Champions League exit costs Manchester United

Shock elimination in group stage sees club rocked by £4.7m pre-tax loss and a sharp drop in revenue

Manchester United is counting the cost of last season's shock early exit from the Champions League, announcing the double whammy of a pre-tax loss of £4.7m and sharp revenue decline.

The full-year results to the end of June for the company, which recently listed in New York, show revenues contracting from £331m to £320m, a drop of 3.3 per cent, whereas a £12m profit in 2011 turned into a pre-tax loss. Only a one-off tax credit of £28m pushed the club into the black after tax.

Lower TV revenue and gate receipts resulting from the Champions League elimination in the group stages, and to a lesser extent the club's early exit in the FA Cup, accounts for the poor numbers. Its wage bill has also risen by close to 10 per cent in the past year.

The blow to the bottom line was softened by greater commercial activity – the club has 34 partners, which brought in £117m over the year to the end of June, up £13m on the previous 12 months. A major, £10m training kit sponsorship was signed with DHL, while a $559m (£344m), seven-year shirt deal with General Motors has been signed.

In total, Manchester United has 34 commercial sponsors and partners which makes it the most marketed club in the UK, with rivals such as Arsenal – who have only two such deals in place – left behind.

"There is no doubting that Manchester United is a good business, but as these results show, everything depends on the performance of 11 individuals on a pitch," David Bick, the chairman of Square One Consulting and a football finance expert, said.

"Their business model doesn't just rely on qualifying for the Champions League but having a good run in that competition. If they have a bad season profits can be wiped out."

In its statement to the New York Stock Exchange, the club forecast revenues of £350m-£360m for the 2013 financial year, but this was dependent on it reaching the quarter finals of both the Champions League and FA Cup.

Executive vice-chairman Ed Woodward said: "Our world-record $559m shirt sponsorship deal and the Premier League's new, £1bn a year UK television rights deal (a 70 per cent increase) highlight the outstanding growth prospects for the future. We also expect a substantial increase in the value of the Premier League's international television contracts scheduled to be announced later this year."

Last month, the US-based Glazer family floated about 10 per cent of the club they acquired for £790m in 2005 on the New York Stock Exchange.

At the time, the shares were priced at $14 – below the Glazer family's original lower-end estimate of $16. However, they have since fallen to $12.6, 10.2 per cent down on the float price.

Analysts have said 11 per cent of Manchester United shares are in the hands of short sellers – a far higher proportion than the average for the S&P 500 – suggesting many expect the club's share price to fall further over the coming months. An early Champions League exit this season could help this come true.

Nevertheless, Manchester United is still comfortably the biggest club in Britain – in terms of revenues – and the third richest in the world, behind Spanish giants Real Madrid and Barcelona. Real Madrid's revenues for the 2011-12 financial year were €514m (£415m), a 7 per cent rise, and Barcelona's of €494.9m (£399m) a 4.5 per cent increase.

Celtic in the red: Players hit profits

Glasgow giant Celtic had a taste of things to come in the Ranger-less Scottish top flight when it announced a pre-tax loss of £7.37m for the full year to the end of June. The Scottish Premier League champions saw its revenues dip slightly from £52.6m in 2011 to £51.3m in 2012. Contract renewals to retain players pushed the club into the red from a profit of £0.1m a year ago.

Julian Knight

Arts and Entertainment
arts + entsWith one of the best comic roles around, it's no wonder she rarely bothers with films
News
people
News
i100
News
Davis says: 'My career has been about filling a niche - there were fewer short actors and fewer roles – but now I'm being offered all kinds of things'
PeopleWarwick Davis on Ricky Gervais, Harry Potter and his perfect role
PROMOTED VIDEO
Voices
A Russian hunter at the Medved bear-hunting lodge in Siberia
Save the tigerWildlife charities turn to those who kill animals to help save them
Sport
Frank Lampard will pass Billy Wright and equal Bobby Charton’s caps tally of 106 caps against
sportFormer Chelsea midfielder in Etihad stopgap before New York contract
News
i100
Sport
Usain Bolt of Jamaica smiles and shakes hands with a competitor after Jamaica won their first heat in the men's 4x100m relay
sport
News
ebookA unique anthology of reporting and analysis of a crucial period of history
News
Chancellor George Osborne, along with the Prime Minister, have been 'complacently claiming the economy is now fixed', according to shadow Chancellor Ed Balls
i100... which is awkward, because he is their boss, after all
Arts and Entertainment
The first film introduced Daniel Radcliffe to our screens, pictured here as he prepares to board the train to Hogwarts for the first time.
booksHow reading Harry Potter helps children grow up to be gay-friendly
Life and Style
A small bag of the drug Ecstasy
Health
News
i100
Life and Style
Floral-print swim shorts, £26, by Topman, topman.com; sunglasses, £215, by Paul Smith, mpaulsmith.co.uk
FashionBag yourself the perfect pair
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Financial Analyst - Forecasting - Yorkshire

£300 - £350 per day: Orgtel: Financial Analyst, Forecasting, Halifax, Banking,...

Business Architect - Bristol - £500 per day

£500 per day: Orgtel: Business Architect - Banking - Bristol - £500 per day A...

Regulatory Reporting-MI-Bank-Cardiff-£300/day

£200 - £500 per day + competitive: Orgtel: I am currently working on a large p...

Trainee Recruitment Consultant - Birmingham - Real Staffing

£18000 - £23000 per annum + Commission: SThree: Real Staffing are currently lo...

Day In a Page

Save the Tiger: Meet the hunters tasked with protecting Russia's rare Amur tiger

Hunters protect Russia's rare Amur tiger

In an unusual move, wildlife charities have enlisted those who kill animals to help save them. Oliver Poole travels to Siberia to investigate
Transfers: How has your club fared in summer sales?

How has your club fared in summer sales?

Who have bagged the bargain buys and who have landed the giant turkeys
Warwick Davis: The British actor on Ricky Gervais, how the Harry Potter set became his office, and why he'd like to play a spy

'I'm a realist; I know how hard this business is'

Warwick Davis on Ricky Gervais, Harry Potter and his perfect role
The best swim shorts for men: Bag yourself the perfect pair and make a splash this summer

The best swim shorts for men

Bag yourself the perfect pair and make a splash this summer
Has Ukip’s Glastonbury branch really been possessed by the devil?

Has Ukip’s Glastonbury branch really been possessed by the devil?

Meet the couple blamed for bringing Lucifer into local politics
Dress the Gaza situation up all you like, but the truth hurts

Robert Fisk on Gaza conflict

Dress the situation up all you like, but the truth hurts
Save the tiger: Tiger, tiger burning less brightly as numbers plummet

Tiger, tiger burning less brightly

When William Blake wrote his famous poem there were probably more than 100,000 tigers in the wild. These days they probably number around 3,200
5 News's Andy Bell retraces his grandfather's steps on the First World War battlefields

In grandfather's footsteps

5 News's political editor Andy Bell only knows his grandfather from the compelling diary he kept during WWI. But when he returned to the killing fields where Edwin Vaughan suffered so much, his ancestor came to life
Lifestyle guru Martha Stewart reveals she has flying robot ... to take photos of her farm

Martha Stewart has flying robot

The lifestyle guru used the drone to get a bird's eye view her 153-acre farm in Bedford, New York
Former Labour minister Meg Hillier has demanded 'pootling lanes' for women cyclists

Do women cyclists need 'pootling lanes'?

Simon Usborne (who's more of a hurtler) explains why winning the space race is key to happy riding
A tale of two presidents: George W Bush downs his paintbrush to pen father’s life story

A tale of two presidents

George W Bush downs his paintbrush to pen father’s life story
Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover

The dining car makes a comeback

Restaurateur Mitch Tonks has given the Great Western Pullman dining car a makeover
Gallery rage: How are institutions tackling the discomfort of overcrowding this summer?

Gallery rage

How are institutions tackling the discomfort of overcrowding this summer?
Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players

Eye on the prize

Louis van Gaal has £500,000 video surveillance system installed to monitor Manchester United players
Women's rugby: Tamara Taylor adds fuel to the ire in quest to land World Cup

Women's rugby

Tamara Taylor adds fuel to the ire in quest to land World Cup