This is the first season in a long time for Manchester United where they are playing without Champions League. The fans can feel the pinch already, as not being part of Europe’s elite while all your main rivals, including the noisy neighbours, are going away to exotic locations midweek.
But it is not just the footballing side that’s hurting Manchester United. Lost revenue from matchdays, which includes both the tickets as well as the tv money, is putting a dent on the balance sheet too.
In accounts published by the club on Tuesday, Manchester United reported a decrease of 9.9 percent revenue in the first quarter of the 2014/2015 financial year, which ends September 30, with the year-on-year figure at £88.7 million. Even the adjusted earnings were down by close to 9 percent at £20.3 million, but they did record a profit of £8.9 million, which was an improvement over the small loss they made last year.
What does it all mean?
Bluntly put, it just means that Manchester United need to find a way back into the top 4, and fast. If you forget the fans for a minute and look at this on a purely business level, this performance is not satisfactory at all, especially coming on the heels of the stock exchange entry by the club. If investors don’t see any profits being made by the club, they will see no value in having the shares in their portfolio and will look to sell. And if this happens, the value of the club will fall, and the Glazers will lose a huge chunk of money.
And it’s not just the stock market that will hurt Manchester United if they continue to not qualify for European football. Adidas have a clause written in their record 10 year contract with the club that the team must qualify for the Champions League by the end of the 2016/17 season, or else they will face a penalty of 23 million pounds. So, the 75 million pounds a year deal will drop to 52 million pounds, and that will once again hurt the balance sheet.
Significance for the fans
For most fans, the daily workings and finances of the club wouldn’t matter much, but they will want their club in Champions League too. But they might end up having to bear the brunt of the fall in revenue in terms of ticket prices. The Glazers, in a bid to ensure that the balance sheet is not in the red, may turn to the fans to get more revenue from gate receipts, that will offset the loss in tv money and sponsorship.
Of course, the drop that they have faced in the first quarter has been somewhat offset by all the various sponsorship deals that the club have signed, but their continued absence from the Champions League would mean these sponsorship deals would also fall by the way side.
The fans will hope all this conjecture will not come to fruition, and the club gets back into the top 4 by the end of this season itself.