A few years ago the former owner of Tottenham Hotspur, Lord Sugar, quipped that money from a new Premier League TV deal would be just like prune juice - "go in one end and out the other". A look at Manchester United's financial results for the first quarter on the 2017/18 and you can see what he meant.
Some teams are just getting around to issuing financial statements for the 2016/17 year but Manchester United has already released its first-quarter results for 2017/18.
Revenue for the Q1 is up over $27M, from $158.6M (₤120.2M) a year ago to $186.1M (₤141M) for the three months ending September 30. (Currency conversion 1.32 dollar to pound)
A return to Europe’s premier competition, the UEFA Champions League, contributed to an increase of almost $12M in TV revenue - $50.3M to $38.4M.
Two additional home matches helped generate another $7.4M in Matchday revenue - $29.6M to $22.2M.
Commercial revenue comprising Sponsorship, Retail and Merchandising went from $61.2M to $70.2M although the Retail and Merchandising area was showed a very slight decrease.
Evolution of Manchester United's revenue model pic.twitter.com/dJ93kRq0Il
— Bluegrass Capital (@BluegrassCap) November 6, 2017
It is worth placing Manchester United’s revenue performance in the context of other Premier League teams and 2015/16 is the last year for which the entire roster of financial results is available.
In this quarter alone, Manchester United exceeded the revenue generated of all but 14 Premier League teams for that entire year. West Ham generated $186M, the 7th highest amount of revenue in 2015/16, the same as Manchester United’s first quarter this year.
The downside for Manchester United is that expenses are also growing at around the same rate of 17% over a year ago. Employee costs are up 12% from $82.2M to $92.3M.
Operating expenses less Employee costs increased by over 22% rising from $59.9M to $73.2M.
Spending on players has increased sharply since the retirement of long-serving manager Sir Alex Ferguson in 2013. In fact, in the years since Fergie left Manchester United has spent close to $800M buying new players – more than was expended in the 27 years Ferguson was in charge.
The impact of the increased spending is not immediate but is spread throughout the length of the players’ contracts through an Amortization charge.
In this quarter Manchester United booked $47.7M versus $40.7M a year ago. In 2012/13 the entire Amortization charge amounted to just $55M.
Overall, Manchester United recorded an increase in quarterly profit (net income) from $1.5M to $10.4M. But turning a profit in both quarters was only possible on account of the profit generated from the sale of players.
It is worth remembering that the timing of the transfer windows impact clubs financials in that any profit or loss from sales hits Q1 and Q3.
This quarter’s $10.4M profit would have been a $12.4M loss if not for a profit of $22M on player sales.
The previous year the corresponding figures were $1.5M, $9.3M and $10.8M.
Earlier this year Forbes valued Manchester United at $3.69B - up 11% from the year before - and ranked the team the most valuable in the world.
In 2016/17 Manchester United recorded $767M in Turnover and based on an apples-to-apples comparison it is likely that United will retain the title of the highest-earning soccer team in the world. The Deloitte Football League will issue its 2017 rankings in early 2018.
As part of its press release, Manchester United indicated that it expects total turnover for 2017/18 to land between $760M and $772M.
Over the last six years, the correlation between Q1 and full year revenue has ranged from 20.7% to 24%.
Averaging the percentages over six years suggests that a Turnover of $825M (£625M) for 17/18 might be closer to the mark.
