Manchester United’s Champions League Return Provides Profit Lift
(Bloomberg) -- A return to Europe's top knockout soccer tournament helped Manchester United Plc boost quarterly profit, even as the pandemic wiped out ticketing revenue by keeping fans out of stadiums.
The world's fourth-biggest soccer club by revenue reported operating profit of 48.5 million pounds ($67 million) its fiscal second quarter, up 33% from 36.5 million pounds in the same period a year earlier. That followed a 68% jump in broadcasting revenue to 108.7 million pounds due to participation in the UEFA Champions League, United said in a statement after Thursday's close of trading in New York, where its shares are listed.
The northwest England-based team, which ranked behind FC Barcelona, Real Madrid and Bayern Munich in Deloitte LLP's 2021 Football Money League, returned to Europe's leading club competition this season after failing to qualify for the 2019/2020 edition. And while United was knocked out in the group stages this time round, the club is on course to qualify for next season's tournament, sitting second in England's Premier League.
“The commercial opportunities for MANU look limitless,” Jefferies analyst Randal Konik wrote in a note, pointing to potential future growth in broadcasting revenue, and the prospect of a rebound in takings at the club's 76,000-seat Old Trafford stadium. “This all means very predictable revenues that can grow long-term with stable margins and growing cash flows.”
Konik upped his price target to $22 a share from $19, indicating about 17% upside from Thursday's closing price of $18.83. The shares have rallied about 12% year-to-date after the U.K. government outlined a plan for bringing fans back into stadiums. United's quarterly matchday revenue plummeted 96% as games were played behind closed doors.
“Our focus remains on preparing to return the fans to Old Trafford,” Executive Vice Chairman Edward Woodward said on an analyst call after the results. “We are hopeful of crowds ramping back up to full capacity next season.”
©2021 Bloomberg L.P.
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