Manchester United football club posted a 25% decrease in profits for the first quarter of 2017, due to their failure to qualify for the UEFA Champions League competition, and risk losing £20 million in sponsorship deal with Adidas.
A clause in Manchester United’s sponsorship agreement with Adidas states that they could lose over £20 million if they fail to qualify for the Champions League again next year. They had signed a 10-year deal with the German sportswear giant worth around £750 million.
“There is a clause in the Adidas contract that applies if we are missing from the Champions League for two years in a row,” said United’s chief financial officer Cliff Baty.
“An example would be if we [were set to receive] £70m [in a given year], we would not receive £21m [of that].”
The club’s match-day revenue decreased by 32.3% during the period because of fewer home fixtures, as well.
Ed Woodward, Executive Vice Chairman of Manchester United, commented, “While our financial results for this quarter reflect the impact of our non-participation in the UEFA Champions League, we are pleased that we remain on track to deliver record revenues for the coming year. During the quarter we added a number of top quality players to our squad, which once again demonstrates our determination to challenge for trophies.”
While the commercial revenue rose, 4.4%, the total revenue fell from £123.6 million to £120.2 million.
They announced five sponsorship deals in the quarter, including EA Sports, Tag Heuer and Apollo as global sponsors; and the Hong Kong Jockey Club as a regional sponsor. Meanwhile, Virgin Money was announced as the official UK financial services partner.
Manchester United’s net debt was £337.7 million ($419.4 million), an increase of £51.5 million over the year, stating the impact of foreign exchange rate movements on their USD denominated debt, as the reason.
SOURCE:Isportsconnect
