Thread by @SwissRamble

Manchester United are the first Premier League club to publish 2018/19 financial results, covering a disappointing season when they finished sixth in the league and were eliminated in the Champions League quarter-finals by Barcelona. Some thoughts in the following thread #MUFC

#MUFC profit before tax was up slightly from £26m to £27m, as revenue rose £37m (6%) to a record £627m, but the wage bill also increased £36m (12%) to £332m. After tax club went from £38m loss to £19m profit, as prior year was impacted by non-cash write-off due to US tax reform.

#MUFC first English club above £600m revenue. Almost all growth was in broadcasting, up £37m (18%) to £241m, due to Champions League participation (and new rights agreement). Commercial and match day flat at £275m and £111m respectively. Profit on player sales £8m higher at £26m.

#MUFC wage bill climbed £36m (12%) to a Premier League high of £332m, but player amortisation dropped £11m (8%) to £126m and other expenses were £8m lower at £109m. Exceptional charges up £18m to £20m for Mourinho’s departure, while net interest up £5m to £23m (forex losses).

#MUFC £27m profit before tax would have been 8th highest in 2017/18, though a long way below the huge profits reported at #THFC £139m, #LFC £125m, #AFC £70m and #CFC £67m. On the other hand, no fewer than seven Premier League clubs lost money last season.

The #MUFC strategy has not been overly reliant on player sales, so their £26m profit from this activity was in the bottom half of the Premier League, although up £8m from prior season. Included sales of Daley Blind (Ajax), Sam Johnstone (WBA) and Marouane Fellaini (SD Luneng).

#MUFC have reported profits in five of the last six years, only making a small loss of £4m in 2015 due to the lack of European football. In the last four years, they have aggregated £159m profits, averaging £40m in that period, though last two years’ average is “only” £27m.

#MUFC results have hardly ever been boosted by player sales. In fact, in the last 10 years, they have only had £101m profits in total, while three clubs made more than that in 2017/18 alone: #LFC £124m, #AFC £120m and #CFC £113m. Next year will benefit from Lukaku sale to Inter.

Looking at the five years up to 2017/18, #MUFC only made £50m profit from player sales, which is significantly worse than the rest of the Big Six. In this period #CFC made nearly £300m more from this activity with £337m, while even neighbours #MCFC made twice as much with £108m.

#MUFC 2018/19 results were adversely impacted by £19.6m exceptional charges relating to compensation paid for the most recent managerial change: £15m to Jose Mourinho with the remainder to his coaching staff. That makes £36m in manager pay-offs since Sir Alex Ferguson retired.

#MUFC EBITDA (Earnings Before Interest, Tax, Depreciation & Amortisation), considered a proxy for cash operating profit, as it strips out player sales and exceptional items, increased from £177m to £186m, though not as high as the record £200m two years ago.

However, #MUFC EBITDA of £186m is still the highest in the Premier League, underlining the club’s incredible ability to generate cash. The only other clubs above £100m were #THFC £159m and #MCFC £125m. To place this into perspective, nine clubs had EBITDA below £20m.

Although #MUFC revenue has grown by an impressive £112m (22%) since 2016 to £627m, almost all of this growth has come from central TV deals £101m, while commercial and match day have only increased by £7m and £4m respectively. Europa League means a fall to £560-580m this season.

#MUFC revenue of £627m is by far the highest in England, £127m more than the closet challenger #MCFC £500m, followed by #LFC £455m, #CFC 443m, #AFC £388m and #THFC £381m. However, these are all from 2017/18, so should increase when 2018/91 results are published.

Other leading clubs have been narrowing the revenue gap to #MUFC. Even without the benefit of increases in 2018/19, three of the Big Six have seen higher growth since 2016 than #MUFC £112m, namely #THFC £170m, #LFC £153m and #CFC £119m, while #MCFC was identical at £112m.

Based on 2017/18 figures, #MUFC £590m revenue was third highest in the Deloitte Money League, only below Real Madrid £665m and Barcelona £612m. The Spanish giants have just announced their 2018/19 results with Barcelona up to £776m and Real Madrid £671m (excluding player sales).

Somewhat disappointingly, #MUFC commercial income was slightly down from £276m to £275m. Despite Ed Woodward’s comment that “playing performance doesn’t really have a meaningful impact on what we can do on the commercial side”, this has been essentially flat for the last 4 years.

To place this into context, #MUFC £275m commercial income is still £43m higher than #MCFC £232m. It is also at least £110m more than their next closest challengers: #CFC £165m, #LFC £154m, #THFC £109m and #AFC £107m. However these are all 2017/18 figures.

#MUFC Chevrolet shirt sponsorship is £64m a season ($75m at current exchange rates), while Adidas kit deal is an amazing £75m (though cut by 30% if fail to reach Champions League for 2 consecutive seasons). Aon pay £15m for training kit/facilities, Kohler £10m for sleeve sponsor.

Broadcasting income was the driver of #MUFC revenue growth in 2018/19, up £37m (18%) from £204m to £241m, primarily due to the new Champions League broadcasting rights, allied with the changes in distribution methodology, which increased European TV money from £38m to £83m.

#MUFC TV money from the Premier League dropped £7m to £143m, mainly due to finishing 6th against 2nd the previous season (lower merit payment), but they were also only shown live 27 times vs 28 (lower facility fees). Partially offset by higher overseas deal.

#MUFC earned €94m (£83m) for reaching the Champions League quarter-finals, €45m more than the previous season when they only got to the last 16, as TV rights were 50% higher. Also boosted by finishing 2nd in prior season’s PL, so they got 30% of first half of the UK TV pool.

#MUFC also benefited from a new UEFA coefficient payment (based on performances over 10 years), as they received €31m for this element (the 5th highest in the Champions League), compared to #MCFC £24m, #LFC €23m and #THFC €16m.

This UEFA coefficient meant that #MUFC ended up earning around the same as #MCFC with £83m, though less than Champions League finalists #LFC £99m and #THFC £90m. Europa League finalists #CFC and #AFC received £45-50m less with £39m and £32m respectively.

#MUFC relatively poor performance in Europe, including not even qualifying in 2015, means that they have “only” earned €221m in the last 5 years. That’s not too shabby, but it is a hefty €117m less than #MCFC €338m. Also below #LFC €265m, #THFC €236m and #AFC €228m.

#MUFC match day income rose slightly by £1m (1%) from £110m to £111m, as they staged the same number of home games (26). This was easily the highest in the top flight: £12m above #AFC £99m and £30m more than #LFC £81m (2017/18 figures).

#MUFC 74,500 average attendance was once again the highest in the Premier League, around 14,500 more than #AFC. Season ticket prices have been frozen for 8 consecutive years, while £15 tickets for 18 to 25-year-olds were introduced in 2018/19.

#MUFC wage bill shot up £36m (12%) from £296m to £332m, mainly due to further investment in the first team squad, including an additional 7 months of Alexis Sanchez, resulting in an increase in the wages to turnover ratio from 50% to 53%.

#MUFC £332m wage bill is the highest ever reported by a Premier League club. In the last three years it has grown by an incredible £100m (43%). It is worth noting that up until 2012, United’s wages were only the third highest in England, behind #MCFC and #CFC.

#MUFC £332m wages are miles above the other leading clubs: #LFC £264m, #MCFC £260m, #CFC £244m, #AFC £223m and #THFC £148m (though in fairness these are all 2017/18 figures). United fans will also note that City have outsourced some back-office staff to their holding company.

MUFC wages to turnover ratio increased from 50% to 53%, the highest it has been for many years (it was only 45% 2 years ago). However, it is still one of the lowest (best) in Premier League, though not as low as #THFC amazing 39%. Well below UEFA’s recommended upper limit of 70%.

We will have to wait for another #MUFC company to publish its accounts before we know Ed Woodward’s 2018/19 salary, but United fans will be delighted to see that he trousered £4.2m in 2017/18, the most in the Premier League, though it included once-off exercise of share options.

#MUFC player amortisation, the annual charge to expense transfer fees over the length of a player’s contract, fell 8% (£11m) from £137m to £126m, still the second highest in United’s history.

As a result of this decrease, #MUFC player amortisation of £126m is now below #MCFC £134m and just above #CFC £124m (both 2017/18). There is then a sizeable gap to #AFC £86m and #LFC £77m.

Despite a club spokesman claiming, “we have invested heavily in the playing squad and will continue to do so”, #MUFC player purchases in 2018/19 of £103m were the lowest since 2012/13, £140m less than the prior season. As a comparative, #MCFC spend £328m in 2017/18.

On the other hand, #MUFC have averaged around £128m net spend in last 3 years (purchases £176m, sales £47m), compared to £98m in preceding 2 years and £55m in 3 years before that. This is in cash terms, though United have increased transfer debt, so total player spend is higher.

#MUFC net debt fell by £50m from £254m to £204m (lowest since 2005), mainly due to £66m increase in cash from £242m to £308m. In Sterling terms, gross debt was up £15m from £496m to £511m, though the USD debt remains unchanged. Amounts owed on transfers down from £258m to £188m.

Even after all the Glazers’ refinancings, #MUFC still owe more than half a billion pounds. The only club close to that is #THFC £466m for their new stadium. Worth noting that #CFC have around £1.2 bln debt in their holding company. United also have £66m contingent liabilities.

Although it has reduced from its peak, #MUFC annual interest payment of £19m is a lot more than any other Premier League club, though #THFC stadium debt has increased their interest to £14m. More relevantly, #MCFC and #LFC only pay £4m and £2m respectively.

On the other hand, #MUFC also have the highest cash balance of £308m, more than four times as much as the £71m in 2012, which makes the club’s strategy on debt (including transfers) a little puzzling. Only two other Premier League clubs are above £60m: #AFC £231m and #THFC £101m.

#MUFC cash increased by £56m (excluding £9m forex gain) with £264m generated from operating activities, partly due to decrease in debtors. Net £135m spent on players (purchases £178m, sales £43m). Another £23m paid out in dividends, £16m interest and £26m capex/investment.

In the last decade #MUFC have generated an incredible £1.9 bln cash: £1.6 bln operating activities plus £318m share issue. Around £800m has been spent on players but more than that on financing. Another £119m on infrastructure, £23m on tax and £113m just increasing bank account.

#MUFC would have had even more money to spend if they did not have to bear the cost of the Glazers’ leveraged buy-out. In fact, in the last 10 years they have spent an extraordinary £838m on financing: £488m interest, £251m debt repayments and £99m dividends.

#MUFC were the only Premier League club to pay dividends to their owners in 2017/18. This has averaged £22m in the last 4 years, which would cover the wages of two top players at £200k a week.

Ed Woodward said, “Everyone at Manchester United is committed to delivering on our primary objective of winning trophies”, which fans might take with a pinch of salt. What is clear is that the slowdown in the commercial juggernaut has coincided with a decline on the pitch.