Manchester United has forecast profit for 2018 below analyst estimates as higher player salaries eroded an increase in revenue following its return to the Champions League.
Broadcasting revenue for the first quarter of the club’s current financial year rose 31% to £38.1m (€42.7m), mainly as a result of participation in Europe’s elite club competition. The qualification drove player salaries higher as employee benefits grew 12% over the prior year.
Overall revenue for the first quarter came in at £141m, compared with £120.2m for the corresponding three-month period a year ago. United also posted a 33.3% rise in matchday revenue after playing two additional home games in the period,
The club has maintained its forecast for adjusted earnings, on an EBITDA basis, of £175m-£185m for the fiscal year, compared with an average £184.6m estimate of analysts.
United returned to the Champions League this season after winning the second-tier Europa League in May, during manager Jose Mourinho’s first season at the club. The absence from the top continental competition was just its second in 21 years.
Manchester United spent a reported £145m on players during the summer transfer window, including an initial £75m on Romelu Lukaku from Everton, a record price paid by an English club for a striker.
United was one of six clubs which recently attempted to negotiate a higher share of Premier League broadcasting rights.
Executive vice-chairman Ed Woodward is understood to have attended a meeting of executives and owners yesterday to discuss the best way to package rights for the next domestic auction.
Manchester United shares, listed in New York, have risen about 33% this year, and were up by nearly 2.7% in early trading yesterday.
The share performance reflects increased investor interest in the company’s digital strategy, as well as the team’s improved on-field performance, said JPMorgan & Chase analyst Alexander Mees, who maintains an ‘overweight’ rating on the stock.
reporting by Reuters)