No trophies, no profits: £4.7m loss reported by Man Utd
Shares fall as Manchester United pays the price for first trophy-less season since 2005
SHARES in Manchester United fell after the club reported a pre-tax loss of £4.7m for the 12 months to the end of June having made a profit of £12m the previous year.
The Daily Mail says the club is paying the price for a season in which it was eliminated from both the FA Cup and the highly lucrative Champions League and pipped to the Premier League title by rivals Manchester City. It was the first season since 2005 that United have failed to win a trophy and United's poor performance contributed to a 35 per cent drop from a year earlier in match-day revenue and a 37 per cent decline in broadcasting revenue.
United floated on the stock market in New York last month at $14 a share – valuing the club at £1.4bn. Since then, shares have drifted lower, reaching $12.50 last night. "As if proof were needed, football clubs are inextricably linked to what happens on the pitch," Richard Hunter, head of equities at Hargreaves Lansdown Stockbrokers, told the Mail.
But in a conference call, United executives urged investors to avoid focusing on individual quarterly comparisons, which could vary based on the squad's performance and the timing of player contracts.
The Wall Street Journal reports that analysts believe the club's future earnings growth will most likely stem from sponsorships and merchandise sales, especially in Asia where, the debt-laden club says, 325 million of the team's 659 million fans live. Indeed, sponsorship revenue from new deals with General Motors and Toshiba is sharply up.
Still, a trophy-less season is hurting United's bottom line. As if to underscore the need for goals, Bloomberg Businessweek reminds us that nine-times European champions Real Madrid announced last week it had become the first sports team to breach the E500m revenue mark in a single year.