Manchester United is adjusting to life without European football, saying it expects a sharp drop in earnings and revenues this season as the Premier League giant attempts to reassert its on-pitch dominance.
The 20-times champions of England and thrice winner of Europe's biggest club competition announced record revenues of £433.2 million for the 2013-14 season, a rise of almost a fifth on the previous season.
But after a barren Premier League campaign, which left it in seventh position and unable to qualify for European competition, it is predicting revenues to fall by as much as £48 million this season to between £385 million and £395 million.
The cost of strengthening its depleted squad will also hit earnings.
Manchester United made record adjusted earnings before interest, tax, depreciation and amortisation in the 12 months to the end of June of £130.1 million, a rise of 20 per cent. But it warned that adjusted ebitda for this season is likely to drop sharply and is not expected to be higher than £90 million to £95 million.
The club’s impressive commercial income and its share of the Premier League’s collective TV rights deals have given it leverage in the transfer window. It has spent heavily to try to arrest the on-pitch decline, which has continued into this season.
Employee costs rose 19 per cent to £214.8 million as United added Juan Mata, Luke Shaw and Ander Herrera to the squad. Net transfer spending for the season was £78.9 million, up from £36.4 million in 2012-13.
This season's transfer deals will see those costs inflate further, following the £60m signing of Ángel Di María from Real Madrid and the loan deal with Monaco for Radamel Falcao by new manager Louis van Gaal.
United returns to Premier League action this weekend, looking for its first victory of the season. It was also dumped out of the Capital One Cup by MK Dons of the third tier.
Shares have slipped in recent months. At the end of July, they hovered at $20, but closed yesterday in New York at $15.56.
Other operating costs rose £19.2 million to £88.3 million because of preseason tour costs and foreign exchange losses. The club's expenses for amortisation of player registrations was up 33 per cent to £55.3 million. The cost of parting company with former manager David Moyes and his coaching staff was £5.2million.
Financial Times
