Manchester United trim wage bill but Champions League absence costs club £30m
Manchester United’s Champions League absence continued to hit them in the pocket as revenue fell 14 per cent to £105.7m in the second quarter for the three months ended 31 December.
That was largely driven by a massive 39 per cent fall in broadcasting revenue from £46.9m to £28.4m. Last season Manchester United earned £35.8m in broadcast, participation and performance payments for their Champions League campaign which saw the club reach the quarter-final stage.
A lack of European football of any kind – as well as an early exit from the League Cup – has seen matchday revenue also fall 8.3 per cent from £33.7m to £30.9m.
However, despite the arrival of the Premier League’s highest-paid player Radamel Falcao and a number of other high-profile signings, United have managed to shed the wage bill by 5.6 per cent to £48.7m for the quarter. Big earners such as Nemanja Vidic, Patrice Evra and Rio Ferdinand have all departed since last year.
While broadcasting and matchday revenues have dropped, United’s commercial arm continues to march on, on, on. Commercial revenues rose 9.7 per cent to £46.4m, largely thanks to a £6.8m increase in sponsorship revenue. This season is United’s first with Chevrolet as their shirt sponsor, a deal which is said to be worth around £53m a season.
Manchester United predict full-year revenues to be around £385m to £395m, or around a nine to 10 per cent drop. The New York-listed club did not fail to mention the new Premier League TV rights deal worth £5.1bn that comes into effect from the 2016 season onwards.
Why it’s interesting
Even without the Champions League, United’s revenue from the last six months would have still made them the 13th richest club in the world last year.
Of course, the club has taken a hit from missing out on Europe and splashing out on transfer fees, but such is the strength of its commercial operations that it can more than withstand a season away from the continent.
What Manchester United said
The recently announced Premier League broadcasting rights package for 2017-19, representing an increase just over 70 per cent, once again demonstrates that we are part of the top football league in the world.Notwithstanding no European football this season, our Revenues and EBITDA remain strong and demonstrate the underlying strength of our business model, with commercial revenues up year over year. On the pitch, the team is well positioned to challenge for a top four finish in the Premier League and we look forward to the rest of the season.
Just imagine what they could do with that extra money back in the bank from a return to Europe’s elite. Pressure’s on, Louis…