Manchester United break more records
Robust growth in the three key sectors of commercial, broadcasting and match day income helped Manchester United to achieve record profits and revenues in the three months to 31st March.
Underlying profits increased 25 per cent to a record £25m. Turnover rose a near 30 per cent to £91.7m. Sponsorship revenues increased 52.2 per cent. Group debt decreased by 15.9 per cent since June 2012 to £436.9m. Some analysts think that it could drop to £100m in a few years if the Glazers do not pay themselves dividends.
Broadcasting revenues increased 28.4 per cent year on year to £21.7m, while match day revenues benefitted from three home cup matches in the period that saw revenues rise 27.8 per cent to £34 million. However, it is commercial revenues that are increasingly becoming the driver of success. These increased 31.9 per cent year on year.
When the Glazers took over at Old Trafford commercial revenue was £47.8m. It is likely to break through the £150m barrier when the full year financial results become available at the end of June. United believe that they have only begun to scratch the surface in terms of commercial revenues which are expected to account for more that 50 per cent of turnover within the next two years.
Incoming chief executive Ed Woodward told investors in a conference call that the club were targeting 94 sectors commercially, only 13 to 14 of which they operate in at present. Their customer management relation base topped 30 million people, up five million in the last quarter alone.
Negotiations are continuing with Nike on the new kit deal, but it could be worth as much as double the existing £25m a year deal which expires in 2015. The sponsorship deal with Aon which includes the training kit is worth between £160m and £180m a year. The seven year shirt sponsorship agreement with Chevrolet is worth £367m.
Staff costs for the third quarter increased 25.1 per cent year on year to £44.9m, primarily due to new player signings, existing player wage increases and growth in commercial headcount. Overall staffing levels now exceed 800. Other operating expenses increased 50.3 per cent year on year to £21.8m. This was primarily due to an increase in domestic cup gate share costs, catering direct costs, and police and security costs.
United incurred £18.3m in net finance costs, the result mainly of foreign exchange losses on dollar-denominated senior secured notes and cash balances, but gained a £6.7m tax credit.
The market consensus opinion on the shares remains a buy, reflecting the success of the club.