United profit plummets by $200m after Champions League exit

Manchester United, knocked out of the UEFA Champions League too soon, have lowered their profit prediction. Forecasted income from TV rights, sponsorships, and match-day profits has taken a major hit due to the club’s failure to advance in the competition.

According to Manchester United‘s board of directors, the club’s early elimination from the Champions League was an expensive mistake. Due to their poor defensive play, United suffered an early group-stage elimination.

The Red Devils allowed 15 goals in their six games, and as a result, finished last. It only meant they would not advance even to the UEFA Europa League.

Due to the significant financial consequences of this loss, the club will need to reevaluate its profit forecasts. Because of their early exit from the top European competition, United’s revenue aspirations have shrunk.

What does Champions League exit mean for United?

On paper, the club’s expected income was somewhere between $824-$862 million, as per Financial Times. Because of the Champions League shock, however, the prediction has been lowered to an updated estimate of $805-843 million.

The revised forecast for adjusted core profit ranges from $158 to $190 million, down from $177 million to $209 million in the prior estimate.

Manchester United’s net loss for the quarter that ended September 30 was $32 million, down slightly from $33 million in the same period last year. The quarter witnessed an increase in operational expenditure and costs associated with players’ pay.

It only put further strain on the club’s financial situation. Revenue from broadcasts increased by 12.3% to 43 million pounds, or $54 million. Still, the Champions League departure is expected to cause a decline.

Participating clubs get a cut of the prize money from UEFA, the governing body of soccer in Europe. Thus, there will be even more pressure on manager Erik ten Hag as a result of this predicted decline in income.

After the news broke, Manchester United stock dropped to $19.92. In monetary terms, it amounts to a loss of almost $200 million for the club.

Another hurdle for Sir Jim Ratcliffe

One shareholder who may feel the effects of the lowered profit prediction is Jim Ratcliffe. The British billionaire bought a 25% share in the club in the hopes of turning its fortunes around.

In light of this financial prediction drop, it is abundantly evident that major teams’ ability to participate in the Champions League. Especially, since it directly impacts their financial stability and performance.

The difficulty that billionaire Sir Jim Ratcliffe has in turning around the club’s finances has been highlighted by this. On Christmas Eve, the Englishman reached an agreement to purchase a minority stake in Manchester United for around $1.6 billion.

Speculation about a takeover of the club persisted for the better part of last year. Sheikh Jassim Bin Hamad al-Thani of Qatar had bid for the whole club for a year before this deal finally came through.

Under the terms of the agreement, Ratcliffe’s INEOS business assumed control of the club’s soccer initiatives. Nevertheless, the long-time owners, the American Glazer family, retain a controlling share and oversee the club.

PHOTOS: IMAGO.