Manchester United: The Team is Better Than The Stock

The legendary soccer club's first public earnings results were far from championship-caliber

  • Share
  • Read Later
Michael Regan / Getty Images

Danny Welbeck of Manchester United takes on Hamit Altintop of Galatasaray during a match at Old Trafford on September 19, 2012 in Manchester, England.

This may be mixing football metaphors, but Manchester United was thrown for a loss in the fourth quarter. The American-controlled, English soccer team, which now trades on the New York Stock Exchange after going public earlier this year, reported a loss about of about $25 million on revenue of $121 million in its final quarter ending in June. Revenue was down 25%, reflecting United’s failure on the field. The team played fewer games as a result of being knocked out of the big money UEFA Champions League tournament, which was won by rival Chelsea, as well as getting dumped in England’s FA Cup, its top domestic tournament. Man U currently sits in second place in the Barclays Premiership.

For the year, Man U. had revenues of $519 million, a decrease of 3.3%; the team showed a profit of $38 million, but that was mostly the result of a tax credit. Man U did much better selling sponsorship and souvenirs, including a $559 million agreement with Chevrolet that makes the car brand the team’s exclusive shirt sponsor beginning next season. (Buy a Chevy, they’ll throw in the Man U kit.)

“We are one of the most popular and successful sports teams in the world, playing one of the most popular spectator sports on Earth,” notes Man U.’s corporate website. The response from American investors seems to be, Who Cares? They have treated Man U. as though it were Blackburn Rovers. Its shares have fallen more than 10% since the team’s $14 a share IPO in August, meaning that Man U has lost more than $240 million of value—that’s more than most teams in England are worth. Among the losers at this point is George Soros, an all-star investor who now owns a minority stake..

Some of Man U.’s fans aren’t happy either.  The Manchester United Supporters Trust, (MUST) an independent fan group, has been harshly critical of the team’s majority owner, the Glazer family  (also owners of the NFL Tampa Bay Buccaneers). The Glazers control all of the voting stock.  MUST has accused the Glazers of enriching themselves to the team’s detriment, and make their ire visible by wearing green and gold scarves and shirts—thought to be the team’s original colors—in protest. Although Man U produces a positive cash flow, its debt stands at more than $700 million and it is paying about $80 million in finance charges annually.  While Man U has continued to purchase quality players such as Robin Van Persie, fans believe the high finance costs limit the team’s access to the transfer market.

For the fiscal 2013 season, Man U is projecting revenues between $567 and $583 million. But that assumes that the team reaches the quarterfinals of the Champions League, the FA Cup and League Cup. So far that campaign is off to a good start, with the Reds 1-0 win over Turkish power Galatasaray in the first game of group play in the Champions League. But with the stock dependent on a string of victories, no team in the world will have more costly losses than Man U.