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Manchester United 2nd-Quarter Profit Off 61% on Higher Operating Expense, Year Earlier Tax Benefit

02/14/2013 | 07:45am US/Eastern
  By Tess Stynes 
 

Manchester United PLC's (>> Manchester United PLC) fiscal second-quarter earnings fell 61% as the British soccer team posted higher operating expenses and the year-earlier period included a tax benefit.

Manchester United last month acquired British Sky Broadcasting Group PLC's (>> British Sky Broadcasting Group plc) one-third minority stake Manchester United Television, giving the sports club complete ownership of the unit.

The famed soccer club is owned by the Glazer family, headed by American businessman Malcolm Glazer. The role of the Glazers, who took on debt to purchase the team for $1.47 billion in 2005, stirred the ire of some fans, who worried the new debt would restrict the team's ability to keep and attract top talent. In an effort to reduce its debt load, Manchester United went public on the New York Stock Exchange in August.

For the quarter ended Dec. 30, Manchester United reported a profit of 16.2 million British pounds ($25.1 million), or 10 pence (16 cents) a share, down from GBP42.1 million, or 27 pence a share, a year earlier. The year-earlier period included a tax credit of GBP22.9 million. Revenue increased 8.7% to GBP110.1 million ($170.7 million).

Analysts polled by Thomson Reuters most recently projected earnings of GBP15.83 on revenue of GBP111 million.

Operating expenses increased 11% as staff costs increased 14% amid new player signings, player wage increases and growth in commercial headcount.

Commercial revenue jumped 29% amid growth in sponsorship deals, which rose 49%.

Matchday revenue, which includes ticket sales, was down 2.8%, mainly because of one less domestic cup home game being played in the period.

Broadcasting revenue rose 4.8%.

The company had gross debt of GBP366.6 million, compared with GBP439 million a year earlier.

BSkyB is 39% owned by News Corp. (NWSA, NWS.AU, NWS). News Corp also owns Dow Jones & Co., publisher of this newswire and The Wall Street Journal.

Shares of Manchester United, which affirmed its fiscal year guidance, closed Wednesday at $18.71 and were inactive premarket. The stock is up 21% since the Manchester United Television announcement.

Write to Tess Stynes at tess.stynes@dowjones.com

Subscribe to WSJ: http://online.wsj.com?mod=djnwires

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