Financial Analysis of Manchester United

The assignment provided is a comprehensive financial analysis of Manchester United, including an income statement and balance sheets. The report covers various aspects such as revenue, profit, net spend, and transfer activities. It also mentions several research papers related to football clubs' financial performance, individual differences in speech recognition, and player fatigue status. Additionally, it references news articles about Manchester United's record-breaking financial figures.

Individual Report

Table of Contents
Brief introduction of the Manchester united ...................................................................................1
Mission, vision and objective of the company.................................................................................1
A critical review of the financial performance and health of the
company using the financial papers for Manchester united.............................................................2
RECOMMENDATION...................................................................................................................5
CONCLUSIONS..............................................................................................................................8
REFERENCES................................................................................................................................9
APPENDICES...............................................................................................................................11

INDEX OF TABLES
Table 1: Ratio analysis of Manchester United for 3 recent years....................................................6
Table 2: Comparing the financial analysis of Manchester united with Chelsea plc........................7

Brief introduction of the Manchester united
It is the professional football club in England and it has many competitors in the world. It
has many branches across the world. It follows various strategies and approaches that helps to
get higher performance in a world. 20 times they won the matches in the world and it has great
brand image in a world. It is the highest earning football club in the world for 2015-2016 and it
has higher growth in a world. Annual revenue of the firm is €689 million and this is the most
famous and valuable club in a world. It follows different types of strategies and approaches to
win. They have huge number of market share and shareholders that gives more advantages to the
company. It took appropriate training and development for the effective planning. Management
of the firm gives an effective plans and polices to the member of the club that gives higher
performance and also helps to get desired target in the world. They also give effective training to
the players so that they can easily play well to win the matches. It also uses the promotional and
pricing strategies to get higher performance in the world.
Manchester united has main objective to become the world's famous football club. Fan club is
the competitor of this firm. It follows different types of strategies and approaches to increase
their sales revenue. Manchester united has good brand image in the world. It has many
shareholders and stakeholders that gives higher performance to a firm in the world.
Mission, vision and objective of the company
Manchester unites is the famous club in the world and they have good brand image in a
world. It uses different types of business strategies and approaches to increase overall firm
performance and productivity in the world. Main objective of this firm is to become the famous
football club in a world. It uses different types of marketing and business approaches that gives
more profit to the company. Management gives effective training and development to the
members to increase their firm performance in a world. Manchester firm follows various
strategies that helps to get higher profit in a world (Cavelti and et.al., 2012).
 Vision: main vision of this firm is to get higher performance and profit in a world. It
follows various strategies which helps to get higher profit in an industry.
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 Mission: Manchester united has the mission to become the best football club in a world.
They have main goal to become world best football club in the world (Tamati, Gilbert
and Pisoni, 2013).
 Business strategies: Company follows different types of business strategies that helps to
get higher performance and higher profit in a world. They have the objective to increase
their sales revenue and profitability by expanding the higher growth. Management
follows various business strategies that helps to get desired target in an industry. They
have many shareholders that gives more profit to the company (Lansdown, 2012). It also
helps to expand their business in a world. It updates the marketing infrastructure that
gives more enhancement to an entity. To get higher growth in the world firm must use the
promotional and marketing strategies. They are trying to increase the number of market
shareholders and combined with the other businesses which helps to get high profit in the
world. Management gives appropriate training and development to the member to get
desired goal in the world.
A critical review of the financial performance and health of the
company using the financial papers for Manchester united.
Manchester united is the most renounced and profitable football club and the first quarter
revenue in the year 2017 was about £141 million. The commercial revenue of the company
grown to about £6.2 million to £80.5 million as there were many friendly matches during the
summer visit of the club to US. Also in the champions league Manchester united won 4 matches
and were in the quarter final as well of the Carabao cup. With these achievements the financial
condition of the club rose and this also saw the salary increase of the employees and members of
club. While the gross debt of Manchester club was not changed since last quarter and an increase
in cash reserve to £216 million to £164 million last year. The net income of Manchester club was
about £7.9 million and in the next year it was estimated to rise till £10 million. There was a total
turnover of about £760 million in the year of 2017 as released in press (Manchester United post
record-breaking financial figures topping half a billion in revenue for second consecutive year,
2017). The famous magazine Forbes also valued Manchester united club at £3.63 billion and up
to 11% from the year before it ranked most valuable team in world. Commercial revenue of
Manchester was slightly higher than the broadcasting revenue which was around £31.4 million
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up to 12% whereas match day income were lower. And in the quarter of 2017 two global level
sponsorship deals was signed with ride hailing service Uber and Singapore firm Aladdin street.
Manchester united came to the top position after 11 years in January 2017 of the Deloitte
football money league with the highest annual revenue in the history of all the football club. If
the club fails to reach Champions league in the coming seasons Adidas would cut down
sponsorship by 30% with Manchester (Velayutham and Velayutham, 2016). This became the
first British club to break half billion mark and then developed on that position only the revenue
roused to £515.3 million to £581 million for the quarter end of June 2017. The operating profits
of club in January 2017 was about £80 million and earning of about £199 million before interest,
tax and deprecation. The new executive chairman of Manchester United club Ed Woodward said
“We concluded a successful season of 2016-17 with a total three trophies and then return into
Champions league football.” Although there are many other football clubs which are doing very
well in the league and their financial performance and health (Thorpe, 2017). The major
competitors of Manchester club are Liverpool, Chelsea, Arsenal, Real Madrid and Barcelona
football club. To analysis this competitor SWOT and PEST analysis need to be done:
SWOT analysis:
Strengths- they are the positive point of the club which makes it popular all over the world they
are:
-Manchester club is having the global brand image and is one of the most valuable football club.
-It is having very good marketing skills, global brand presence and very high quality of
merchandising.
-Manchester club is the most profitable and richest club in world.
-There are many sponsors of company like Audi, Nike, AIG, Thomas Cook etc.,
- At the moment the whole stadium has total seating capacity of about 76000 seats.
Weaknesses-
-Currently there are many financial problems which is faced by club.
-The whole Britain's market of football is very much saturated.
Opportunities-
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-In countries like India, China and USA there are growing popularity of football so club can tap
these countries as opportunities (Styles and Martin, 2017).
-And by this opportunity they will be able to do more advertising and brand will be more brand
visibility would be there.
Threats-
-Although it is having many good players but then also be best one are bought by other clubs.
-There always have been internal problems between the players and management.
-The expensive players were transferred and financial debts incurred.
PEST analysis
The decision of the club also has been affected by the external environmental factors like
the changes in tax rates, new laws, demographic and the government changes. The factors which
affecting the decision are political, economical, social and technological.
Political these factors consist of the laws which are made by government of the countries in
which they are operating into (Paramio-Salcines, Downs and Grady, 2016). There are about £1.5
billion dues which are pending on club and this figure was misappropriated by the owners of
Manchester club.
Economical there was an increased in number of players and officials and the post of their for
the employment bases. Manchester is having a positive influence on economy only because of
the official are from around the world (Kotula and Lee, 2015). The supporters of Manchester
club are mainly from the other countries and this is increasing balance of payment in country.
Average of £15 is spent by the officials on basic need ;like food and drink in a single.
Social there are number of people whether players, officials and fans from across the world who
are associated with the club and many people who interact all over the world because of football.
So this is very important factors as it is affecting the society in very positive manner and also
creating employment (Peeters and Szymanski, 2014). Manchester is united with a wide range of
culture as there are players who play for the club all across the world having diversified culture.
It is also the highest salary paying club in world to all its employees whether players of officials.
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Technological it has also contributed in the football games a lot as players are able to play night
matches with the help of electricity (Gregory‐Smith and O'Reilly, 2014). This technological
change has facilitated many people or fans of football to watch the game of football regardless of
there locations. Fans of the club can also now can gain information about Manchester club
through the use of internet. And if fans have missed any of the match of Manchester club then
they can watch it online as well this is because of technological changes or advancements.
Key performance indicators:
These are the indicators which helps the organisation in measuring efficiency of
workforce and of business in context with achieving the targeted goals. Thus, with the help of
such measurement of the firm will become able to manage the profitability, sales, marketing and
production of firm. However, there are several performance indicators such as:
Balance scorecard: In accordance with these measuring techniques the business makes'
analysis of overall day to day performances as well as it facilitates the strategies to enhance the
organisational performance. Thus, the scorecard also helps workforce to make the valuable
efforts in attaining the industrial targets as well as deal in the fair competition.
Bottom line: The final result of any task such as balances or the outcomes which are
known as the bottom line. Thus, the managers of an organisation will analyse the balances of
various previous periods and make innovative changes to enhance the firm's liquidity and
profitability which in turn helps in operational improvements.
Benchmarking: It is the techniques which in turn facilitate the organisation to make the
record of overall performances held in the firm while attaining the business objectives. Thus, it
helps in making the adequate decision as well as motivate to increase the efforts in business
operations.
Critical success factors:
These are the management terms which in turn helps the organisation in achieving the
targets as well as highlights the key results and success factors which motivates firm to make
efforts in attaining such goals.
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RECOMMENDATION
In accordance with the financial report of the organisation it can be said there is need to
pay more attention as well as need to implement various changes which in turn helps them in
having the adequate growth in coming year. However, it will be beneficial for Manchester
United to have sound economy in the company as they will be able to organise more matches
and will enhance the profitability in the coming time (Bi, 2015). However, there are some ratio
analysis which will describe the financial growth of this company in the recent three years
analysis such as:
Financial Ratio Analysis
Of Manchester United 2015 2016 2017
Particulars Formulas
amou
nt ratio
amou
nt ratio
amou
nt ratio
Profitability Ratios
Return On
Equity
Profit Available To
Owners *100 129
56.46
% 166
75.80
% 211
96.35
%
Average Equity 228.5 219 219
Return On
Assets Profit (LOSS) *100 129
18.59
% 166
20.72
% 211
26.11
%
Average Total Assets 694 801 808
Profit Margin Profit (LOSS) *100 129
32.66
% 166
32.23
% 211
36.32
%
Sales Revenue 395 515 581
Liquidity Ratios
Current Ratio Current Assets 240 0.74 367 0.908 399 0.964
Current Liabilities 323 404 414
Quick Ratio Current Assets-Inventory 240 0.74 366 0.906 397 0.959
Current Liabilities 323 404 414
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Table 1: Ratio analysis of Manchester United for 3 recent years
Interpretation: By considering the above listed table which reflects the financial health of
Manchester on the basis of 3 years of comparison. Thus, the comparison was made over the
profitability and liquidity of the organisation over such period. In accordance with the
profitability ratio there has been analysis which are based on the 3 years analysis as per return on
equity in 2015 the company has 56.46% while in 2016 it rises to 75.80% therefore it can be said
that the organisation has made growth in profitability as well as there has been increment in the
equity of owners. Hence, as per the 2017 there has been favourable Outcome comes from such
segmentation such as 96.35%. Thus, it can be said that currently the company in having the
adequate growth and profitability due to expansion of the stadium as well as increment in the
prices of tickets. Thus, it has provoked the financial stability of the firm.
However, as per the analysis on return on assets in 2015 it is 18.59%, in 2016 it is
20.72% as well as in 2017 it is 26.11% thus, it can be said over such years the company has
acquired the adequate growth as well as make the profitable earning such time. Hence, it can be
said that the operational activity of this club is consistently growing which in turn reflects in the
increment of the profitable gains of the business. Therefore, there has been analysis which are
measured in the profit margin of firm. Hence, in 2015 it is 32.66% while in 2016 it has the little
reduction for 32.23%. Hence, it can be said that there has been reduction in the profitability of
the organisation while in 2017 the margin increases to 36.32%. Hence, it can be said that there
has been adequate growth in such year as the company has acquired the good returns as well as
have the adequate selling. Hence, in accordance with the sale of the organisation over such years
the there has not been that much profitable selling or increment in the numbers of consumers.
Therefore, managers will be suggested that they must make increment in their selling and attract
more consumers.
On the other side, the liquidity ratios of the firm in such years which are measured on the
current and quick ratio segmentations describes that, in the year 2015 the current ratio is for 0.74,
in 2016 it is 0.908 and in 2017 it is 0.964. Therefore, it can be said that there has been increment
in the current liability in such years but the not more than as compared with the current assets.
Hence, it reflects the ability of the organisation in terms with meeting the debts of the company.
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However, as per the quick ratios of the organisation in such years there has slight differences as
compared with the current ratios such as in 2015 it is 0.74, in 2016 it is 0.906 and in 2017 it is
0.959. Therefore, it can be said that the inventory or current assets of firm has increases in such
period as well as reflected the adequate growth in such time.
Comparing with Chelsea FC PLC:
In terms of obtaining the adequate information of the profitability Manchester as
compared with the rivalry firm Chelsea it can be understand as per comparing the financial
health of both the organisation on ratio analysis thus, it will help stakeholders or investors to
analysis the growth of business over such period. Hence, it will help them in analysing the
profitability or both the organisations and make the adequate investment decision which in turn
bring them fruitful returns over their invested capital.
PARTICULARS
Manchester
United
Chelsea Fc
Plc
2016 2015-2016
Formulas
Amount
(million) Ratio
Amount
(000) Ratio
Profitability Ratios
Profit Available To Owners *100 166 75.80% -15858 -48.72%
Average Equity 219 32550
Profit (LOSS) *100 166 20.72% -15858 -0.31%
Average Total Assets 801 5075311
Profit (LOSS) *100 166 32.23% -15858 -64.26%
Sales Revenue 515 24677
Liquidity Ratios
Current Assets 367 0.908 10162118 1.221
Current Liabilities 404 8323891
Current Assets-Inventory 366 0.906 10161118 1.221
Current Liabilities 404 8323891
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Table 2: Comparing the financial analysis of Manchester united with Chelsea plc
Interpretation: In order to analyse the profitability of Manchester and Chelsea plc there
has been measurement presented for both the companies over ratio analysis. Hence, it can be said
that there will be fruitful gains in the business as to meet the adequate profitable gains as well as
make the fruitful increment in such operational efficiency. Thus, in accordance with the
profitability ration in the year 2016 Manchester has 75.80% of the gains while Chelsea has
reflected the negative balance of -48.72%. Thus, it can be said that Manchester is earning in the
fruitful way as well as haver the profitable turnover in such period as compared with the Chelsea.
Thus, the operational performance of Manchester is quite better than such rivalry firm.
However, in terms with the liquidity of both the firms which reflects that Chelsea plc is
more capable in meeting the short and long term debts as compared in Manchester. Thus, as per
the shareholder view point it can be said that Chelsea is capable of making payments to its debts
as well as meet the capital expenditure on time. However, it will be recommended to managers
or stakeholders of firm that they must make increment in the profitability as well as make
increment in the operational activity which in turn helps the firm in meeting such goals of the
business.
From the above individual report on Manchester United club and its financial
performance it has been concluded that it is the most renowned football club. The main mission
of the club is to be top most ranked football clubs in world with the best quality of players
employed. It is at present facing many financial problems as the owners of the club has
misappropriated the revenues. The club is also having the forthcoming summer tour feature one
game in Norway and five games in US. So for this they need to do planning and manage the
funds according to their budgets.
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REFERENCES
Books and journals
Bi, Y., 2015. Integration or resistance: The influx of foreign capital in British football in the
transnational age. Soccer & Society. 16(1). pp.17-41.
Cavelti, M. and et.al., 2012. Assessing recovery from schizophrenia as an individual process. A
review of self-report instruments. European psychiatry. 27(1). pp.19-32.
Ecer, F. and Boyukaslan, A., 2014. Measuring performances of football clubs using financial
ratios: the gray relational analysis approach. American Journal of Economics. 4(1). pp.62-
71.
Ferguson, A. and Moritz, M., 2015. Leading: Learning from life and my years at Manchester
United. Hachette Books.
Gregory‐Smith, I., and O'Reilly, C.A., 2014. Appointments, pay and performance in UK
boardrooms by gender. The Economic Journal. 124(574).
Kotula, M., and Lee, C.K.M., 2015. Strategic sourcing supplier selection misalignment with
critical success factors: Findings from multiple case studies in Germany and the United
Kingdom. International Journal of Production Economics. 166. pp.238-247.
Lansdown, T. C., 2012. Individual differences and propensity to engage with in-vehicle
distractions–A self-report survey. Transportation research part F: traffic psychology and
behaviour. 15(1). pp.1-8.
Paramio-Salcines, J. L., Downs, P. and Grady, J., 2016. Football and its communities: the
celebration of Manchester United FC’s Ability Suite. Soccer & Society. 17(5). pp.770-791.
Peeters, T. and Szymanski, S., 2014. Financial fair play in European football. Economic Policy,
29(78), pp.343-390.
Styles, J. and Martin, R., 2017. The Promotion of Physical Literacy through an “Active
Classroom” Environment: A Case Study of the Manchester United Enterprise Foundation.
Advances in Physical Education. 7(02). p.168.
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Tamati, T. N., Gilbert, J. L. and Pisoni, D. B., 2013. Some factors underlying individual
differences in speech recognition on PRESTO: A first report. Journal of the American
Academy of Audiology. 24(7). pp.616-634.
Thorpe, R. T., 2017. Monitoring player fatigue status in the English Premier League. Br J Sports
Med, pp.bjsports-2017.
Velayutham, S. and Velayutham, A., 2016. Emergence of the Transnational Capitalist Class in
Sports: Manchester United Football Club (MUFC) and the English Premier League (EPL).
Perspectives on Global Development and Technology. 15(5). pp.520-542.
Online
Manchester United post record-breaking financial figures topping half a billion in revenue for
second consecutive year, 2017 [Online] Accessed through
<http://www.independent.co.uk/sport/football/premier-league/manchester-united-latest-
news-financial-figures-released-profit-revenue-transfer-net-spend-a7959196.html>
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APPENDICES
Income statement of Manchester united
Balance sheets of Manchester united plc
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