Manchester United today released its first set of results – cue drum roll – unfortunately showing that full-year revenues had dropped 3.3% to £320.3m, compared with the previous year. Part of its problem was the failure to qualify for the knockout stages of the Champions League, which pushed the club into an unexpected pre-tax loss last season. Well, the effect of a tax credit actually gave the club a nominal profit, but if it is excluded, a loss of £5m remains on the balance sheet. But today the club said it is expecting to increase revenues to around £360m next year, on the assumption the team will reach the quarterfinals of the Champions League.
The club’s executive vice-chairman, Ed Woodward, said that despite the poor revenues performance and the pre-tax loss, 2012 had actually yielded record cash in commercial deals, which raised £118m. That’s 13.7% more than the previous year and the club attributes the rise mainly to a lucrative training kit deal with DHL and a souped up deal with Nike over its profit-share arrangement. Woodward described 2012 as the ‘best year ever’ in this regard, and said that the club is expecting ‘a substantial increase in the value of the Premier League’s international television contracts’ in the next financial year.
The club’s float was mired in controversy after it emerged that the Glazer family, which owns a larger portion of the club, was set to pocket around half of the proceeds of the float, using the rest to pay down just a fraction of the club’s enormous debts. When the float actually happened on the New York Stock Exchange and the share price levelled out, many were already disappointed: it settled at $14 per share just two days after listing, against expectations of around the $20 mark.
It is far too early to tell whether the float was a good decision for the club. But with such a bankable supporter base around the world, good management could dig the club out of its somewhat precarious debt situation. The Glazers meanwhile, are laughing all the way to the bank…