SBD Global/November 15, 2012/Finance

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  • ManU Releases First Quarter Results, Revenue of $121M, Debt Down To $570M

    ManU announced an increase in revenue, driven by sponsorship.

    ManU announced financial results on Wednesday for the first quarter of '13 ending Sept. 30. According to a press release from the club, total revenue was £76.3M ($120.9M), an increase of 3.4% from the previous quarter. Sponsorship revenue increased 32.4% as a result of 10 new sponsorship deals: General Motors, Bwin, Toshiba Medical Systems, Yanmar, Kagome, Santander, Sinsei Bank, MBNA, Bakcell and Fuji TV. ManU Exec Vice Chair Ed Woodward said, "Manchester United had a record first quarter driven by our commercial operation, which continues to experience extremely strong global revenue growth in new media and mobile, retail merchandising and sponsorship." The club projects revenue for fiscal '13 to be between £350M-360M ($555M-570.5M).

    RED DEVILS REDUCE DEBT: In London, Jamie Jackson reported the club "would have made an overall loss had it not been for a £26.5M ($42M) tax credit received by registering its holding company in the tax-free haven of the Cayman Islands." In the three months to the end of September, "the club's debt fell to £359.7M ($570M), a drop of 17% from the £433.2M in the same period last year." Woodward said: "The team has also made a strong start to the 2012-13 season -- currently first place in the Premier League and our Champions League group" (GUARDIAN, 11/14). The MANCHESTER EVENING NEWS reported "broadcasting revenues in the first quarter were down because the club played one more Champions League game in the same period of '11, two fewer Premier League matches were televised this year and it received less TV money because the team finished second in the Premier League but first in '11-12." Matchday income "grew by 13.3%, mainly as a result of fees earned by staging Olympic Games matches at Old Trafford" (MANCHESTER EVENING NEWS, 11/14). BLOOMBERG's Tariq Panja wrote "the team has been boosted by its commercial division." Revenue rose 24% to £43M ($68.1M) following deals with companies such as Japan’s Shinsei Bank Ltd. and Toshiba Medical Systems after the signing of Japanese midfielder Shinji Kagawa before the season. Woodward said on a conference call, "A deal with Japanese drinks manufacturer Kagome was struck by staff at a new Hong Kong sales office that opened in August" (BLOOMBERG, 11/14).

    GLAZER MANIPULATIONS: The PA reported ManU's "finances were under fresh scrutiny" Wednesday when it emerged that its "gross debt was reduced to £359.7M after the club’s owners ‘retired’ a further £62.6M ($99.2M) worth of bonds during the first financial quarter." The results are bound to receive a negative reaction from some fans groups, "particularly as reports in the U.S. overnight indicated the club had to be forced to disclose greater information" than it initially wanted when it launched its IPO in the summer. A report on the Bloomberg financial wire said that "United Owner Malcolm Glazer initially did not disclose the true state of the finances before its recent initial public offering." Letters between club execs and the SEC show that "the regulator demanded and received further disclosure about debt and benefits for Glazer and members of his family in the IPO" (PA, 11/14). BLOOMBERG's Linda Sandler reported "what investors and fans were not able to see until a month after the team raised $233M selling shares, was the owners’ behind-the-scenes resistance to disclosing more transparent earnings data, details about Glazer’s debt and what the IPO money was to be used for." The SEC-ManU letters "show seven Glazer family members have kept almost total control of the club after the IPO, saddling the team with higher taxes to evade potential shareholder lawsuits by incorporating offshore." The club "reported a loss in its first quarterly financial results after the IPO as the team failed to win a trophy either in domestic or European competition in '12." ManU Dir of Communications Phil Townsend said, "As with every SEC filer, we went through several rounds of SEC comments. Our interaction with the SEC was very positive, and we look forward to many, many years as a U.S. public company" (BLOOMBERG, 11/14).

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  • ManU Backs Financial Fair Play Plans Hoping To Improve EPL Clubs' Finances

    ManU is backing plans for the Premier League to adopt its own version of UEFA’s Financial Fair Play regulations to "improve the finances of English football’s top-tier clubs," according to Roger Blitz of the FINANCIAL TIMES. The regulations, which require clubs to live within their means, "apply only to clubs that qualify for UEFA’s competitions" -- the Champions League and the Europa League. EPL clubs will "renew discussions" Thursday on options to introduce cost controls across all 20 clubs, and ManU has said that it will "back calls for UEFA’s measures to be adopted by the league." ManU Exec Vice Chair Ed Woodward said, “We are supportive of proposals broadly mirroring Financial Fair Play which we abide by already, and those discussions have developed.” Woodward said there were “a number of parameters being discussed, one of which is break even” (FINANCIAL TIMES, 11/14).

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  • Borussia Dortmund CEO Shuns Investors After Posting Record Income

    Bundesliga club Borussia Dortmund CEO Hans-Joachim Watzke's message for institutional investors after Germany’s only listed football team posted the biggest profit in its history was "don’t buy our shares," according to Alex Duff of BLOOMBERG. Watzke said that "he doesn’t want shareholders disrupting his club," which announced record annual net income of €34.3M ($43.7M) on Aug. 28 after winning back-to-back Bundesliga titles. That’s a bigger profit than Real Madrid, which calls itself "the world’s biggest sports team by sales." Watzke said that most shareholders "are fans with an emotional tie" to Borussia. Investment firm Silvia Quandt & Cie analyst Klaus Kraenzle said that institutional investors could "pressure the club to increase profit at the expense of sporting success." The combined stake of money managers rose to 14.2% from 6.5% since Aug. 26. Watzke: “We would not like to have them. It’s very important that I am free to make decisions." The biggest shareholder is a "crazy" fan of the team, Bernd Geske. Geske, a board member, holds 11.6% (BLOOMBERG, 11/13).

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  • Swiss Olympic Receives $26M From Switzerland's Lottery Companies

    Swiss Olympic "has received CHF24.6M ($26M) from Switzerland's lottery companies Swisslos and Loterie Romande in '11," according to Peter Jegen of the NEUE ZÜRCHER ZEITUNG. Swiss Olympic's annual report revealed that the total payout from the Sport-Toto-Association was exactly CHF24.604,033.35, "which was about CHF100,000 ($105,700) higher than what the organization originally budgeted." The amount represents about half of Swiss Olympic's annual budget of CHF54.3M ($57.4M), which means it also represents a majority of the CHF21.6M ($22.8M) that Swiss Olympic distributes to its 83 member organizations. Besides Swiss Olympic, "the country's football organizations also profit from lottery money." An agreement between the Swiss Football Federation (SFV), Swiss Football League and the Sport-Toto-Association "has been recently extended for three more years." The SFV and the SFL already received a check of CHF4.5M ($4.8M). The amount primarily benefits youth football but also coach and referee training & education as well as women's football (NZZ, 11/14).

    Swiss Olympic's 2011 annual report (German).

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