Struggling Manchester United Revenues Hit By Absence From Champions League

(RTTNews) - English football giants Manchester United Plc (MANU) reported Tuesday a profit for the first quarter compared to a small loss last year, boosted by increased tax credit and lower player wages.

However, United suffered from missing out on the Champions League as revenue fell by 9.9 percent to 88.7 million pounds for the three months to the end of September.

The club, languishing in seventh place in England's top league this year, recently concluded the largest kit manufacturer sponsorship deal in sports with Adidas AG (ADDDF, ADDYY).

The deal is worth 750 million pounds over 10 years starting next season. Adidas outbid rival Nike, Inc. (NKE) with the record offer.

It also signed five additional sponsorship deals during the quarter with Nissin and Abengoa (global), Association of Football Federations of Azerbaijan - AFFA (regional), Maybank and Gloops (renewals of regional).

Additionally, it signed a number of leading players including Blind, Di Maria, Rojo, and Falcao on loan after signing Herrera and Shaw earlier in the window.

"While we recognize that the 2014/15 fiscal year financial results will reflect our absence from the Champions League, we signed the largest kit sponsorship deal in the history of sport in the first quarter and, with that concluded, we are excited to focus our efforts on the meaningful growth opportunities in sponsorship, digital media and retail and merchandising," Executive Vice Chairman Ed Woodward said in a statement.

Man U reported net income of 8.94 million pounds or 5.45 pence per share for the first quarter, compared to a net loss of 0.29 million pounds or 0.18 pence per share in the prior-year quarter.

Excluding items, adjusted income for the quarter was 4.24 million pounds or 2.59 pence, compared to 2.24 million pounds or 1.37 pence per share in the year-ago quarter.

Commercial revenue decreased 5.2 percent to 56.8 million pounds, with 2.4 percent rise in sponsorship revenue to 46.3 million pounds.

Broadcasting revenues declined 13.0 percent to 16.8 million pounds from the prior year, primarily due to non-participation in the UEFA Champions League in the current season.

Matchday revenue declined 21.8 percent to 15.1 million pounds from last year, due primarily to playing one fewer domestic cup home game and non-participation in the UEFA Champions League in the current season.

Profit on disposal of players' registrations for the quarter was 18.33 million pounds, sharply higher than 1.0 million pounds in the prior-year quarter.

Tax credit for the quarter was 0.83 million pounds, sharply higher than 0.18 million pounds last year.

Operating expenses for the quarter grew 2.9 percent to 92.75 million pounds from 90.21 million pounds a year ago. Meanwhile, employee benefit expenses for the quarter decreased 6.6 percent to 49.4 million pounds from the year-ago quarter, due primarily to lower player wages.

Looking ahead to fiscal 2015, Manchester United continues to expect revenues between 385 million pounds and 395 million pounds and adjusted profits in the range of 90 million pounds to 95 million pounds.

MANU closed Monday's regular trading session at $16.29, down $$0.07 on a volume of 0.10 million shares. In the past 52-week period, the stock has been trading in a range of $14.26 to $19.97.