Manchester United PLC Reports First Quarter Fiscal 2024 Results
- Record total first quarter revenue
- Record Matchday and Commercial revenue
- Record ticket sales and attendance
- Paid global memberships surpassed 400K
- New multi-year global partnership with WOW HYDRATE
- Renewed partnerships with Konami, Concho Y Toro, and Mlily
- Record Megastore turnover
- Opened expanded Women’s facilities at the Carrington Training Complex
- Adjusted EBITDA guidance lowered due to early Champions League exit and reduction in Broadcasting revenues
Insights
The reported increase in Manchester United's first quarter revenue, particularly in Matchday and Commercial revenue, reflects a robust consumer demand and efficient monetization of the club's brand. The record ticket sales and attendance, coupled with the expansion of the global membership program, indicate a strong fan base that can be leveraged for future revenue streams. The partnerships with WOW HYDRATE, Konami, Concho Y Toro and Mlily, alongside the extension with adidas, demonstrate the club's ability to attract and maintain lucrative commercial relationships, which is essential for sustainable financial growth.
The revised revenue and EBITDA guidance for fiscal 2024, with decreases attributed to the early Champions League exit, underscores the volatility and impact of on-field performance on broadcasting revenues. This adjustment is a critical reminder for stakeholders of the inherent risks associated with sports franchises where performance can significantly influence financial outcomes. The increased operating expenses, particularly in employee benefits, reflect the club's investment in talent, which is necessary to remain competitive but also adds pressure on the club's profitability.
Analyzing the key financials, the 9.3% increase in total revenue is a positive indicator of growth, yet the dip in adjusted EBITDA suggests that costs are rising at a pace that could potentially outstrip revenue gains. The operating profit shows a significant recovery from the previous year's loss, which may be indicative of improved operational efficiency or cost control measures.
The basic loss per share improvement is modest and indicates that while the club may be moving in the right direction, there is still work to be done to achieve profitability. The stability of non-current borrowings in USD terms shows prudent financial management, but the increase in current borrowings and the impact of foreign exchange rates on finance costs highlight areas of potential financial risk.
The capital expenditure on property, plant and equipment, as well as on intangible assets, suggests a strategic focus on long-term growth through facility improvements and investment in the playing squad. However, this needs to be balanced with the immediate financial pressures and the challenge of managing a high wage bill.
From an economic standpoint, Manchester United's financial results can be seen as a microcosm of the broader sports industry, where revenues are closely tied to performance and marketability. The club's revenue diversification strategy, through increased commercial and matchday revenues, helps mitigate the risks associated with fluctuating broadcasting revenues, which are often tied to competition outcomes.
The investment in women's facilities reflects a growing trend in sports to capitalize on women's leagues, which can offer new revenue channels and fan engagement opportunities. The club's focus on digital engagement, as seen with the launch of the Official Supporters' Club Hub, aligns with industry-wide digital transformation efforts aimed at enhancing fan experiences and creating additional revenue streams.
The significant increase in profit on disposal of intangible assets, primarily players, highlights the importance of player trading as a revenue source in football economics. This aspect of the business model can provide substantial capital if managed effectively, though it also adds a layer of unpredictability to financial planning.
Key Points
- Achieved record total first quarter revenue driven by record Matchday and Commercial revenue
- Club continues to achieve record ticket sales and attendance while paid global memberships recently surpassed a record 400K, the largest membership program of any global sports team
- Signed a new multi-year global partnership with WOW HYDRATE, and renewed partnerships with Konami, Concho Y Toro and Mlily
- Achieved record Megastore turnover during the quarter driven by a strong finish to the 2022/23 season and record 2023/24 kit launches
- Club opened expanded Women’s facilities at the Carrington Training Complex
- Club launched an online Official Supporters’ Club Hub during the first quarter
Outlook
For fiscal 2024, the Company is forecasting revenue guidance to be within a range of
Phasing of Premier League games |
Quarter 1 |
Quarter 2 |
Quarter 3 |
Quarter 4 |
Total |
2023/24 season |
7 |
13 |
10 |
8 |
38 |
2022/23 season |
6 |
10 |
10 |
12 |
38 |
2021/22 season |
6 |
12 |
11 |
9 |
38 |
Key Financials (unaudited)
£ million (except loss per share) |
Three months ended 30 September |
|
|
|
2023 |
2022 |
Change |
Commercial revenue |
90.4 |
87.4 |
|
Broadcasting revenue |
39.3 |
35.0 |
|
Matchday revenue |
27.4 |
21.3 |
|
Total revenue |
157.1 |
143.7 |
|
Adjusted EBITDA(1) |
23.3 |
23.6 |
( |
Operating profit/(loss) |
1.9 |
(3.4) |
|
|
|||
Loss for the period (i.e. net loss) |
(25.8) |
(26.5) |
|
Basic loss per share (pence) |
(15.79) |
(16.26) |
|
Adjusted loss for the period (i.e. adjusted net loss)(1) |
(8.6) |
(9.9) |
|
Adjusted basic loss per share (pence)(1) |
(5.27) |
(6.08) |
|
|
|||
Non-current borrowings in USD (contractual currency) (2) |
|
|
|
(1) Adjusted EBITDA, adjusted loss for the period and adjusted basic loss per share are non-IFRS measures. See “Non-IFRS Measures: Definitions and Use” on page 6 and the accompanying Supplemental Notes for the definitions and reconciliations for these non-IFRS measures and the reasons we believe these measures provide useful information to investors regarding the Group’s financial condition and results of operations. |
(2) In addition to non-current borrowings, the Group maintains a revolving credit facility which varies based on seasonal flow of funds. The outstanding balance of the revolving credit facility as of 30 September 2023 was |
Revenue Analysis
Commercial
Commercial revenue for the quarter was
-
Sponsorship revenue was
£56.2 million , a decrease of£1.6 million , or2.8% , over the prior year quarter. -
Retail, Merchandising, Apparel & Product Licensing revenue was
£34.2 million , an increase of£4.6 million , or15.5% , over the prior year quarter, primarily due to the extension of our partnership with adidas until the end of the 2034/35 season and strong Megastore performance.
Broadcasting
Broadcasting revenue for the quarter was
Matchday
Matchday revenue for the quarter was
Other Financial Information
Operating expenses
Total operating expenses for the quarter were
Employee benefit expenses
Employee benefit expenses for the quarter were
Other operating expenses
Other operating expenses for the quarter were
Depreciation and amortization
Depreciation for the quarter was
Profit on disposal of intangible assets
Profit on disposal of intangible assets for the quarter was
Net finance costs
Net finance costs for the quarter were
Income tax
The income tax credit for the quarter was
Cash flows
Overall cash and cash equivalents (including the effects of exchange rate movements) increased by
Net cash inflow from operating activities for the quarter was
Net capital expenditure on property, plant and equipment for the quarter was
Net capital expenditure on intangible assets for the quarter was
Net cash inflow from financing activities for the quarter was
Balance sheet
Our USD non-current borrowings as of 30 September 2023 were
In addition to non-current borrowings, the Group maintains a revolving credit facility which varies based on seasonal flow of funds. Current borrowings at 30 September 2023 were
As of 30 September 2023, cash and cash equivalents were
About Manchester United
Manchester United is one of the most popular and successful sports teams in the world, playing one of the most popular spectator sports on Earth. Through our 146-year football heritage we have won 67 trophies, enabling us to develop what we believe is one of the world’s leading sports and entertainment brands with a global community of 1.1 billion fans and followers. Our large, passionate and highly engaged fan base provides Manchester United with a worldwide platform to generate significant revenue from multiple sources, including sponsorship, merchandising, product licensing, broadcasting and matchday initiatives which in turn, directly fund our ability to continuously reinvest in the club.
Cautionary Statements
This press release contains forward‑looking statements. You should not place undue reliance on such statements because they are subject to numerous risks and uncertainties relating to the Company’s operations and business environment, all of which are difficult to predict and many are beyond the Company’s control. These statements often include words such as “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” or similar expressions. The forward-looking statements contained in this press release are based on our current expectations and estimates of future events and trends, which affect or may affect our businesses and operations. You should understand that these statements are not guarantees of performance or results. They involve known and unknown risks, uncertainties and assumptions. Although the Company believes that these forward-looking statements are based on reasonable assumptions, you should be aware that many factors could affect its actual financial results or results of operations and could cause actual results to differ materially from those in these forward-looking statements. These factors are more fully discussed in the “Risk Factors” section and elsewhere in the Company’s Registration Statement on Form F-1, as amended (File No. 333-182535) and the Company’s Annual Report on Form 20-F (File No. 001-35627) as supplemented by the risk factors contained in the Company’s other filings with the Securities and Exchange Commission.
Non-IFRS Measures: Definitions and Use
1. Adjusted EBITDA
Adjusted EBITDA is defined as loss for the period before depreciation, amortization, profit on disposal of intangible assets, net finance costs, and tax.
Adjusted EBITDA is useful as a measure of comparative operating performance from period to period and among companies as it is reflective of changes in pricing decisions, cost controls and other factors that affect operating performance, and it removes the effect of our asset base (primarily depreciation and amortization), material volatile items (primarily profit on disposal of intangible assets), capital structure (primarily finance costs), and items outside the control of our management (primarily taxes). Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for an analysis of our results as reported under IFRS as issued by the IASB. A reconciliation of loss for the period to adjusted EBITDA is presented in supplemental note 2.
2. Adjusted loss for the period (i.e. adjusted net loss)
Adjusted loss for the period is calculated, where appropriate, by adjusting for foreign exchange losses/gains on unhedged US dollar denominated borrowings (including foreign exchange gains/losses immediately reclassified from the hedging reserve following change in contract currency denomination of future revenues), and fair value movements on embedded foreign exchange derivatives, subtracting/adding the actual tax credit/expense for the period, and adding the adjusted tax credit for the period (based on an normalized tax rate of
In assessing the comparative performance of the business, in order to get a clearer view of the underlying financial performance of the business, it is useful to strip out the distorting effects of the items referred to above and then to apply a ‘normalized’ tax rate (for both the current and prior periods) of the weighted average US federal corporate income tax rate of
3. Adjusted basic and diluted loss per share
Adjusted basic and diluted loss per share are calculated by dividing the adjusted loss for the period by the weighted average number of ordinary shares in issue during the period. Adjusted diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the period to assume conversion of all dilutive potential ordinary shares. There is one category of dilutive potential ordinary shares: share awards pursuant to the 2012 Equity Incentive Plan (the “Equity Plan”). Share awards pursuant to the Equity Plan are assumed to have been converted into ordinary shares at the beginning of the financial year. Adjusted basic and diluted loss per share are presented in supplemental note 3.
Key Performance Indicators
|
Three months ended 30 September |
||
|
2023 |
2022 |
|
|
|
|
|
Revenue |
|
|
|
Commercial % of total revenue |
|
|
|
Broadcasting % of total revenue |
|
|
|
Matchday % of total revenue |
|
|
|
|
|
|
|
|
2023/24 Season |
2022/23 Season |
|
Home Matches Played |
|
|
|
PL |
4 |
3 |
|
UEFA competitions |
1 |
1 |
|
Domestic Cups |
- |
- |
|
Away Matches Played |
|
|
|
PL |
3 |
3 |
|
UEFA competitions |
1 |
1 |
|
Domestic Cups |
- |
- |
|
|
|
|
|
Other |
|
|
|
Employees at period end |
1,142 |
1,205 |
|
Employee benefit expenses % of revenue |
|
|
|
CONSOLIDATED STATEMENT OF PROFIT OR LOSS (unaudited; in £ thousands, except per share and shares outstanding data) |
||||
|
Three months ended 30 September |
|||
|
2023 |
|
2022 |
|
Revenue from contracts with customers |
157,096 |
|
143,654 |
|
Operating expenses |
(184,762 |
) |
(163,644 |
) |
Profit on disposal of intangible assets |
29,481 |
|
16,608 |
|
Operating profit/(loss) |
1,815 |
|
(3,382 |
) |
Finance costs |
(34,968 |
) |
(49,730 |
) |
Finance income |
349 |
|
18,742 |
|
Net finance costs |
(34,619 |
) |
(30,988 |
) |
Loss before income tax |
(32,804 |
) |
(34,370 |
) |
Income tax credit |
7,047 |
|
7,854 |
|
Loss for the period |
(25,757 |
) |
(26,516 |
) |
|
|
|
||
Basic and diluted loss per share: |
|
|
||
Basic and diluted loss per share (pence) (1) |
(15.79 |
) |
(16.26 |
) |
Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share (thousands) (1) |
163,159 |
|
163,062 |
|
(1) For the three months ended 30 September 2023 and the three months ended 30 September 2022, potential ordinary shares are anti-dilutive, as their inclusion in the diluted loss per share calculation would reduce the loss per share, and hence have been excluded. |
CONSOLIDATED BALANCE SHEET (unaudited; in £ thousands) |
|||
|
As of |
||
|
30 September 2023 |
30 June 2023 |
30 September 2022 |
ASSETS |
|
|
|
Non-current assets |
|
|
|
Property, plant and equipment |
256,961 |
253,282 |
244,642 |
Right-of-use assets |
8,417 |
8,760 |
3,677 |
Investment properties |
19,923 |
19,993 |
20,203 |
Intangible assets |
966,766 |
812,382 |
920,941 |
Deferred tax asset |
6,244 |
- |
644 |
Trade receivables |
45,014 |
22,303 |
19,325 |
Derivative financial instruments |
190 |
7,492 |
36,683 |
|
1,303,515 |
1,124,212 |
1,246,115 |
Current assets |
|
|
|
Inventories |
5,046 |
3,165 |
3,752 |
Prepayments |
36,418 |
16,487 |
30,912 |
Contract assets – accrued revenue |
47,343 |
43,332 |
46,139 |
Trade receivables |
28,920 |
31,167 |
51,224 |
Other receivables |
11,677 |
9,928 |
1,929 |
Income tax receivable |
- |
5,317 |
4,547 |
Derivative financial instruments |
6,646 |
8,317 |
12,137 |
Cash and cash equivalents |
80,829 |
76,019 |
24,277 |
|
216,879 |
193,732 |
174,917 |
Total assets |
1,520,394 |
1,317,944 |
1,421,032 |
CONSOLIDATED BALANCE SHEET (continued) (unaudited; in £ thousands) |
||||||
|
As of |
|||||
|
30 September 2023 |
30 June 2023 |
30 September 2022 |
|||
EQUITY AND LIABILITIES |
|
|
|
|||
Equity |
|
|
|
|||
Share capital |
53 |
|
53 |
|
53 |
|
Share premium |
68,822 |
|
68,822 |
|
68,822 |
|
Treasury shares |
(21,305 |
) |
(21,305 |
) |
(21,305 |
) |
Merger reserve |
249,030 |
|
249,030 |
|
249,030 |
|
Hedging reserve |
(2,947 |
) |
4,002 |
|
659 |
|
Retained deficit |
(221,669 |
) |
(196,652 |
) |
(196,029 |
) |
|
71,984 |
|
103,950 |
|
101,230 |
|
Non-current liabilities |
|
|
|
|||
Deferred tax liabilities |
- |
|
3,304 |
|
- |
|
Contract liabilities - deferred revenue |
7,816 |
|
6,659 |
|
20,382 |
|
Trade and other payables |
203,853 |
|
161,141 |
|
172,977 |
|
Borrowings |
528,787 |
|
507,335 |
|
577,367 |
|
Lease liabilities |
7,766 |
|
7,844 |
|
2,588 |
|
Derivative financial instruments |
850 |
|
748 |
|
- |
|
Provisions |
95 |
|
93 |
|
11,706 |
|
|
749,167 |
|
687,124 |
|
785,020 |
|
Current liabilities |
|
|
|
|||
Contract liabilities - deferred revenue |
214,666 |
|
169,624 |
|
171,344 |
|
Trade and other payables |
267,728 |
|
236,472 |
|
258,443 |
|
Income tax liabilities |
684 |
|
- |
|
- |
|
Borrowings |
204,380 |
|
105,961 |
|
102,892 |
|
Lease liabilities |
971 |
|
1,036 |
|
1,000 |
|
Derivative financial instruments |
499 |
|
931 |
|
- |
|
Provisions |
10,315 |
|
12,846 |
|
1,103 |
|
|
699,243 |
|
526,870 |
|
534,782 |
|
Total equity and liabilities |
1,520,394 |
1,317,944 |
1,421,032 |
|||
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited; in £ thousands) |
||||
|
Three months ended 30 September |
|||
|
2023 |
|
2022 |
|
Cash flow from operating activities |
|
|
||
Cash generated from operations (see supplemental note 4) |
25,871 |
|
3,619 |
|
Interest paid |
(10,574 |
) |
(9,628 |
) |
Interest received |
349 |
|
18 |
|
Tax refunded/(paid) |
5,817 |
|
(52 |
) |
Net cash inflow/(outflow) from operating activities |
21,463 |
|
(6,043 |
) |
Cash flow from investing activities |
|
|
||
Payments for property, plant and equipment |
(9,029 |
) |
(4,393 |
) |
Payments for intangible assets |
(132,213 |
) |
(100,024 |
) |
Proceeds from sale of intangible assets |
25,669 |
|
11,662 |
|
Net cash outflow from investing activities |
(115,573 |
) |
(92,755 |
) |
Cash flow from financing activities |
|
|
||
Proceeds from borrowings |
100,000 |
|
- |
|
Principal elements of lease payments |
(200 |
) |
(878 |
) |
Net cash inflow/(outflow) from financing activities |
99,800 |
|
(878 |
) |
Effect of exchange rate changes on cash and cash equivalents |
(880 |
) |
2,730 |
|
Net increase/(decrease) in cash and cash equivalents |
4,810 |
|
(96,946 |
) |
Cash and cash equivalents at beginning of period |
76,019 |
|
121,223 |
|
Cash and cash equivalents at end of period |
80,829 |
|
24,277 |
|
SUPPLEMENTAL NOTES |
||||
1 General information |
||||
Manchester United plc (the “Company”) and its subsidiaries (together the “Group”) is a men’s and women’s professional football club together with related and ancillary activities. The Company incorporated under the Companies Law (as amended) of the |
||||
2 Reconciliation of loss for the period to adjusted EBITDA |
||||
|
Three months ended 30 September |
|||
|
2023 £’000 |
2022 £’000 |
||
Loss for the period |
(25,757 |
) |
(26,516 |
) |
Adjustments: |
|
|
||
Income tax credit |
(7,047 |
) |
(7,854 |
) |
Net finance costs |
34,619 |
|
30,988 |
|
Profit on disposal of intangible assets |
(29,481 |
) |
(16,608 |
) |
Amortization |
46,845 |
|
40,139 |
|
Depreciation |
4,102 |
|
3,478 |
|
Adjusted EBITDA |
23,281 |
|
23,627 |
|
3 Reconciliation of loss for the period to adjusted loss for the period and adjusted basic and diluted loss per share |
|||
|
Three months ended 30 September |
||
|
2023 £’000 |
2022 £’000 |
|
Loss for the period |
(25,757) |
(26,516) |
|
Foreign exchange losses on unhedged US dollar denominated borrowings |
13,753 |
40,440 |
|
Fair value movement on embedded foreign exchange derivatives |
8,163 |
(18,612) |
|
Income tax credit |
(7,047) |
(7,854) |
|
Adjusted loss before income tax |
(10,888) |
(12,542) |
|
Adjusted income tax credit (using a normalized tax rate of |
2,286 |
2,634 |
|
Adjusted loss for the period (i.e. adjusted net loss) |
(8,602) |
(9,908) |
|
|
|
|
|
Adjusted basic and diluted loss per share: |
|
|
|
Adjusted basic and diluted loss per share (pence) (1) |
(5.27) |
(6.08) |
|
Weighted average number of ordinary shares used as the denominator in calculating basic and diluted loss per share (thousands) (1) |
163,159 |
163,062 |
|
(1) For the three months ended 30 September 2023 and the three months ended 30 September 2022 potential ordinary shares are anti-dilutive, as their inclusion in the diluted loss per share calculation would reduce the loss per share, and hence have been excluded. |
4 Cash generated from operations |
||||
|
Three months ended 30 September |
|||
|
2023 £’000 |
2022 £’000 |
||
Loss for the period |
(25,757 |
) |
(26,516 |
) |
Income tax credit |
(7,047 |
) |
(7,854 |
) |
Loss before income tax |
(32,804 |
) |
(34,370 |
) |
Adjustments for: |
|
|
||
Depreciation |
4,102 |
|
3,478 |
|
Amortization |
46,845 |
|
40,139 |
|
Profit on disposal of intangible assets |
(29,481 |
) |
(16,608 |
) |
Net finance costs |
34,619 |
|
30,988 |
|
Non-cash employee benefit expense - equity-settled share-based payments |
740 |
|
529 |
|
Foreign exchange gains on operating activities |
(142 |
) |
(1,173 |
) |
Reclassified from hedging reserve |
(252 |
) |
(163 |
) |
Changes in working capital: |
|
|
||
Inventories |
(1,881 |
) |
(1,552 |
) |
Prepayments |
(20,119 |
) |
(15,566 |
) |
Contract assets – accrued revenue |
(4,011 |
) |
(9,900 |
) |
Trade receivables |
(5,245 |
) |
15,983 |
|
Other receivables |
(1,749 |
) |
(360 |
) |
Contract liabilities – deferred revenue |
46,199 |
|
9,182 |
|
Trade and other payables |
(8,237 |
) |
(17,153 |
) |
Provisions |
(2,713 |
) |
165 |
|
Cash generated from operations |
25,871 |
|
3,619 |
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20240116518128/en/
Investor Relations:
Corinna Freedman
Head of Investor Relations
+44 738 491 0828
Corinna.Freedman@manutd.co.uk
Media Relations:
Andrew Ward
Director of Media Relations & Public Affairs
+44 161 676 7770
andrew.ward@manutd.co.uk
Source: Manchester United
FAQ
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