Manchester United set for above average Europa League revenue but confirm Adidas deal will be cut by £21m if they fail to reach Champions League

 
Joe Hall
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Manchester United Paul Pogba
Paul Pogba celebrates reaching the Europa League semi-final (Source: Getty)

Manchester United have confirmed to investors that the value of their Adidas kit deal will be cut by £21m should they lose to Ajax in next Wednesday’s Europa League final.

But the Premier League giants said that such a loss would be mitigated by their exceptionally high-earning Europa League run, which could yet result in Champions League qualification if they triumph next week.

United yesterday increased their full-year revenue expectations to between £560m - £570m, up from a previous forecast of between £530m - £540m, in part thanks to their progress on the continent which is set to generate more revenue than normal for an English side.

Failure to qualify for next season’s Champions League will curtail those revenue expectations, triggering a 30 per cent decrease in their £75m Adidas kit deal to £54m and denying them the approximate £40m they could expect to earn from the competition.

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“It’s [the Adidas deal] a 30 per cent reduction in the following year’s payments,” said chief financial officer Cliff Batty on an investor conference call.

“But in accounting terms that’s spread out over the remaining life of the contract. It would be about a £4m hit in fiscal 2017 and then about a £2m hit over the remaining years of the contract.

“Clearly the Champions League has greater revenues. But we have designed an offset within salary costs and our bonus structure which attempts to dampen the impact between being in the Champions League and the Europa League.”

United recorded a £3.8m loss in the first three months of the year, down from a £13.7m profit a year ago, due to adverse currency fluctuations and increased player amortisation costs.

Yet the world’s richest football club, a mantle recently seized from Real Madrid, remain a commercial behemoth and are forecasting profits of between £185m and £195m for this season.

Jose Mourinho’s side, who have benefited from the underperformance of both Southampton and Tottenham in the Europa League, expect to earn £7m - £8m more than an English team would have in an average season.

“In the Champions League we’d expect £40 - £50m in revenues,” said Batty. “Whereas the Europa League, absent of this year, is normally around the £15m - £20m.

“This year we’ve benefited from the performance of other English teams in the Europa League. Because of the performance of Southampton and Tottenham in that competition, we picked up a bigger share of that market pool.”

United could eventually earn more from their Europa League campaign this season than they did from last year’s Champions League campaign when they took home €38.1m, equivalent to just under £30m at the time.

As a cup winner — United qualified to the Europa League by winning last year’s FA Cup — the Red Devils are entitled to the biggest slice of the TV money set aside by Uefa to distributed based on the previous season’s domestic performance.

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In contrast to most years when three English teams compete in the Europa League group stage, United only had to split TV money for the first half of the tournament with Southampton.

With Saints failing to reach the knockout stage and Tottenham only lasting one round after being relegated from the Champions League, United will have been entitled to 100 per cent of the TV money for the last four rounds of the competition.

Last season Liverpool made €26.4m (£22m) for finishing runners-up in the Europa League, but had to share TV money with both Tottenham and United for an extra round.

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