Profits soar despite revenue drop
MANCHESTER, England -- Manchester United PLC said Tuesday that its net loss widened in its fiscal fourth quarter after the celebrated soccer club was knocked out of lucrative competitions early in the season.
The team, which went public on the New York Stock Exchange last month, said it lost 14.9 million pounds ($24.2 million), or 10 pence per share. That's compared to a loss of 351,000 pounds ($570,000) in the year-ago period.
Manchester United, known as the Red Devils, was eliminated in December in the group stages of the Champions League, Europe's top competition for clubs, meaning it lost out on TV and match-day revenue in following months. It was also knocked out early in the FA Cup, the English tournament.
For the year, the company said net income rose by 79 percent in part because of tax credits.
The results released on Tuesday were the first since the 134-year-old English club made a disappointing debut on the New York Stock Exchange. Analysts said investors were reluctant to snap up shares because the company is debt ridden and the Glazer family, which owns the biggest stake in the team, retains almost total voting control.
For the three months ending June 30, total revenue declined by 25 percent.
Investors seemed unimpressed with the results -- shares in Manchester United were down 24 cents, or 1.9 percent, to $12.72 in morning trading in New York.
For the year, revenue declined by 3 percent to 320.3 million pounds ($520 million). Commercial revenue grew 13.7 percent to a record 117.6 million pounds thanks to a new kit sponsor and new media and mobile deals.
The company noted that its $559 million sponsorship deal with General Motors announced this summer is more than double the size of its deal with current sponsor Aon. The seven-year deal for GM's Chevrolet to sponsor the team shirts starts in the 2014-15 season.
Manchester United raised about $110 million from its public offering. The team is hoping to expand its lucrative sponsorships and licensing deals.
For its fiscal 2013, the team said it expects revenue to be between 350 million pounds and 360 million pounds. But broadcasting and ticket revenue is largely dependent on how far the team goes in English and European competitions.
Manchester United is one of the most renowned sports teams in the world. It claims 659 million followers and 26.9 million Facebook fans. Half of its fans are in Asia, where its games are televised and its replica shirts and other products are huge sellers.
It was the first time that revenue from commercial income exceeded that from broadcast and matchday income.
Broadcast revenue was down 11.3 percent to £104m ($168.9 million) and matchday revenue down 10.9 percent to £98.7m ($160 million).
The fall in revenue had been expected after United's failure to make the knockout stages of the Champions League last season.
A United spokesman told the Press Association: "The results are consistent with what we expected. We strongly believe the outstanding results in the commercial sector demonstrate the huge potential the club has, and the financial outlook is very positive."
A Manchester United plc statement said: "Broadcasting revenues for the year decreased... primarily as a result of our elimination at the group stages of the Champions League.
"For the fourth quarter, revenues decreased 37.4 percent to £27.5 million ($44.6 million) as no participation fees were earned compared to Champions League participation fees from the quarterfinal, semifinal and final in the fourth quarter of the prior year.
"In addition, we earned minimal revenues from the FA Cup following our fourth round exit, compared with reaching the semifinal in the previous year.
"Matchday revenues for the year decreased... as a result of having played four fewer home games compared with the prior season when we also received a share of the gate receipts from the Champions League final and FA Cup semifinal, both of which were held at Wembley Stadium."
Information from The Associated Press and Press Association was used in this report.