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Manchester United Q1 results show drop in broadcast income, increase in sponsorship

(Photo by Alex Livesey/Getty Images)

English Premier League club Manchester United’s first-quarter financial results showed a drop in broadcast income due to failure to qualify for the Uefa Champions League, offset by an increase in sponsorship and a drop in player wages.

Broadcast revenue was down £9.9m to £32.9m, while sponsorship revenue climbed by 8.1 per cent to £53.6m thanks to new deals with Lego and Konami, and extra revenue from pre-season exhibition games.

Wage costs dropped by nearly 9 per cent, primarily due to bonuses not being paid for Champions League participation.

Total revenue for the July to September 2019 accounting quarter was essentially flat year-on-year at £135.4m ($175.4m/€158.4m). Ebitda rose 18.4 per cent to £34.8m.

The club is forecasting total revenue for the year between £560m and £580m, a significant fall on the previous year’s £627.1m. The 20-time English champions warned in September that annual revenue would fall for the first time in five years due to missing out on revenue from the Champions League.

In the Q1 earnings call, Ed Woodward, United’s executive vice-chairman, said he was encouraged in terms of the club’s prospects for longer-term revenue growth by a deal that US broadcaster CBS recently signed for Champions League rights: “We remain very optimistic for continued increases in global football broadcast rights as demonstrated by recent news that CBS has acquired the Uefa club competitions in the US through to June 2024. This was at an estimated 50-per-cent increase from the prior US contract and will feature select games free-to-air.”

Woodward also said he optimistic about the future of Premier League revenue growth, according to the Telegraph, and said television audiences for the league were up sharply this season.

He also referenced Fifa’s plans for the revamped Club World Cup tournament – which has been expanded to include 24 teams – as well as the confederation’s reforms to limit loans and payments to agents, as laying the groundwork for future revenue growth for clubs.

Woodward added: “Our ultimate goal is to win trophies, playing fast, fluid, attacking football – with a team that fuses graduates from our Academy along with world-class acquisitions. We know this will not be achieved overnight. However, we have made investments across the club that we believe have set us on the right path.

“We have a clear vision in terms of football philosophy and recruitment. The significant investments that we have made in recent years in areas such as transfers, recruitment infrastructure, analytics and our academy are already beginning to bear fruit.

“I want to reiterate that our ability to make the investments we need to be successful on the pitch is underpinned by our continued strong financial performance.”

United are reported to be in talks with potential new shirt sponsors, with current sponsor Chevrolet, the American car manufacturer, unlikely to renew.