Man Utd pay price of failure

Manchester United today announced a surprising fall in pre-tax profits and admitted that failure in Europe last season will hit their financial performance over the next 12 months.

Despite posting a record operating profit of £58.3 million for the year ended 31 July, reinvesting the cash from the sale of David Beckham to Real Madrid in new players hit the club's profit level before tax.

It posted a pre-tax profit of £ 27.9 million, down from £39.3 million last year. The club also showed a slight drop in turnover as income fell to £169 million from £173 million.

United's £11m dip in pre tax profits was a direct result of player trading in the year. United spent £44m on new talent including Gabriel Heinze, Kleberson, Cristiano Ronaldo, Louis Saha and Alan Smith. The current figures don't include the £27m spent on Wayne Rooney in August and explain why United are predicting a difficult financial year ahead.

Last year United banked a net surplus on player trading, mostly from the sale of David Beckham to Real Madrid, worth £12.9m. But this year they made a £3.1m net loss on player trading. This also included writing off almost £2m on the sales of Fabian Barthez and Diego Forlan.

In a statement to the Stock Exchange this morning, chairman Sir Roy Gardner said: "Short-term results will be affected by a sharp drop in media revenues. Following the latest FAPL TV deals, revenue is expected to fall by around £8 million this year (21 per cent of total FAPL TV revenue for 2003-04) and then stay flat over the following two years.

"Clearly, the exact amount will depend on our final position in the league and the number of live games on TV, which determines our share of the domestic TV deals.

"Having finished third in the 2003-04 season, our media revenues from the Champions League will also reduce by approximately £6 million.

"As the Champions League TV pools are set for the current and next season, an improved team performance in 2004-05 could see our share of the pool increase in 2005-06.

"The overall impact of these two factors on 2004-05 revenues will be a reduction of approximately £14 million (assuming a like-for-like basis of performance), equivalent to 25 per cent of our 2003-04 FAPL and Champions League media revenues. As there are no costs associated with this revenue, this will have a significant impact on our profitability."

The club also took the unprecedented step today of outlining in detail the payments made on players and their agents in the past financial year - a direct result of United's battle earlier this year with Irish racing tycoons John Magnier and JP McManus, who own a 28.9 per cent stake in the club.

The figures show that in the 12 months to 31 July, United paid £5million to agents relating to player deals involving big-name signings such as Alan Smith, Rio Ferdinand and Cristiano Ronaldo.

Create a FREE account to continue reading

eros

Registration is a free and easy way to support our journalism.

Join our community where you can: comment on stories; sign up to newsletters; enter competitions and access content on our app.

Your email address

Must be at least 6 characters, include an upper and lower case character and a number

You must be at least 18 years old to create an account

* Required fields

Already have an account? SIGN IN

By clicking Create Account you confirm that your data has been entered correctly and you have read and agree to our Terms of use , Cookie policy and Privacy policy .

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.

Thank you for registering

Please refresh the page or navigate to another page on the site to be automatically logged in