When revenue gets infected by a virus: ManUtd Lost £70 million

The English football giant with hundreds of millions of fans around the world saw its annual revenue drop by £118 million year-on-year. However, future prospects may not be quite so bleak after all. The club remains one of the most prestigious brands in the world of sports.

Manchester United is not just a name in football, but across the entire sports and entertainment industry. With a valuation of $3.81 billion, the "Red Devils" ranked 10th overall in Forbes magazine's annual list of the world's most valuable sports clubs. However, the famous club has been going through tough times recently, and not just on the pitch. The team from the iconic Old Trafford stadium is also posting weaker financial results, further impacted by the coronavirus factor.

According to newly released figures for the fiscal year ending June 30, ManUtd recorded revenues of £509 million, despite earlier forecasts projecting as much as £580 million. In practice, this is the lowest figure in the past five years. Broadcast rights income also dropped sharply—from £241 million the previous year to just £140 million now. The club’s overall debt nearly doubled year-on-year, and similar downward trends could be listed further. However, according to experts, there’s no need for excessive panic.

Positive market response
"The drop in revenue was significant, but largely expected. Certainly, more could have been done to prevent the pandemic from cutting £70 million off projected revenues, but there are other aspects that support a more positive outlook," said sports analyst and football manager Jozef Tokos for Economic Daily. One key development is that, for the first time in a long while, the club moved to cut expenditures, particularly wages. And after publishing its financials, the market responded positively. The club’s stock jumped over 9 percent on the New York Stock Exchange after the results were announced and maintained a solid level even yesterday afternoon. "This clearly proves that even though the initial numbers may look bad, it shouldn't stop the club from continuing on a successful path," Tokos added.

Robust financial health
The current financial results of the 20-time English champion already reflect the first three to four months of the pandemic, which hit the global sports industry hard. However, according to Tokos, the Manchester United brand is so economically strong that it should weather this turbulent and uncertain period without major disruption. "Yes, the numbers may look bad at first glance, but with a closer analysis of the various segments, the picture isn't so grim. It definitely could have been worse. I see this more as a light at the end of the tunnel," the sports analyst concluded.

Improving transfer policy
One area where United urgently needs to improve is the efficiency of money spent on new team signings. Players like Lindelöf, Fred, Bailly, and Mkhitaryan drained the club’s budget considerably, but their on-field contributions were disproportionate to their massive transfer fees. There is also debate over whether it was necessary to spend €87 million last summer on center-back Harry Maguire. The boom times are, at least for now, over—and even super-rich clubs will have to cut costs to some extent. In United's case, this won’t just mean lowering the price of new acquisitions, but above all, making the right choices when it comes to player selection.