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'A merchandising company that happens to play football'

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As Manchester United report a good set of quarterly results, it is worth recalling the description of them in the Lex column of the Financial Times last month: 'a merchandising company that happens to play football.'

Lex noted: 'Runaway success at flogging clobber means winning matches matters less to Manchester United than other European giants.  Bar one season, the Red Devils have been in the top three clubs by sales for the last two decades, in spite of not winning England's domestic league trophy since 2013 nor the Champions League since 2008.   In the same period Barcelona and Real Madrid have won nine domestic and four major European honours between them.'

In the three months to December, United's operating profits rose 15.3 per cent to £37.6m, while revenues were up 18 per cent  to £157.3m from £133.8m compared to the same period in 2015.   United was helped by healthy climbs in its broadcasting and matchday revenues, which were up 41 per cent and 27 per cent respectively.

Player acquisitions meant that its wage bill and related expenses rose by £7.9m or 14.2 per cent to £63.6m in the quarter.  This weighed down on its net income which slipped by nearly 6 per cent to £17.5m. Debt was up by 27 per cent to £409.3m because of the post-referendum fall in the value of the pound.

Commercial revenues, nearly half of gross sales, have risen by 130 per cent since 2012.  At the end of last year the club concluded an agreement for its first ever branded pillows and mattresses with company Milly, offering its supporters a sounder sleep.   Sponsorship revenues were up 3.5 per cent in the quarter. Growing commercial revenues are needed to offset wages, which grew by more than 10 per cent annually for the past few seasons.

Continued under performance on the pitch will eventually affect revenues.   Money from the deal with kit sponsor Adidas could fall by nearly a third if United fail to qualify for the Champions League for two successive seasons.  By contrast, qualification could yield a double digit percentage revenue boost. As Lex notes, 'For shareholders this season is a financial six pointer.'