Areas of concern as Man United reports its 2017 financial results
Yesterday Manchester United reported 2017 financial results (all amounts are in million pounds). Since the audit is still in progress, full version of annual report is not yet published. Instead, condensed financial information was reported. Let's review key things:Total revenue increased by 1.5% to 590 million. Matchday decreased by 1.6% which is due to less matches played comparing to previous season (ManUnited won Europa League that year). Commercial revenue, which was key driver of club's revenues in the past years, remains the same at ~275 million, even though United reported 7 new sponsor deals. As such, this year broadcasting revenue was the main revenue increasing factor, boosting by 5% (which is result of finishing 2nd comparing to 6th a year before). Overall this is concerning factor, as such development in club's revenues make MU dependent on football results, which are not the best under Mourinho. Salaries increased by 12.3% to 296 million. Main factor, per Woodward, are Champion's League bonuses awarded to squad last year. Hmm, if losing to Sevilla in quarter finals boosts salaries by 12.3%, what happens is United reaches the final?Net profit from sale of player's registrations is moderate 18 million (Januzai to osiedad). As I mentioned previously, financial fair play is not working properly, as clubs can legally cheat with sales of players.Gross debt is still significant at 476 million, decreasing by 11 last year. The debt was incurred as part of Glaser's takeover of the club back in the day. Seems like MU cannot pay it in advance, as available cash is 242 million (enough to pay a bigger porting than 11 million). This means that annual interest expense of ~20 million is an unfortunate reality for the club in the nearest future.The result for the year is net loss of 37 million. Main factor here is decrease of corporate tax rate in the US (35% -> 21%), which led to reassessment of deferred tax asset. That's unfortunate, as club pays taxes in the UK, while utilized deferred tax losses incurred in the US. Anyways, this is a non-cash loss, so does not affect club's performance. Stock market assessed results negatively - MANU stock dropped by 2%: Trade volume was very low, as investors were interpreting results and hesitant to trade. Overall, I'm waiting annual report to perform more detailed and thorough analysis.