Manchester United owner stems losses

MANCHESTER United’s parent company Red Football Ltd today announced a drop in losses despite higher interest charges relating to the controversial leveraged buyout by the Glazer family in 2005.

On the back of a successful season by the football club, which won the UEFA Champions League and as well as the English Premiership for a 10th time, income for the company – which counts no less than six members of the Glazer family as directors – rose from £210m to £256m.

Boosted by prize money and TV revenues profits before interest and tax rose from £18.6m to £24m.

The company saw strong growth in income in all areas. Matchday revenues rose from £92.5m to £101.5m; media revenues from £61.4m to £90.7m and commercial incomes from £56m to £64m.

The staff wage bill  – after new contracts for star players such as Rooney and Ronaldo came into effect – jumped from £73.6m to £94.5m in the year to June 30 2008.

At the bottom line Red Football declared a loss of £21.4m, down from £24.3m, despite interest charges rising from £42.9m to £45.49m.

Debt of £473.9m was up on the 2007 figure of £452.4m, while total group borrowings rose to £523.6m from £514m.

During the year Red Football spent £11.6m on buying the Manchester International Freight Terminal, which generates £1m in rental income a year, and also spent £2.6m to double its stake in MUTV, the club’s subscription-only television channel, to 66.7%.

Red Football said its four key goals for growth are; maintaining playing success; treating fans as customers; leveraging the global brand; and developing club media rights.

Looking forward it said the outlook for the current financial year had begun well with 63,000 individual and executive season tickets being sold in advance of the beginning of the current campaign.

It said it was “exploring new commercial opportunities” both within the UK and overseas to “further leverage” the brand.

Separately newly-filed figures for Manchester United Ltd, which operates the football club,and does not include any impact of the parent company’s borrowings, recorded a pre-tax profit of £66.4m, up 11% on 2007. Turnover was £256.2m, up 21%.

The ultimate holding company of Manchester United Ltd and Red Football Ltd, Red Football Joint Venture posted a loss of £44.8m for the year to June 2008.

RFJV made interest payments of £68.8m on loans totalling £687.4m in 2007-08. The level of debt increased by £24m in the year as interest on “Payment in Kind” loans worth £152m at the start of the season was rolled over.

THE PIK debt of £175.5n is not secured on the club’s assets but on the Glazer family’s equity.