Manchester United PLC (NYSE: MANU) is on track to generate record levels of revenues in 2017 after the English soccer team upgraded its guidance for the year.
The Old Trafford outfit now expects to bring in between £560mln (US$722mln) and £570mln (US$735mln) for the current year to June 30, as opposed to the £530mln-£540mln originally predicted.
It said the higher forecasts were largely down to the impact of the Premier League’s new money-spinning TV deal, as well as the team’s on-field success.
Revenues rise in Q3
Broadcasting revenues for the three months ended March jumped 12% compared to the same period last year, while on the pitch Man United has already secured one major trophy despite enduring a relatively disappointing season on the whole so far.
In addition to the English Football League cup it won back in March, Jose Mourinho’s men have also reached the final of the Europa League where they will play Dutch team Ajax in two weeks’ time.
Victory in that match in Stockholm would ensure qualification into the more prestigious, and more lucrative, Champions League for next season, which would serve to boost the club’s revenues in 2018.
The off- and on-field success helped the Red Devils to post total revenues for the quarter up to £127.2mln – a year-on-year rise of 3%.
Matchday revenues fell slightly to £29.3mln (Q3 2016: £29.8mln). Once upon a time this would’ve been seen as a big issue, but given that this stream only accounts for around 20% of revenues now, United doesn’t seem overly concerned.
“As we near the end of the season, I am delighted we have picked up two trophies so far (EFL Cup and Charity Shield), and look forward to competing for a third in the Europa League final, the only trophy we have never won,” said executive vice chairman Ed Woodward.
“We are forecasting better full year financial performance than expected and as such have raised our revenue and profit guidance for the year. We look forward to a strong finish to 2016-17, both on and off the pitch.”
Soccer players don’t come cheap
Despite the increased third quarterly revenues, increased staff costs meant the club slumped to a £4.1mln loss, in comparison to the £23.2mln profit it posted in 2016.
Wages and other staff-related costs soared by more than 18% to £66.5mln in the quarter, with the number of employees increasing from 797 to 888.
Much of this sharp increase will have come from new players brought in at the start of this season. Zlatan Ibrahimovic and Paul Pogba were two of the high-profile, and very expensive, stars signed by Man United in the last summer.
If you believe the recently published ‘Football Leaks: The Dirty Business of Football’, Pogba is on a weekly salary in excess of £150,000 while Zlatan is reportedly paid more than £300,000 for a week’s work.
Wage costs are likely to ease in the summer given that Zlatan, alongside other well-paid players such as Wayne Rooney, are expected to leave.
That will create some temporary breathing room in the Old Trafford coffers, although it’s expected that Man United will bring in some more, and just as expensive, big name stars.
The stock was unchanged in after-hours trading at US$16.35.