Manchester United NYSE listing aids debt reduction - CNBC Africa

Manchester United NYSE listing aids debt reduction

Financial

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The English Premier League club’s gross debt decreased from 436.9 million pounds in 2012 to 389.2 million pounds in 2013.

“The key here is that they’re paying down the debt that they took out when the Glazers, the current owners, bought the club. That should reassure fans and, as long as they carry on performing well, it should be an onward march upwards,” ETX Capital’s Joe Rundle told CNBC Africa.

Manchester United listed on the New York Stock Exchange in 2012 in order to service some of the club’s substantial debt.

“It does seem to be a success. They’ve listed in America – that was a bit of a shock that it wasn’t in the London market and the fans were pretty angry about that, but these figures should go a long way to calm down the fans,” Rundle added.

According to market research agency Kantar, the English soccer club has 659 million followers worldwide, 173 million of which reside in Africa and the Middle East. 

“If you strip this back into a brand, they’re a hugely successful brand. They have a hugely loyal following throughout the world and the Glazers do seem to be able to turn that into revenue and turn it into profit,” Rundle indicated.

The club reported that total revenue increased by 13.4 per cent from 320.3 million pounds in 2012 to 363.2 million pounds in 2013. Commercial revenue contributed 152.5 million pounds to that amount.

Total operating expenses increased by 8.8 per cent to 310.3 million pounds in 2013 and cash generated from operating activities increased from 30.9 million pounds to 57.2 million pounds.

Net income increased from 23.3 million pounds in 2012 to 146.4 million pounds in 2013 and adjusted net income increased from 4.5 million pounds to 17.2 million pounds.

“I think the test is on the field. The profit, although up 280 per cent, is only 17 million pounds – that’s not a huge profit. If at the end of the season they are struggling, there’s going to be pressure for them to make a big acquisition. Just one of those deals could blow a big hole in the profitability of this business,” Rundle explained.

“The Champions League is absolutely key for a lot of clubs in Europe, particularly clubs that are run as a business rather than rich billionaire’s play toys. If Manchester United don’t make the Champions League – that changes their business model. That will be a big downward move in the shares and I think that would trigger them having to spend a lot of money in the transfer market.”       

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