- Title: UK/FILE: MANCHESTER UNITED FOOTBALL CLUB REPORTS SHARP JUMP IN YEAR'S PROFITS
- Date: 28th March 2002
- Summary: (U5)LONDON, UNITED KINGDOM (MARCH 26, 2002) (REUTERS) (SOUNDBITE) (English) PETER KENYON, CHIEF EXECUTIVE OFFICER, MANCHESTER UNITED PLC, SAYING "Four out of five European games' audience was Manchester United's, and top ten Sky games were Manchester United. So, Manchester United is still a huge draw. And, importantly enough, I think TV revenue still only accounts for ab
- Embargoed: 12th April 2002 13:00
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- Location: LONDON AND LEEDS ENGLAND, UNITED KINGDOM / BANGKOK; THAILAND
- City:
- Country: United Kingdom Thailand
- Topics: Business,General,Sports
- Reuters ID: LVABHBXC5FCHR5NC60V54ABK3E6E
- Story Text: Manchester United, the world's richest football club,
reported a sharp jump in half-year profits on Tuesday, but
said soaring player wages meant it would not repeat the
performance in the second half.
English champions said costs had risen by nearly 30 per
cent, with almost all of the rise coming from higher wages,
due to last summer's acquisitions of Argentine midfielder Juan
Sebastian Veron and Dutch striker Ruud van Nistelrooy, as well
as new deals with several key players.
The end of an Umbro sponsorship deal on April 30 and the
higher wages would hurt second-half profits, with players' pay
expected to soak up about 50 per cent of group turnover for
the year as a whole.
That compares to 39 per cent for the previous year, which
was the lowest ratio of any club in the English Premiership.
But Chief Executive of Manchester United Peter Kenyon
still believes this is a workable balance:
"We believe that, with the squad size of 25, what it
currently is, it's not about adding more players to this
squad, that's the level we need to compete domestically and in
Europe. The age of this squad and the quality of this squad -
we are confident that we can maintain around 50 per cent of
our turnover to be a workable model. And it still remains one
of the best within the industry."
Salaries took up 34 million pounds ($49 million) in the
first half to the end of January -- 40 per cent up on the same
period a year ago. But Peter Kenyon said the club's highest
salary, that of football star David Beckham, was included in
the 50 per cent figure quoted.
"Within that 50 per cent level we've already accounted for
David continuing his contract with us. That's not an extra
cost on top of that. And we are confident, and he is
confident, that we'll conclude that prior to the World Cup,"
said Peter Kenyon.
There's also growing evidence that the price of TV rights
to soccer is peaking - underlined by the problems at the
German Kirch and ITV Digital. But Peter Kenyon argues
Manchester United is not as financially dependent on TV rights
as most other clubs.
"Four out of five European games audience was Manchester
United's, and top ten Sky games were Manchester United. So,
Manchester United is still a huge draw. And, importantly
enough, I think TV revenue still only accounts for about 30
per cent of our overall revenue. So, in relation to other
forms of revenue of Manchester United, we think it's a
manageable aspect. But we fundamentally believe that Premier
League product, and Manchester United in particular, is
delivering what TV companies want - and that's good value in
audiences."
The club reported profits were up 79 per cent to 30.9
million pounds in the first six months, boosted by the sale of
players such as Jaap Stam and Andy Cole.
Turnover was up 14 per cent to a record 81.8 million
pounds and it recorded a profit from trading players to the
tune of 7.9 million pounds, compared with net expenditure of
3.3 million in the previous first half.
Group operating profit, stripping out player trading, rose
14 per cent to 23.6 million pounds. Company's CEO believes
there are no significant reasons to overt the current trend:
"I think it would be remiss to think they would escalate
at the rates they have. But I think, as long as Premier League
products continue to deliver those audiences, that would drive
advertising and we believe there should be no reason why they
would fall back."
Outgoing chairman Roland Smith said prospects for the rest
of the financial year would depend on progress beyond the
quarter finals of the European Champions League competition,
which starts next month when Manchester plays Spanish club
Deportivo Coruna.
United's challenge for a record fourth successive domestic
championship appeared to slip at the weekend as it dipped into
second place in the Premiership after losing to
Middlesborough. United are one point behind Liverpool, with
six games left, while Arsenal are just one point behind
United, with two games in hand.
United now face four successive away games including
difficult visits to Leeds United and Chelsea, while new title
favourites Arsenal are set to visit Old Trafford in May.
The club increased its half-year dividend to shareholders
by five percent to 0.64 pence a share from 0.61p.
United's shares were steady around 123-1/4 pence in
morning trade, valuing the company at just over 320 million
pounds ($457 million). - Copyright Holder: REUTERS
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