September 25, 2018 / 11:20 AM / 25 days ago

Manchester United's on-field slip-ups fail to slow financial juggernaut

(Reuters) - English soccer club Manchester United (MANU.N) forecast revenue for 2018-19 to rise to record levels, helped by increased broadcasting revenue as a result of UEFA’s new revenue distribution system coming into effect.

Soccer Football - FA Cup Final - Chelsea vs Manchester United - Wembley Stadium, London, Britain - May 19, 2018 Manchester United fan waves a flag before the match REUTERS/Andrew Yates

The forecast comes despite the club having dropped off the pace in the new Premier League season, sitting seventh in the table, eight points behind leaders Liverpool and six adrift of cross-town rivals and reigning champions Manchester City.

United, whose squad includes French World Cup winner Paul Pogba, Spain goalkeeper David de Gea and Chile forward Alexis Sanchez, said revenue is expected to be between 615 million pounds and 630 million pounds in the year to next June.

Revenue for 2017-18 also came in at a record 590 million pounds ($775.4 million) despite a slowdown in the fourth-quarter, due to a dip in commercial and broadcasting revenue.

“Our increased revenue expectation for the year demonstrates our continued strong long-term financial performance which underpins everything we do and allows us to compete for top talent in an increasingly competitive transfer market,” Executive Vice Chairman Ed Woodward said in a statement.

Manchester City, owned by Arab billionaire Sheikh Mansour bin Zayed Al Nahyan, won the league with a 19-point margin over United last season and are now looking to close the gap on their local rivals off the pitch as well.

Earlier this month, City posted revenue of 500.5 million pounds and profit of 10.4 million pounds for the year ended June 30. (bit.ly/2Q1fCBM)

WIDESPREAD PERCEPTION

Despite the widespread perception that United’s football has fallen behind City - a club once dismissed by former manager Alex Ferguson as “noisy neighbors” - Woodward said the club’s priority was still on-the-pitch success.

“Our board, our investors, and everyone at the club are aligned with the fans on what we need to do on the pitch, and that is to win trophies,” Woodward said on a post earnings conference call.

There have been media reports of behind-the-scenes discord between Woodward and team manager Jose Mourinho, over the club’s recruitment policy.

The club signed three players in the latest summer transfer window for a total of about 64 million pounds but did not buy a central defender, leaving Mourinho frustrated.

Manchester City’s spend was at a similar level to United’s, as it brought in three new players for a total of 62.6 million pounds. Liverpool, by contrast, spent 171.3 million pounds on four new players.

United’s revenue for the three months ended June 30 fell 16 percent to 147.6 million pounds, as the team’s failure to progress beyond the round of 16 in the lucrative UEFA Champions League contrasted with the previous year, when they won the second-tier Europa League.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) for the year are expected to be between 175 million pounds and 190 million pounds compared with 177.1 million pounds reported for 2017-18.

The club said its employee benefit expenses for the year rose 12.3 percent to 295.9 million pounds, primarily due to higher player wages related to participation in the Champions League.

UEFA had released its new revenue distribution system in June, under which 2.5 billion euros ($2.95 billion) would be distributed among clubs participating in the Champions League, Europa League and Super Cup competitions.

The amount available for distribution in 2017-18 was 1.72 billion euros.

Reporting by Shashwat Awasthi and Chris Peters in Bengaluru and Alistair Smout in London; Editing by Keith Weir and Ed Osmond

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