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Manchester United set for £0.5bn of revenue in 2016

A lucrative new kit deal with Adidas continues to bolster Manchester United's burgeoning commercial operations, which helped drive a 29.9% increase in third quarter revenue.

Old Trafford, Theatre of Dreams - home of Manchester United
Matchday and TV revenues rose, but Adidas drove commercial growth.

Manchester United Plc (NYSE:MANU) told investors it expects to generate between £500-510mln of revenue for the full year, and forecasts earning of £178-188mln.

Third quarter results for the three months ended March 31 2016 reveal £44.9mln of earnings (adjusted EBITDA), up 76.8%, and a 29.9% rise in revenue to £123.4mln.

As it currently stands, with one remaining league fixture, Manchester United are set to miss out on qualification to the lucrative UEFA Champions League competition for the 2016/17 season. Later this month, however, the team will play in the prestigious FA Cup final at Wembley.

Whilst the group’s sporting performances have fallen short of the football club’s typically high expectations, the financials give another signal that off-field commercial successes are keeping it at the top of football’s money league.

Commercial operations accounted for £65.8mln of group revenue, a 37.7% increase compared to the corresponding quarter of 2015.  

A lucrative new kit deal with Adidas, which came into effect this season, provided the main driver commercial revenue growth – with retail, merchandising and apparel sales amounting to £24.4mln.

Manchester United announced five new sponsorships in the quarter, including deals with Gulf Oil, and 20th Century Fox. The company also highlighted a 40% increase in international Premier League broadcasting rights for the 2017-19 cycle.

Revenue from broadcasting during the most recent quarter, meanwhile, increased by £6.1mln, just over 28%, to £27.8mln due to the clubs participation in European competition and an extra televised Premier League game compared to the same period of last year.

Similarly, two home Europa League fixtures meant that matchday revenues were up 16.9% to £29.8mln.

Player wages - or in ‘employee benefit expenses’ - totalled £56.2mln for the three month period representing a £6mln, or 12%, rise from last year due to player contract renewals and bonuses.

Net finance costs for the third quarter amounted to £3.6mln, down by £2.2mln or 37.9%, as a result of debt refinancing last June.

A 4.5 cents per share dividends was confirmed for the clubs owners - the holders of the Class A (i.e. those listed on NYSE) and Class B shares (those owned by the Glazer family). 

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