Finance Uncategorized

Manchester United's financial cost of failure

The club released its first definitive figures on the financial cost of not qualifying for this year’s Champions League tournament.

(Photo by Clive Rose/Getty Images)
(Photo by Clive Rose/Getty Images)

Manchester United released its first definitive figures on the financial cost of not qualifying for this year’s Champions League tournament.

The club’s revenue fell 9.9 percent to $138.8 million for Q2 compared to the same period a year ago, and revenue is expected to drop between 8.77 percent and 11 percent of last year’s mark of $678 million. Therefore, the damage will be at least $67 million.

United Executive Vice Chairman Ed Woodward confirmed that the drop in revenue was due to the team’s first absence in Champions League in two decades and the subsequent drop in broadcasting rights and ticket sales. The cost of United’s absence in the Champions League has been somewhat suppressed by the increase in sponsorships and lower wage bills.

(Photo by Matthew Peters/Man Utd via Getty Images)
(Photo by Matthew Peters/Man Utd via Getty Images)

The club’s salary expenditures dropped 6.6 percent to $77.3 million because it avoided bonuses for playing in the Champions League. The lower wage is also due to the departure of a number of highly paid players such as Ryan Giggs, Rio Ferdinand and Nemanja Vidic.

Sponsorship revenue is up 2.4 percent compared to the prior 2013 Q2 due to an increase in shirt sales and other sponsorships. During Q1 the club signed the most expensive kit sponsorship in the world with adidas, paying the team a staggering $100 million annually for the next 10 years. It also announced five new sponsors: Nissan, Abengoa, Maybank, Gloops and Association of Football Federations of Azerbaijan.

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