Manchester United reports strong third quarter and issues record forecast

Manchester United has seen third quarter revenues increase, and losses narrow, while raising its full-year forecasts to record levels.

The club, which is currently on the block for potential sale or partial sale, with Ineos owner Sir Jim Ratcliffe and Qatar investor Sheikh Jassim both in the frame, achieved sales of £170m in the three months ended March 31, 2023, up from £152.8m at the same point the previous year.

Losses in the period were £5.6m, significantly down from the £27.7m loss registered a year ago.

The club also announced that, for fiscal year 2023, the company has raised its previous revenue guidance from £590m to £610m to a record £630m to £640m and raises its previous adjusted EBITDA guidance of £125m to £140m to £140m to £150m.

Non-current borrowings as of March 31, 2023 were $650m, which was unchanged from the same period in 2022.

Commercial revenue for the quarter was £69.4m, an increase of £3.8m, or 5.8%, over the prior year quarter.

Sponsorship revenue was £41.0m, an increase of £1.8m, or 4.6%, over the prior year quarter, primarily due to new sponsorship agreements.

Retail, Merchandising, Apparel & Product Licensing revenue was £28.4m, an increase of £2m, or 7.6%, over the prior year quarter, primarily due to an increased number of matches played at Old Trafford.

Broadcasting revenue for the quarter was £50.7m, a decrease of £0.8m, or 1.6%, over the prior year quarter, as a result of the men’s first team participating in the UEFA Europa League compared with the UEFA Champions League in the prior year, partially offset by progression in domestic cup competitions.

Matchday revenue for the quarter was £49.9m, an increase of £14.2m, or 39.8%, over the prior year quarter, due to playing five additional home matches in the current year quarter, compared with the prior year quarter.

Total operating expenses for the quarter were £176.7m, an increase of £1.4m, or 0.8%.

Employee benefit expenses, mainly players’ wages, for the quarter were £85.0m, a decrease of £16.8m, or 16.5%, over the prior year quarter as a result of squad turnover and the men’s first team not participating in Champions League in the current year.

Other operating expenses for the quarter were £45.3m, an increase of £14.7m, or 48%. This is primarily due to increased matchday costs associated with progression in domestic cup competitions.

Net finance costs for the quarter were £1m, compared with £14.1m in the prior year quarter. The movement was driven by a favorable swing in foreign exchange rates in the current quarter, largely offsetting interest costs payable on borrowings. This compares with an unfavorable swing in foreign exchange rates in the prior year quarter.

Overall cash and cash equivalents – including the effects of exchange rate movements – increased by £42.7m in the quarter, compared with an increase of £8.4m in the prior year quarter.

Net cash inflow from operating activities for the quarter was £54.1m, an increase of £30.9m compared with a net cash inflow in the prior year quarter of £23.2m.

Net cash outflow from financing activities for the quarter was £0.2m, compared with £11.3m in the prior year quarter.

Non-current borrowings as of March 31, 2023 were $650m, which was unchanged from the same period in 2022. As a result of the year-on-year change in the USD/GBP exchange rate non-current borrowings when converted to pounds sterling were £521.5m, compared with £489.2m at the prior year quarter.

In addition to non-current borrowings, the group maintains a revolving credit facility which varies based on seasonal flow of funds. Current borrowings at March 31, 2023, were £203.7m compared with £102.3m at March 31, 2022.

As of March 31, 2023, cash and cash equivalents were £73.7m compared with £95.8m at the prior year quarter, primarily due to investment in the first team playing squad.

United reported record sales of global memberships, with the 2022/23 programme having closed at 360,000 members, the largest paid membership programme in world sport.

There remains continued exceptional demand for tickets, with more than 146,000 individuals currently on the season ticket waiting list – 2023/24 renewals for season tickets and executive club, which launched in February, sold out in record time with the lowest ever churn.

And there is continued momentum in demand for women’s football with Leigh Sport Village ticket sales for the 2022/23 season 200% higher than the 2021/22 season.

The club is returning to the US for its Summer Tour 2023 with an exciting schedule of matches in New York, San Diego, Las Vegas, and Houston.

United gained 5.3 million followers and generated more than 601 million digital interactions and 2.33 billion video views across all global social platforms in the third quarter.