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Inside Manchester Utd.'s Finances: Sponsor Revenue Outweighs Its Infamous Debt

Manchester United published some financials recently and, no surprise, the club is still mired in the debt that has so angered the fans of the biggest sports franchise on the planet. But debt aside, Man. Utd. is actually doing everything else right. The growth of the club's sponsorship revenues do not bode well for the fans' campaign against the club's American owner, Malcolm Glazer.

Here's a look at the club's brand and sponsor financials, which you can download yourself here. Man. Utd.'s sponsorship revenues are up and they have room to keep growing. Even though it has a new, £80 million ($125 million) shirtfront deal with insurer Aon, the club is far from dependent on that money. It grew revenue last year from £278.5 million to £286.4 million:

Notice how ticket sales and TV broadcast fees are flat -- as I've said before, there is a structural ceiling on the revenues that any club can generate from its fanbase. Its sponsor revenue ("commercial turnover") is the real growth provider at the club. And that growth continued into the first half of the current football season (note that the club's fiscal year roughly follows the fall-through-spring international soccer season, not the calendar):

Here are the same numbers presented in a more visually intuitive way. Note that the sponsor revenues (in blue) are the only piece of business at Man. Utd. that is adding significant value:

Man. Utd.'s other big sponsor is Nike (NKE), which makes and sells its shirts, but combined Aon and Nike form less than half of all the club's commercial revenues, and their share of those revenues is dropping even as those cash streams increase (click to enlarge):

Now compare Man. Utd.'s finances to those of Arsenal, discussed in a previous BNET post. Arsenal, like Man. Utd., is one of the Premier League's "Big Four" clubs, yet its income statement makes it look like a minnow-in-waiting. There is no significant growth in Arsenal's sponsor revenue, and it is highly dependent on a one-off real estate deal for income.

As far as the debt is concerned, the Manchester fans are right: It's staggering. It currently stands at £489.4 million in total debt due, on which Man. Utd. is making roughly £35 million a year in interest payments.

But overall, this bodes well for Man. Utd. as the season draws to a close and the club goes into the summer transfer market to buy new players. It has the cashflow to make acquisitions that Arsenal does not, debt or no debt. Thus the campaign to oust Tampa Bay Bucs' owner Glazer and his family from the club should gird itself for the long haul.


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