Manchester United's total income fell by 3.3% to £320.3m for the year ending June 30 2012, the club's annual results today revealed.
The fall in revenue had been expected after United's failure to make the knockout stages of the Champions League last season.
For the first time however, revenue from commercial income exceeded that from broadcast and matchday income.
A United spokesman told the Press Association: "The results are consistent with what we expected. We strongly believe the outstanding results in the commercial sector demonstrate the huge potential the club has, and the financial outlook is very positive."
The growth in income from sponsorship and commercial deals has certainly cushioned the blow of the shortfall from the Champions League and FA Cup compared to the previous season. Commercial revenue was up 13.7% to £117.6m, while broadcast revenue was down 11.3% to £104m and matchday revenue down 10.9% to £98.7m.
A Manchester United plc statement said: "Broadcasting revenues for the year decreased... primarily as a result of our elimination at the group stages of the Champions League.
"For the fourth quarter, revenues decreased 37.4% to £27.5 million as no participation fees were earned compared to Champions League participation fees from the quarter-final, semi-final and final in the fourth quarter of the prior year.
"In addition, we earned minimal revenues from the FA Cup following our fourth round exit, compared with reaching the semi-final in the previous year.
"Matchday revenues for the year decreased... as a result of having played four fewer home games compared with the prior season when we also received a share of the gate receipts from the Champions League final and FA Cup semi-final, both of which were held at Wembley Stadium."
Despite the drop in turnover, United actually recorded a profit of £23m, although that was entirely due to a tax credit of £28m - without that credit there would have been a £5m loss.
Ed Woodward, United's executive vice-chairman said in a statement: "We are delighted to announce our first results as a NYSE [New York Stock Exchange] listed company; fiscal 2012 was the best year ever for Manchester United's commercial business.
"Our world-record 559m dollar shirt sponsorship deal with Chevrolet and the Premier League's new £1bn a year UK television rights deal (a 70% 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.
"In addition, we continued to strengthen our team by signing world-class players such as Robin van Persie and Shinji Kagawa over the summer."