Manchester United revenue down as coronavirus hits broadcast income
English Premier League soccer giants Manchester United have recorded a third-quarter operating loss of £3.3 million ($4 million), as revenue fell by 18.7 per cent.
With the end of the quarter having been affected by the coronavirus-enforced shutdown of the Premier League, and the Uefa Europa League that the club is also involved in, there were year-on-year falls in both matchday and broadcast income, although commercial revenue was slightly up.
Total revenue in the three months to the end of March came to £123.7 million, down from £152.1 million in the same period last year. Operating profit in in the third quarter of 2018-19 came to £14.2 million.
The club’s net debt now stands at £429.1 million, up from £301.7 million on 31 March 2019, an increase of over 42 per cent.
On a conference call earlier today, Cliff Baty, the club's chief financial officer, said the pandemic has cost the club an initial £28 million already, and that the eventual figure will likely be much higher.
The club lost £8 million during the final weeks of March, when three matches were postponed (including £4 million from the postponed away game at rivals Tottenham Hotspur alone), and Baty also said the club would end up paying at least £20 million back to broadcasters, even if the season is eventually completed.
This will be necessary due to the changes in dates and kick-off times for games.
Broadcast was the most heavily affected income source, dropping from £53.8 million in 2019 to £26 million this year, a fall of 51.7 per cent. This was largely down to the club having factored an initial rebate of £15 million to the Premier League into their accounts.
The rebate was due following the delay to Premier League matches from mid-March onwards, as the virus caused a shutdown that looks likely to extend until at least mid-June, and both domestic and international broadcasters suffered changes to their Premier League schedules not included in the original contracts.
It is assumed that all clubs will have to make a rebate in some form, although the amount will change from team to team, given that only 50 per cent of the league’s broadcast revenue, from both domestic and international partners is distributed on a uniform basis. The other half is awarded based on how many times the club features on TV during the season (facility fees), and on its league position (merit payments).
TV revenue was also substantially hit by Manchester United not being involved in the prestigious and lucrative Uefa Champions League this season, having only qualified for the Europa League.
Matchday revenue was unaffected by the pandemic until the latter half of March, and so only fell 8.2 per cent year-on-year, from £31.7 million to £29.1 million.
The club had one home fixture cancelled in March, as well as two away games.
Commercial income rose by 3 per cent, from £66.6 million to £68.6 million. Despite the retail and merchandising revenue being down slightly year-on-year, as the club’s Old Trafford Megastore was closed in March, this was more than compensated for by an increase of £3.1 million in sponsorship revenue.
Third-quarter sponsorship came to £44.7 million.
Manchester United's Q3 EBITDA ( earnings before interest, tax, depreciation and amortisation), fell substantially year-on-year, from £41.2 million to £27.9 million.
Operating expenses fell to £131.8 million, down from £134.2 in 2019, despite the club having said in April that it would not be placing staff on the UK government’s furlough scheme during the current crisis, and would continue to shoulder all salaries themselves.
On the pitch, before the virus caused a shut down in all competitions, Manchester United were fifth in the Premier League table, three points behind fourth-place Chelsea and a guaranteed Champions League place for next season.
They were also also all but guaranteed to advance to the quarter-finals of the Europa League.
Meanwhile, rivals Liverpool have reached a financial settlement with new kit supplier Nike, the US sportswear giant, to see out the remainder of the 2019-20 season with incumbent sponsor New Balance.
Nike’s five-year deal with Liverpool, which was officially announced in January, is due to being on 1 June but the Premier League season is set to run into July when it returns from suspension next month and the club are keen to finish the campaign with New Balance.
The three parties are believed to have come to an agreement after first holding talks in March when the season was put on hold.
Nike are understood to have put back their activation date to the start of the 2020-21 season in return for financial compensation.
Liverpool want to complete the campaign with New Balance despite the league leaders going through a court case with their kit provider in October as the Boston-based brand contested the club’s impending deal with Nike, citing a matching clause in its contract enabling it to compete with a lucrative offer from its rival.
Liverpool argued that New Balance had not matched the offer as the company could not compare with Nike’s distribution network comprising over 6,000 stores worldwide, 500 owned by Nike itself.
A UK High Court sided with the Merseyside club which allowed them to conclude negotiations with Nike on a deal worth a basic £30 million per year, rising to about £70 million in incentives.
Despite an acrimonious relationship in recent months, New Balance has produced the biggest-selling kit in Liverpool’s history and with the club on the verge of winning their first Premier League title, it views it as a huge marketing opportunity even with the contract coming to an end.
Liverpool’s owners Fenway Sport Group are believed to have favoured this scenario in an effort to end the partnership amicably with the brand.
Premier League chief executive Richard Masters this week said Liverpool will be given a trophy presentation “if at all possible”.
With the health situation improving in the UK and clubs resuming training in small groups this week, there are hopes that the 2019-20 season can be restarted, behind closed doors, in mid-June.Sportcal