Manchester United Q3 Earnings Preview: Can Soccer Team Overcome English Premier League Disappointment, Champions League Miss Going Forward?

Author: Chris Katje | July 09, 2024 02:09pm

The sport of soccer is making headlines with viewers tuning into the 2024 Copa America and Euro international tournaments.

A publicly traded soccer team is on deck to report quarterly earnings on Wednesday before the market opens.

Earnings Estimates: English soccer team Manchester United PLC (NYSE:MANU) is expected to report third-quarter revenue of $162.9 million according to data from Benzinga Pro.

The company reported revenue of $206.5 million in last year's third quarter and has beaten analysts' estimates in six straight quarters.

Analysts expect the company to report a loss of 27 cents per share in the third quarter, compared to a loss of 9 cents in last year's third quarter. The company has missed analysts' earnings per share estimates in four of the past five quarters.

Recent Minority Sale: Manchester United made headlines in recent months with Jim Ratcliffe taking a minority stake in the team, buying 25% of Class B and 25% of Class A shares.

The billionaire bought shares at $33 each and a team valuation of $6.3 billion. Shares of Manchester United have fallen significantly in 2024 as reports originally saw the team being sold in its entirety.

A look at the chart from Benzinga Pro below shows shares of Manchester United down 22.5% year-to-date.

The image also shows Manchester United with a market capitalization of $2.7 billion and an enterprise value of $3.6 billion, both figures significantly lower than the $6.3 billion valuation Ratcliffe placed on the team.

Estimates from Forbes and Sportico value Manchester United at $6.6 billion and $6.2 billion, respectively.

Ratcliffe plans on investing hundreds of millions into the team and its Old Trafford stadium going forward.

Key Items to Watch: Among the items that could be highlighted in the earnings report are recent partnerships signed by the team.

Manchester United partnered with Malaysia Airlines on a multi-year deal to make the airline the official commercial airline of the team.

The team also unveiled its new jerseys for the 2024-2025 season with Qualcomm Inc (NASDAQ:QCOM) now the front-of-shirt sponsor as part of a three-year deal, with an option for a two-year renewal.

Qualcomm has placed its Snapdragon logon on the jerseys as it looks to grow brand recognition for its key product used by smartphones and PCs.

The shirt sponsorship deal is worth a reported $76 million annually and one of the richest in soccer. A look at how the sponsorship breaks down in the financials could be a key area to watch.

A report from The Athletic said Manchester United is considering selling the naming rights to its iconic Old Trafford stadium. The report said the naming rights could help pay for a redevelopment of the stadium or a new stadium. The team is also considering increasing its ticket prices ahead of the upcoming season, which could be an item to watch in comments and future ticket sector revenue.

Competition could be another area to watch ahead of the 2024-2025 English Premier League season set to begin on Aug. 17. Manchester United finished a disappointing eighth place last season and will now miss out on the lucrative Champions League where the top European teams compete.

Last season, Manchester United exited the Champions League after the group stage, winning one match and having four draws in six group stage matches. The Champions League adds to broadcast and ticket revenue and could make the team face tough comps going forward.

Betting odds from sportsbook DraftKings Inc (NASDAQ:DKNG) list Manchester United with the fifth best odds to win the English Premier League 2024-2025 season at +2,500. The leaders Manchester City and Arsenal are heavy favorites at odds of +110 and +190, respectively. Manchester United is listed with odds of +200 to finish in the top four of the league, guaranteeing Champions League admission in the next season.

MANU Price Action: Manchester United stock trades at $15.80 on Tuesday versus a 52-week trading range of $13.50 to $24.60. Manchester United shares are down 32% over the last year.

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