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Glazers Continue To Plunder Manchester United

Manchester United released their third-quarter financial results and they do not make good reading for United fans as profit fell 8.5% due to the early Champions League exit. The full impact of not going deep into the Champions League this season and finishing second in the league, instead of winning it, will show up in the Q4 results.

From the official report:

Earnings before interest, taxes, depreciation, and amortization declined to 20.4 million pounds in the three months ended March 31, compared with EBITDA of 22.3 million pounds in the year-earlier period, MU Finance Plc said today in a preliminary results statement.

Total sales in the quarter fell 5.9 percent to 70.8 million pounds. Commercial revenue rose 15 percent as the club benefited from sponsorships.

United reduced debt by 61.2 million pounds to 423.3 million pounds in the quarter, leaving it with 25.6 million pounds in cash and equivalents at the end of the period.

So what do those numbers really mean? Andy Green (@andersred) is the savviest United fan I know online when it comes to United’s finances and these are some of the headlines he tweeted today after looking over United’s financial reports:

  • Q3 headlines. Q3 revenue down 5.8% y-on-y. CL exit impact on Matchday and media. Bigger impact to come in Q4.
  • Q3 commercial income up 15% y-on-y, impact of DHL, Nike revenue recognition. Doesn’t offset 13% matchday fall and 19% media fall.
  • Revenue down 5.8% and costs down 4.7% means EBITDA for Q3 down 8.4%. Margin 28.9% vs. 29.7% last year.
  • Champions League exit, 2nd place in PL and poor cup form makes an IPO for United more difficult.
  • During the conference call to investors, United said that they were seeing no impact from weaker on pitch performance in conversations with potential sponsors.
  • Overall the club spent £71m in the first nine months either on bond interest or buying back bonds.

The part that upsets most United fans is the £71m that left the club in the last nine months. That is £71m  that cannot be reinvested in the club by buying new talent. Or to put it another way, the money that United received for Ronaldo the Glazers took out to pay bond holders.

There has been a lot written recently about the money that Manchester City have spent in winning the title. No English club generates the sort of revenue that United does. Unfortunately United’s profits are being plundered by the Glazers in order to pay for their takeover instead of being reinvested in the squad and this year we began to see the impact that is having on the pitch.

An IPO would in theory remove these interest payments, but my concern after an IPO is that the Glazers continue to plunder the club for £50-£75m every year in dividend payments instead of reinvesting it in the squad. In theory, United should be able to compete with any club in the world for a player based on their revenues.

Unfortunately, the reality is that because of the Glazers, United cannot compete for the top players like Eden Hazard and instead have to hope that SAF can somehow get  another year out of Paul Scholes.