Manchester United enjoyed a mixed season that ultimately ended in jubilation as the side won the Community Shield, League Cup and most importantly, the Europa League – gaining entry to this seasons Champions League, their ultimate goal.
The season started with promise after the then world record transfer of their former youth player Paul Pogba, along with the huge presence of Zlatan Ibrahimovic supposed to guide the club to domestic and European glory under the management of Jose Mourinho.
This didn’t come to fruition as they finished 6th in the Premier League however they will take solace from their cup victories.
Off the pitch the club had another great season, reaching new record revenue figures while boosting profits by 7.7% to £39.2m while also decreasing net debt levels.
Lets delve into the numbers.
Revenue Analysis
Revenue rose to record levels, rising from £515.3m to £581.2m (12.8%) after the new Premier League TV deal came into effect and a successful Europa League campaign.
Commercial revenue rose by a measly amount, increasing from £268.3m to £275.5m (2.7%) due to lack of major commercial sponsorship deals with their main two deals, Adidas and Chevrolet having many years remaining on them, both these deals represent 13.6% and 10.2% of their total revenue. Manchester United’s commercial revenue consisted of sponsorship deals (£162.3m), merchandise sales (£104m) and mobile content sales (£7.7m).
Broadcasting revenue increase by the most, rising from £140.4m to £194.1m (38.2%) after the new Premiere League TV deal came into effect, representing £174.1m of this amount. The lack of Champions League was offset by domestic cup and Europa League success.
Matchday revenue was also on the rise, increasing from £106.6m to £111.6m (4.7%) on the back of their cup success leading to more home games which increased gate receipts.
The Premier League interestingly accounted for 25.4% of total revenue at £147.6m, while the Europa League campaign brought in a cool £48.5m – more than a lot of Champions League teams can say.
Revenue is likely to increase slightly this year with a good chance of breaking the £600m barrier after their Champions League campaign despite their relatively early exit. A lack of cup success this year (unless they win the FA Cup) will have a negative effect on revenue, however this will potentially be offset by a positive commercial year.
Expense Analysis
Operating expenses broke the £500m mark for the first time as Manchester United invested heavily as they look to return to their glory days. Operating expenses rose significantly from £436.7m to £511.3m (17.1%).
Amortisation costs were also on the up after significant player investment, rising significantly from £88.0m to £124.4m (41.4%).
Other expenses increased from £91.2m to £117.9m (29.3%) due to the costs of having more games being given as the primary reason for this big jump.
Out of all operating expenses, wages took up a great deal, rising from £232.2m to £263.5m (13.5%) after heavy player investment bringing with them premium wages, representing a huge £602k extra a week in wages!
The club also had exceptional income rather than costs this year due to the reversal of an impairment charge for a player that they wrote off but was then reintegrated into the squad. Unfortunately the player in question is not named however we speculated the player in question to be Ashley Young who was previously surplus to requirement before Mourinho found a left back role for the England international.
Net finance costs increased from £20m to £24.3m (21.5%) after adverse foreign exchange movements against Manchester United.
Tax expense rose from £12.5m to £17.3m (38.4%), an effective tax rate of a huge 44% due to a combination of technical tax/accounting rules with the club subject to taxation in various jurisdictions.
Transfers Analysis
Manchester United took last year’s transfer headlines with their sensational world record breaking swoop for former player Paul Pogba in a £94.5m move. Joining him at Manchester United were Mkhitryan (£37.8m) and Bailly (£34.2m) while they had a notable free transfer incoming of Zlatan Ibrahimovic. These players joined the club for a combined £166.5m.
Leaving the club were 5 players in Scneiderlin (£20.6m), Depay (£14.4m), McNair (£4.7m), Blackett (£1.6m) and Keane (£1.1m) for a combined £42.4m while Valdes, Powell and Schweinsteiger all left on free transfers.
This led to a net spend of a huge £124.4m increase on last year’s £48.7m, a incredible 155% rise.
The signings did okay with Zlatan in particularly impressing, almost single handedly pushing united to multiple victories while Bailly also showed great promise despite injuries. Mkhitaryan flatters to deceive while Pogba failed to consistently live up to his huge price tag under so much pressure.
Manchester did however record a profit on player disposals this year of £10.9m compared to a loss of £9.8m in the previous year.
Asset/Liability Analysis
Manchester United are known for their huge debt levels, which this year broke the £500m barrier. However rising cash levels caused net debt levels to fall to the clubs delight as they look to enhance the sustainability of the club.
Debt rose from £490.1m to £503.4m, a measly 2.7% rise primarily due to adverse foreign exchange movements.
On the other hand cash rose significantly from £229.2m to £290.3m (26.7%) on the back of a good financial year for the club with rising revenue bringing in more cash to the clubs coffers. This was despite Old Trafford improvements (£3.5m), Training ground improvements (£5.4m), interest payments (£19.5m) all increasing and taking up more of the clubs cash.
Also increasing was player transfer costs with £193.8m in cash going out to clubs compared to £138.1m in the previous season, due to this season’s transfers plus the fact they are still paying large sums for Martial and Di Maria despite the latter leaving the club 2 years ago.
This has led to net debt falling from £260.9m to £213.1m (22.4%) which will be pleasing to the board and their shareholders.
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