly-profitable business. And, almost uniquely for the UK sector, it has genuine and sustainable growth prospects. Because of the power of the brand, the club is able to secure sponsorship with other top corporate brands. What's more, the club's broadcasting rights have yet to be fully exploited, and its extremely-strong balance sheet should help ensure it can buy the best players to maintain its dominance of the English game.'

Pre-tax profits for the six month period slipped from £30.9m to £20.3m, reflecting the record-breaking purchase of Rio Ferdinand. However, chief executive Peter Kenyon has ruled out an acquisition of a similar scale in the future. He commented, 'We don't see ourselves spending £30m on a player in the future. We don't see these transfer values being maintained by the general football market.'

Profits at the operating level before player trading rose 32 per cent to £31.1m, boosted by a £12m profit contribution from the club's new thirteen-year £303m kit contract with Nike. Although player wages rose by £5m, with a total salary bill of £39.7m, salaries represent 43 per cent of turnover, well within the limit recommended by Deloitte and Touche. If David Beckham does go to Real Madrid or Barcelona, the club will be well placed to replace him.

Although it continues to support collective domestic selling of television rights, the club wants to sell its own rights to overseas television companies as well as to mobile phone groups that could show video clips of goals and other highlights. Income from overseas rights is currently pooled and distributed between the twenty Premiership clubs, but United has an obvious interest in exploiting those rights itself. The club expects a verdict in the next two months from the Office of Fair Trading investigation in to the price-fixing of replica kits. If found guilty, it could be hit by a hefty fine.