Manchester United well positioned for growth, says Jefferies

By James Rogers

Manchester United reported fourth-quarter results last week

Manchester United Ltd., which reported fourth-quarter results last week, is well positioned for growth, says analyst firm Jefferies.

"4Q results marked a solid finish to MANU's fiscal year, and a club-wide restructuring plan is officially underway," wrote Jefferies analyst Randal Konik, in a note. "Recent changes in corporate leadership underscores a real opportunity to improve team performance and club growth."

Manchester United (MANU) shares are up 3.7% in premarket trades Monday. The stock is down 20.3% in 2024, compared with the S&P 500 index's SPX gain of 18%.

Manchester United's new Chief Executive Omar Berrada joined the club in July. He was previously chief football operations officer at rival Manchester City's City Football Group.

Related: Manchester United shares slide after soccer club posts lower revenue, wider loss in Q4

Manchester United is one of the biggest names in world soccer. "The team is well-known and should continue to perform at a high level over the LT [long term]," Konik added. "Growing monetization opportunities appear in reach, and profitability has come to the forefront. We remain optimistic on the LT value creation ahead."

Last week Manchester United reported lower revenue and a wider loss in its fourth-quarter results, but full-year revenue grew to a record 661.8 million pounds, or $881.3 million, from 648.4 million pounds, or $855.3 million, in the prior year. Manchester United said that the full-year revenue number was driven by record commercial and matchday, or gameday, revenues.

The club also gave an update on its recent restructuring and cost-saving initiatives, citing the business-transformation plan it started in the fiscal third quarter. Manchester United announced an employee redundancy program in July 2024, which was concluded at the end of August. This resulted in the "rationalization of the club's employee base by approximately 250 roles across all departments," Manchester United said in a statement.

Related: Manchester United's losses jump and revenue falls with fewer games played

"In total, the club expects to realize annualized cost savings of approximately GBP40 million to GBP45 million, before implementation costs of GBP10 million," the club added. Citing timing and other contractual obligations, Manchester United said it expects to realize these savings over fiscal years 2025 and 2026.

During the quarter, investments were also made in the club's famous Old Trafford stadium, which included new hospitality facilities, an expansion of rail seating and kiosk refurbishments, the club said.

Last week Manchester United also extended its partnership with official logistics partner DHL. The partnership, which began in 2011, will now run until 2027.

Related: Manchester United's stock rises after Jim Ratcliffe clinches 25% stake and vows to return club to soccer's pinnacle

"This partnership is commercially significant as it merges the global reach of both brands," wrote Konik. "The new phase of their collaboration aims to engage fans and local heroes who contribute positive change in their communities, and offers rewards such as signed merchandise, game tickets, and opportunities to play at Old Trafford."

"DHL provides MANU fans worldwide with a range of products and services further enhancing their engagement with the club," Konik added.

Late last year, British billionaire Sir Jim Ratcliffe clinched a 25% minority stake in Manchester United following a protracted tussle. The club is majority owned by the U.S.-based Glazer family.

Related: Manchester City finance hearing is chance to clear the club's name or taint its dominance of English soccer

The Glazers have come under intense pressure to sell Manchester United amid ongoing fan frustration over the team's underperformance on the field. The club last won the Premier League in 2013, and Ratcliffe has vowed to return Manchester United to the sport's pinnacle.

Last season the club won the FA Cup for the 13th time when they defeated Manchester City 2-1.

Manchester United, which is currently 10th in the Premier League won its last game 3-0 at Southampton. The club faces Barnsley at Old Trafford in the third round of the EFL Cup on Tuesday.

-James Rogers

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09-16-24 0850ET

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