Resilient United divi up for Glazers

The authoritative Swiss Ramble turns his forensic gaze to the latest accounts of Manchester United. Some highlights from his analysis follow.

Despite the reduction, a £41m profit during the pandemic times represents an impressive achievement for Manchester United. As Ed Woodward said, “While the disruption to our operations remains significant, we are pleased by the tremendous resilience the club has demonstrated.”

These results might look better than many feared, but it is worth remembering that figures are usually worse in the second half of the year, emphasises the Zurich-based analyst. They are in better shape than most with their many commercial partners. While they will struggle with the financial challenges of COVID-19, Finance Director Cliff Baty said, “We are well positioned to weather the current uncertainty and optimistic for the future.”

The main reason for lower revenue was match day, which fell £52m (94%) from £55m to just £3m, while commercial dropped £29m (19%) from £151m to £122m. This was partly offset by broadcasting rising £59m (60%) from £98m to £156m, mainly due to return to Champions League.

The club reported an operating loss of £13m (excluding player sales and interest) for the first time in ages. This is likely to be repeated this season, as operating profit fell from £36m to £20m in the first six months and there will probably be a large loss second half.

Commercial revenue fell £29m (19%) from £151m to £122m, as sponsorship dropped £25m (25%) from £99m to £74m, including no pre-season tour and prior year once-off credit, and retail was down £4m (8%) from £52m to £48m, due to Megastore closure for a month and lower footfall.

The £536m gross debt is £44m more than £492m prior year comparative, though only £10m higher than June 2020, as the club drew down £60m of Bank of America £200m credit facility. This is the highest debt since 2010, i.e. before the Payment in Kind loans were paid off.

Higher gross debt and lower cash means that the club’s net debt rose £64m (16%) from £391m to £456m. This means that net debt has increased by £138m (43%) in just 2 years since 2019 (£318m).

Although it has fallen from its peak, the club still made a £10m interest payment in the first half. This will amount to £20m for the full-year, which is the highest in the Premier League, ahead of Spurs £14m and Arsenal £11m. This is the cost of carrying so much external debt.

Despite the financial challenges, Manchester United have still found enough cash to pay their shareholders (mainly the Glazers) a full dividend. Nothing was paid in the first six months, but a £10.7m payment was made seven days after these accounts. This works out to £23m annually (£112m in last five years)

WG adds: I have always been an admirer of Manchester United's commercial operation which is one of the most sophisticated anywhere and manages to get obscure sponsorships from the least likely global locations. Meanwhile, the Glazers, who are smart operators, have done well from their Manchester franchise in terms of both capital appreciation and income. You can make money out of football, but someone has to pay the price.

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The Political Economy of Football V2

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