Manchester United: £100m+ profit, £330m+ revenue

You guys talk as if you're financial experts.

Art Morte wrote:I wonder at what point you'll start having real differences in the league... I mean, if ManU make £100m more annual revenue now than the next best club in England, at what point it will start properly showing?

Will we see a future where domestic throphies are divided something like:

50% Manchester United
10% Arsenal
10% Chelsea
10% Liverpool
10% Manchester City
10 % the rest
?

In a very long time, we still need to see the whole profit trend for this year, but as it seems it's not that much better than last years loss of 84m, especially if they keep quoting EBITDA as "operating profit" like last year.

The whole selling shares on the Asian market thing might work out (the whole sale your club and you have a new clean slate!), but the clubs debt is so enormous i'm not sure it will be that easy.

Another note of concern for me would be Financial Fair play properly implemented, Arsenal and Real Madrid are so ahead of the curve there in a way which will translate in very big strength in the transfer market. At this rate United will be Madrids feeder club for years to come.

So if Manchester United were debt free and lived within its own means it would be a pretty decent club in financial terms, last year there was 23.6m "profit" before interest which is slightly behind Madrid i believe, not too bad, it even starts to make sense as a business.

BarrileteCosmico wrote:Does anyone have a balance sheet and income statement?

Or failing that, are they still in debt, even after making a profit of 100M?

http://swissramble.blogspot.com/search/label/Manchester%20United

This is from last year but it still tells you everything you need to know about Manchester Uniteds business, to put shortly, they are not making profits of 100m.

cyberman wrote:No Crimson, our own tv deal would dwarf Madrids and Barcas
If we had the same percentage as the Spanish 2, it would be touching 2 billion. thats a percentage of a collective tv deal that, although keeps the non top clubs in a strong position, means the TV deal isnt nearly as high as the top clubs could get.

God knows what our number would be

Some truth and some fallacy to your argument here. Of course, in the short term, if elite EPL teams could individually negotiate their media deals, they would make a lot more money. However, the reason that the media rights for the EPL are so valuable is that the league is mostly competitive from top to bottom as a result of the revenue-sharing. This means that there are more games with commercial value to broadcasters because of parity in the league... a lot more neutrals will watch EPL because the games are competitive. If the EPL were to adopt La Liga revenue sharing (or lack thereof), the quality of the EPL would drop and so would interest for the league over time. Thus, the media rights, even for clubs like Man U, would erode pretty quickly.

The best example of how glamor franchises sacrificed in the short term but gained 100x in the the long term is the NFL. They have great revenue sharing. Because the league is so competitive, it has generated massive public interest all across the country and abroad. So these glamor franchises have recovered the revenue they forfeited early on to help the league and benefited literally 100x. It's been amazing.

My point is that the commercial interest, and resulting revenue, in Man U is driven in large part by the commercial interest in the EPL. The City of Manchester is not a major metropolitan area and needs the broader interest in the league to attract the many fans it has outside of its boundaries.

If La Liga were to smarten up and put true revenue sharing in place, the league would obviously improve exponentially. Interest in the league would increase and there would be new distribution avenues for the content, not to mention that the overall content would become more valuable. I would suggest that Barca and Madrid would recover all the short term revenue they forfeited in the short term quickly and then benefit exponentially thereafter.

There are a lot more nuances to this, but i wanted to focus just on the media rights part.

But Madrids tv deal has improved (?) despite the weakening o the league.
unless something goes horribly wrong, the tv deal wouldnt go down.
Individual tv deals would attract more investors if anything, never mind the billionaires.

oh an Seppuku ..

another forum where i questioned your argument..
[QUOTE=JimPakistan;10377861]Shares aren't debt.

They are equity financing.

If shares were debt then no company would be debt free.

It is retarded.[/QUOTE]

Seppuku is confusing stock with bonds..

^^
Spot on

Not entirely. Preferred stocks, for example, are a debt instrument.

They have to be paid.

Common stock is equity. True. But they still have dividends.

Seppuku wrote:Not entirely. Preferred stocks, for example, are a debt instrument.

They have to be paid.

Common stock is equity. True. But they still have dividends.

Not entirely true. Preferred stock is only a debt instrument if its cumulative and they put their dividends in arrears...

LOOK AT BHENDS LAYING THE ACCOUNTANCY SMACK DOWN!!!!!

I must confess, Utd will continue to pwn for years to come. Floating 25%; clearing the majority of debt only leads to one thing..

If I'm not mistaken madrid is currently taking steps to improve our income incase the League wakes up and media rights are shared in 3 or 4 years. If they aren't then we'll simply grow even more. From the stadium expansion plan, stadium name change/sponsorship to better shirt deals [both adidas and bwin will need to shell out some cash]. We just made a deal with emirates for 5M a year which I'm sure will grow in the following years.

Real Madrid will remain the best money-making machine with or without the TV income rights

cyberman wrote:Art, weve been the top income club in England for a while now. We just turned down Sneijder due to wages.
Our big signing in 2 years are from Chivas, Wigan, Villa and Blackburn. Were run the right way...with proper management

I know you've been the top income club in England for some years now, I'm just wondering if your financial lead will grow to such an extent where you shall establish a clear gap to the other top teams on the pitch, too. Not like "Barca & Real Madrid ***gap*** the rest of La Liga", but a clear gap nevertheless.

chinomaster182 wrote:

Art Morte wrote:I wonder at what point you'll start having real differences in the league... I mean, if ManU make £100m more annual revenue now than the next best club in England, at what point it will start properly showing?

Will we see a future where domestic throphies are divided something like:

50% Manchester United
10% Arsenal
10% Chelsea
10% Liverpool
10% Manchester City
10 % the rest
?

In a very long time, we still need to see the whole profit trend for this year, but as it seems it's not that much better than last years loss of 84m, especially if they keep quoting EBITDA as "operating profit" like last year.

The whole selling shares on the Asian market thing might work out (the whole sale your club and you have a new clean slate!), but the clubs debt is so enormous i'm not sure it will be that easy.

Another note of concern for me would be Financial Fair play properly implemented, Arsenal and Real Madrid are so ahead of the curve there in a way which will translate in very big strength in the transfer market. At this rate United will be Madrids feeder club for years to come.

So if Manchester United were debt free and lived within its own means it would be a pretty decent club in financial terms, last year there was 23.6m "profit" before interest which is slightly behind Madrid i believe, not too bad, it even starts to make sense as a business.

I think it will be very easy if they want to do it.
In fact, I believe the reason why United released their last season's financial results so quickly - often they are released after New Year - is that these financial results make it even easier for a successful floatation in the Asian market; people will see how much United have grown their revenue, £45m from last year, and how big their revenue is. If their debt (and therefore interest payments) are paid off, there's a really good chance that share owners of United can expect to make money with their shares.

Arsenal are not really ahead of United in terms of FFP, imo.
Yes, Arsenal are already self-sustainable, but United's "only" obstacle is that debt and its interest payments. If those are cleared - which seems likely to happen after these strong financial results and that possible floatation - the reality will be that Arsenal's annual revenue will be something like £230m while United's will be £330m. That's simply £100m more for United to spend on player wages and transfers every year than Arsenal's spending and both clubs would still be self-sustainable.

"So if Manchester United were debt free and lived within its own means it would be a pretty decent club in financial terms."
It wouldn't be pretty decent, it would be awesome. If you've got £300m+ to live within your means every year, that will earn you pole position finances wise in England for years to come. The only thing preventing that at the moment is United's debt, but it's starting to look like they can cope with it after all and pay it off in not such a distant future.

I know the football paradigm has been "no matter how big of a financial hole you dig yourself into, someone will always rescue you! ". However we have never seen a hole this big. I will be very much interested to see how this all plays out and how much it will come back to bite United in the ass, i doubt very very much it will be as painless as some supporters wish.

Madrid is in a major metropolitan area and spends heavily on international superstars... we create our own buzz to overcome La Liga weakness. For example, people are always going to want to watch R9, Zidane, Ronaldo, etc. We don't get any of our brand value from La Liga... we have to generate our own. Man U, on the other hand, can rely on EPL brand value, is in a small city and doesn't need to buy the R9s of the world just to maintain their brand. There's big interest in the EPL, not just Man U.

It's the small piece/big pie argument.

chinomaster182 wrote:I know the football paradigm has been "no matter how big of a financial hole you dig yourself into, someone will always rescue you! ". However we have never seen a hole this big. I will be very much interested to see how this all plays out and how much it will come back to bite United in the ass, i doubt very very much it will be as painless as some supporters wish.

United's debt is no doubt a burden, but one which they have already been able to diminish. If their annual revenue is £100m bigger than the next best earner's - as it currently is - then they in theory are able to spend the same as the 2nd highest income club while spending that extra £100m on paying off debt. And if they indeed sell 20-30% of their shares and use that money to pay off their debt, then they'll be debt free.

sportsczy wrote:Madrid is in a major metropolitan area and spends heavily on international superstars... we create our own buzz to overcome La Liga weakness. For example, people are always going to want to watch R9, Zidane, Ronaldo, etc. We don't get any of our brand value from La Liga... we have to generate our own. Man U, on the other hand, can rely on EPL brand value, is in a small city and doesn't need to buy the R9s of the world just to maintain their brand. There's big interest in the EPL, not just Man U.

It's the small piece/big pie argument.

That's all very fine and well, but my intention was to observe English football and United's superior financial position's possible impact on it

I was actually responding to Cyberman lol.

But as far as the EPL, Chelsea and City will outspend Man U because they could care less about profits. They will straddle the FFP line as much as possible. I don't think money is a competitive advantage for Man U against those types of owners. Scouting and youth development are competitive advantages at the moment however.

wait a minute, rely on the EPL brand? Utd built the EPL brand.
Madrid had Zidane etc but even then your finances and income werent great.
Its well known that it took Beckham..a utd icon..to kick start it.
Even now its a utd icon in Ronaldo thats carrying your brand. Its not clever Madrid marketing, its the Utd rub thats helped Madrid.
We are the ultimate footballing juggernaught (sp)

cyberman wrote:wait a minute, rely on the EPL brand? Utd built the EPL brand.
Madrid had Zidane etc but even then your finances and income werent great.
Its well known that it took Beckham..a utd icon..to kick start it.
Even now its a utd icon in Ronaldo thats carrying your brand. Its not clever Madrid marketing, its the Utd rub thats helped Madrid.
We are the ultimate footballing juggernaught (sp)

lol at united built the EPL brand...

Good god.

Cyber really doesn't possess much knowledge outside of United.


But I must admit, United's global branding has astounded me as it can only continue to grow. Although I wonder how SAF's departure will effect them.

real madrid is still the benchmark.. deal with it.

i'll just leave this here...
Forbes Top 50 Most Valuble Sports Franchises

WTF did I say wrong Arquit?
Madrid signed Zidane et all, 3 CLs in 5 years yet lay 2nd in the income league...behind us.
They were signing galaticos but they werent exploiting them. Expenditure exceeded income.
They sign Beckham, sells shirts and a lightbulb went off in Perez head. Same year they go top, they revolutionised their business model based on Beckham, Even getting the government to impletement the Beckham tax. Our superstar revolutionised Real Madrid.
Perez goes, they lose their galatico identity ( RVN? lol) only to regain it with 1 signing which is carrying that brand as its only true modern day galatico..Utds superstar..CR7
Youre welcome for this history lesson you condescending busy body

Bloodless, Utd have the biggest fanbase in the world, we were recognised as such, plus the most valuable, as far back as 96..pre Beckham.
Weve 11 odd titles in 20 years, involved in every title race. Our players are all time legends. for most of the EPL era we were the only EPL club in the CL worth fearing.
We built the EPL brand to what it is today.

http://www.smh.com.au/articles/2004/10/05/1096871855592.html

Thats our superstar right there kid..