Manchester United profit tumbles but club says it will be first to record £500m revenue in England thanks to Adidas sponsorship and Champions League return

 
Joe Hall
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United did not play in the Champions League last season (Source: Getty)

Manchester United have assured investors revenue will soon bounce back to record levels after last season's absence from the Champions League triggered an 89 per cent tumble in the club's profits and a net loss of £1.2m.

Read more: Manchester United make David De Gea the highest-paid goalkeeper in the world

David Moyes' failure to guide the team to the Champions League qualification spots during his first and only season in charge meant the club missed out on lucrative broadcasting and matchday revenue streams.

However, United predict that following a return to the Champions League and having negotiated the largest kit manufacturer deal in sports history with Adidas, they will become the first club to record over £500m in revenue by next season.

The figures

Much like many of their performances on the pitch, this was not a set of results befitting a financial behemoth such as United.

The club made a net loss of £1.2m - after recording a £23.8m profit only a year before.

Total revenue was down 8.8 per cent from £433.2m to £395.2m as broadcasting revenue dropped by £17.9m to £107.7m and matchday revenue fell by £17.5m to £90.6m with fewer games staged at Old Trafford.

The failure to make the Champions League in the previous season triggered a non-participation clause in United's contract with previous kit supplier Nike which meant retail revenue dropped by £5.9m to £31.6m.

Yet despite a less than convincing season, the power of the club's brand was not in question - commercial revenue rose by four per cent to £196.9m due to a £19.1m increase from a number of new sponsorships.

Looking ahead, United forecast revenue between £500m to £510m.

Net debt has been reduced by 7.3 per cent from £275.4m to £255.2m.

Why it's interesting

Investors were cheered by the revelation that the club will begin to pay out their first dividend since their IPO in 2012. United will pay out a regular dividend worth $0.045 per share dividend to shareholders which will amount to roughly £15m a year.

What vice chairman Ed Woodward said:

As we look to the new season, we are enthusiastic about our strong position, both on and off the pitch. In recent weeks we have further strengthened our squad with an exciting mix of experience and youth, qualified for the group stage of the Uefa Champions League, and seen an impressive launch of our partnership with Adidas. Our record revenue and EBITDA guidance for 2016 reflects the underlying strength of our business and our confidence in its continued growth.

In short

In football terms - little more than a blip. After Manchester United failed to reach the Champions League, the club has excellently braced itself for the hit by continuing to bulk up the power of its brand. Its commercial muscle was well demonstrated by the record £750m kit deal signed with Adidas during the period.

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