Manchester United posts net loss
LONDON -- Manchester United posted a net loss of $132 million last year, when interest costs on the club's debts negated record revenues.
In the financial results released Friday for the fiscal year ending June 30, United reported record revenues of $455 million and the club's operating profit exceeded $159 million for the first time. But those figures were offset by payments to manage the club's debt of about $1.2 billion and costs related to a bond issue.
"We have a long-term financing structure in place, excellent revenues that are growing, we are controlling our costs -- total wages are 46 percent of turnover -- and we can afford the interest on our long-term finance," said David Gill, United's chief executive.
The Premier League giant's record loss follows a $40.6 million profit in the previous financial year, when the trade of Cristiano Ronaldo to Real Madrid brought in a record $127.5 million. The 18-time English champions didn't sign a big-name player to replace the Portugal winger, despite cash reserves of $261 million reported in the financial figures Friday.
The club, which is owned by the Glazer family of Florida, spent about $40 million on new players in the most recent offseason, while neighbor Manchester City laid out more than $191 million to strengthen its squad.
"We still have cash to invest in players and to give good contracts to players and we are comfortable with the business model," Gill said. "We have money in the bank so there is zero pressure ... to sell any star player whether it is Wayne Rooney or X,Y or Z."
After seven matches of the season, United is third in the standings -- five points behind Chelsea and a point back of Manchester City. The latest financial results will provide more ammunition for the protest movement that fans launched in January in a bid to force out the Glazers, who also own the Tampa Bay Buccaneers.
Similar protests at Liverpool, coupled with crippling debts following a leveraged takeover, have forced American co-owners Tom Hicks and George Gillett Jr. to put that club up for the sale. They are now trying to block a $476 million bid by the owners of the Boston Red Sox, saying the offer undervalues the club.
United had no debts before Malcolm Glazer took control in 2005.
The new figures show interest payments chewed up $64 million as the club's debts rose slightly to $832 million. That figure does not include $359 million of payment-in-kind loans, which carry an interest rate of 16.25 percent and don't appear in the latest accounts.
Part of the losses relate to one-time payments of $75 million after bank loans were turned into a seven-year bond issue that raised $804 million earlier this year to replace long-term financing and reduce debts to hedge funds.
Forbes magazine recently estimated that United is worth $1.8 billion -- making it the most valuable soccer team in its rankings for the sixth straight year.
Copyright 2010 by The Associated Press