UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 20-F
(Mark One)
☐
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
☒
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
For the fiscal year ended 30 June 2023
OR
☐
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission file number 001-35627
MANCHESTER UNITED plc
(Exact name of Registrant as specified in its charter)
Not Applicable
(Translation of Registrant’s name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
Sir Matt Busby Way, Old Trafford,
Manchester, England, M16 0RA
(Address of principal executive offices)
Richard Arnold
Chief Executive Officer
Sir Matt Busby Way, Old Trafford,
Manchester, England, M16 0RA Telephone No. 011 44 (0) 161 868 8000
E-mail: ir@manutd.co.uk
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of each class
Class A ordinary shares, par value $0.0005 per share
Trading Symbol(s)
MANU
Name of each exchange on which registered
New York Stock Exchange
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.
54,537,360 Class A ordinary shares
110,207,613 Class B ordinary shares
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act
of 1934. Yes ☐ No ☒
Note—Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations
under those Sections.
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405
of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large
accelerated filer”, “accelerated filer”, and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
Accelerated filer ☐
Non-accelerated filer ☐
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended
transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after
April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial
reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP ☐
International Financial Reporting Standards as issued
by the International Accounting Standards Board ☒
Other ☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Item 17 ☐ Item 18 ☐
TABLE OF CONTENTS
GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PRESENTATION OF FINANCIAL AND OTHER DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
FORWARD-LOOKING STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MARKET AND INDUSTRY DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
SELECTED FINANCIAL DATA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART I
ITEM 1.
IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 2.
OFFER STATISTICS AND EXPECTED TIMETABLE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 3.
KEY INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4.
INFORMATION ON THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 4A. UNRESOLVED STAFF COMMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 5.
OPERATING AND FINANCIAL REVIEW AND PROSPECTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 6.
DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 8.
FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 9.
THE OFFER AND LISTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 10. ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS . . . .
ITEM 15. CONTROLS AND PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16B. CODE OF ETHICS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS . . . . . . . . . . . . .
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16G. CORPORATE GOVERNANCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16H. MINE SAFETY DISCLOSURE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS . . . . . . . . . . . . . . .
ITEM 16J. INSIDER TRADING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 16K. CYBERSECURITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART III
ITEM 17. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 18. FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ITEM 19. EXHIBITS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MANCHESTER UNITED PLC GROUP HISTORICAL FINANCIAL INFORMATION
Page
ii
ii
ii
iv
v
1
1
1
25
50
50
67
76
77
79
79
85
86
87
87
87
88
88
88
89
89
89
89
90
90
90
90
91
91
91
i
GENERAL INFORMATION
In this annual report on Form 20-F (“Annual Report”), references to “Manchester United,” “the Company,” “our Company,” “our
business,” “we,” “us” and “our” are, as the context requires, to Manchester United plc together with its consolidated subsidiaries as a
consolidated entity.
Throughout this Form 20-F, we refer to the following football leagues and cups:
•
•
•
•
•
•
the English Premier League (the “Premier League”);
the Emirates FA Cup (the “FA Cup”);
the English Football League Cup (the “EFL Cup”);
the Union of European Football Associations Champions League (the “Champions League”);
the Union of European Football Associations Europa League (the “Europa League”); and
the Union of European Football Associations Europa Conference League (the “Europa Conference League”).
The term “Matchday” refers to all domestic and European football match day activities from Manchester United men’s games at Old
Trafford, the Manchester United football stadium, along with receipts for domestic cup (such as the EFL Cup and the FA Cup) games
not played at Old Trafford plus receipts from Manchester United women’s home games. Fees for arranging other events at the stadium
are also included as Matchday revenue.
PRESENTATION OF FINANCIAL AND OTHER DATA
We report under International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board
(the “IASB”), and IFRS Interpretations Committee interpretations. None of the financial statements were prepared in accordance with
generally accepted accounting principles in the United States.
All references in this Annual Report to (i) “pounds sterling,” “pence,” “p” or “£” are to the currency of the United Kingdom, (ii) “US
dollar,” “USD” or “$” are to the currency of the United States, and (iii) “Euro” or “€” are to the currency introduced at the start of the
third stage of European economic and monetary union pursuant to the treaty establishing the European Community, as amended.
FORWARD-LOOKING STATEMENTS
This Annual Report contains estimates and forward-looking statements. Our estimates and forward-looking statements are mainly
based on our current expectations and estimates of future events and trends, which affect or may affect our businesses and operations.
Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to
numerous risks and uncertainties and are made in light of information currently available to us. Many important factors, in addition to
the factors described in this Annual Report, may adversely affect our results as indicated in forward-looking statements. You should
read this Annual Report completely and with the understanding that our actual future results may be materially different and worse
from what we expect.
All statements other than statements of historical fact are forward-looking statements. The words “may,” “might,” “will,” “could,”
“would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,”
“contemplate,” “possible” and similar words are intended to identify estimates and forward-looking statements.
Our estimates and forward-looking statements may be influenced by various factors, including without limitation:
the effect of adverse economic conditions on our operations;
•
• maintaining, enhancing and protecting our brand and reputation in order to expand our follower and sponsorship base;
•
•
•
•
•
•
our ability to attract and retain key personnel, including players;
our dependence on the performance and popularity of our men’s first team;
our ability to renew or replace key commercial agreements on similar or better terms or attract new sponsors;
the negotiation, pricing and terms of key media contracts, which are outside of our control;
our reliance on European competitions as a source of future income;
the impact of the United Kingdom’s exit from the European Union (the “EU”) on the movement of players or other
regulations;
our dependence on relationships with certain third parties;
•
ii
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
our relationship with merchandising, licensing, sponsor and other commercial partners;
our exposure to credit related losses in connection with key media, commercial and transfer contracts;
our dependence on Matchday revenue;
our exposure to competition, both in football and the various commercial markets in which we do business;
our ability to protect ourselves from and resolve and remediate cyber-attacks and data breaches on our IT systems;
actions taken by other Premier League clubs that are contrary to our interests;
our relationship with the various leagues to which we belong and the application of their respective rules and regulations;
our ability to execute a digital media strategy that generates the revenue we anticipate;
the impact resulting from serious injuries or losses of the playing staff;
our ability to maintain, train and build an effective international sales and marketing infrastructure, and manage the risks
associated with such an expansion;
uncertainty with regard to exchange rates, our tax rate and our cash flow;
brand impairments resulting from failures to adequately protect our intellectual property and curbing sales of counterfeit
merchandise;
our ability to adequately protect against media piracy and identity theft of our followers’ account information;
our exposure to the effects of seasonality in our business;
•
•
• maintaining our match attendance at Old Trafford;
•
any natural disasters, terrorist incidents or other events beyond our control, such as a pandemic, epidemic or outbreak of an
infectious disease, that adversely affect our operations;
the effect of our indebtedness on our financial health and competitive position;
estimates and estimate methodologies used in preparing our consolidated financial statements; and
the future trading prices of our Class A ordinary shares and the impact of securities analysts’ reports on these prices.
Other sections of this Annual Report include additional factors that could adversely impact our business and financial performance,
principally “Item 3. Key Information — D. Risk Factors.” Moreover, we operate in an evolving environment. New risk factors and
uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can
we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual
results to differ materially from those contained in any forward-looking statements. Therefore, you are cautioned not to place undue
reliance on these forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements. Except
as required by law, we undertake no obligation to update or revise publicly any forward-looking statements contained in this Annual
Report, whether as a result of new information, future events or otherwise, after the date on which the statements are made or to reflect
the occurrence of unanticipated events.
iii
MARKET AND INDUSTRY DATA
This Annual Report contains industry, market, and competitive position data that are based on the industry publications and studies
conducted by third parties listed below as well as our own internal estimates and research. These industry publications and third-party
studies generally state that the information that they contain has been obtained from sources believed to be reliable, although they do
not guarantee the accuracy or completeness of such information. While we believe that each of these publications and third-party
studies is reliable, we have not independently verified the market and industry data obtained from these third-party sources. While we
believe our internal research is reliable and the definition of our market and industry are appropriate, neither such research nor these
definitions have been verified by any independent source.
References to our “1.1 billion fans and followers” are based on the Survey commissioned by us, conducted by Kantar Media (Media
Division of Kantar and division of WPP plc) (“Kantar”) in 2019, and paid for by us. As in the Survey conducted by Kantar, we
defined the term “fans” as those individuals who answered survey questions, unprompted, with the answer that Manchester United
was their favorite football team in the world and the term “followers” as those individuals who answered survey questions,
unprompted, with the answer that Manchester United is a football team that they proactively follow in addition to their favorite
football team. For example, we directed Kantar to include in the definition of “follower” a respondent who watched live Manchester
United matches, followed highlights coverage or read or talked about Manchester United regularly.
The Survey was conducted during the first six months of 2019 and included over 54,000 respondents across 39 countries. It repeated a
similar 2011 survey, also conducted by Kantar, to ensure comparability of approach, methodology and results. The Survey included
questions on:
•
•
•
•
demographics, age, gender and socio-economic background;
viewership of Manchester United matches, social media following and engagement;
relationship, awareness and attitudes to commercial partners; and
interest in Manchester United products, including merchandise.
The Survey indicated that Manchester United has 1.1 billion combined fans and followers worldwide, comprised of 467 million fans
and 635 million followers (compared to 277 million and 382 million, respectively, in 2011), including:
•
•
•
a total of 731.7 million fans and followers in the Asia Pacific region (compared to 324.7 million in 2011);
a total of 296.1 million fans and followers in Europe, the Middle East and Africa (compared to 262.9 million in 2011); and
a total of 74 million fans and followers in the Americas (compared to 71.7 million in 2011).
We expect there to be differences in the level of engagement with our brand between “followers” and “fans”, as defined in the Survey.
We have not identified any practical way to measure these differences in consumer behavior and any references to our fans and
followers should be viewed in that light.
To calculate the number of fans and followers from the approximately 54,000 responses, Kantar applied assumptions based on third-
party data sets covering certain factors including population size, country specific characteristics such as wealth and GDP per capita,
and affinity for sports and media penetration. Kantar then extrapolated the results to the rest of the world, representing an extrapolated
adult population of 5 billion people. However, while Kantar believes the extrapolation methodology was robust and consistent with
consumer research practices, as with all surveys, there are inherent limitations in extrapolating survey results to a larger population
than those actually surveyed. As a result of these limitations, our number of followers and fans may be significantly less or
significantly more than the extrapolated survey results. Kantar’s extrapolated results also accounted for non-internet users. To do so,
Kantar had to make assumptions about the preferences and behaviors of non-internet users in those countries surveyed. For surveyed
markets with especially low internet penetration, these assumptions reduced the number of our followers in those countries and there
is no guarantee that the assumptions applied are accurate. Survey results also account only for claimed consumer behavior rather than
actual consumer behavior and as a result, survey results may not reflect real consumer behavior with respect to football or the
consumption of our content and products. The Survey indicates that the information that it contains has been obtained from sources
believed to be reliable, although they do not guarantee the accuracy or completeness of such information. While we believe that the
survey results are reliable, we have not independently verified the data contained in the survey.
In addition to the Survey, this Annual Report references the following industry publications and third-party studies:
•
•
television viewership data compiled by futures sports + entertainment—Mediabrands International Limited for the 2022/23
season (the “Futures Data”); and
a paper published by AT Kearney, Inc. in 2014 entitled “Winning in the Business of Sports” (“AT Kearney”).
iv
SELECTED FINANCIAL DATA
We prepare our consolidated financial statements in accordance with IFRS as issued by the IASB. The selected consolidated financial
data (including statement of profit or loss data, other data and balance sheet data) presented as of and for the years ended 30 June
2023, 2022, 2021, 2020 and 2019 has been derived from our audited consolidated financial statements and the notes thereto (our
audited consolidated financial statements as of and for the years ended 30 June 2020 and 2019 are not included in this Annual Report).
Our historical results for any prior period are not necessarily indicative of results expected in any future period.
The selected historical financial information presented in the tables below should be read in conjunction with, and is qualified in its
entirety by reference to, our audited consolidated financial statements and accompanying notes. The audited consolidated financial
statements and the accompanying notes as of 30 June 2023 and 2022 and for the years ended 30 June 2023, 2022 and 2021 have been
included elsewhere in this Annual Report.
Unless otherwise specified, all financial information included in this Annual Report has been stated in pounds sterling.
Statement of profit or loss data:
Revenue from contracts with customers (1) . . . . . . . . . . . . . . . . . . . . . . .
Analyzed as:
Commercial revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Broadcasting revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matchday revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses — before exceptional items . . . . . . . . . . . . . . . . . .
Analyzed as:
Employee benefit expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses — exceptional items . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating (loss)/profit before profit on disposal of intangible assets . .
Profit on disposal of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating (loss)/ profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net finance (costs)/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss)/profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax credit/(expense)(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss)/profit for the year(1)/(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
648,401
Year ended 30 June
2022
2020
2021
(£’000, unless otherwise indicated)
494,117
583,201
509,041
2019
627,122
302,886
209,095
136,420
(681,117)
257,820
214,847
110,534
(667,828)
232,205
254,815
7,097
279,044
140,203
89,794
(538,424) (522,204)
275,093
241,210
110,819
(583,337)
(331,374)
(163,211)
(13,848)
(172,684)
(384,141)
(117,911)
(14,314)
(151,462)
— (24,692)
(692,520)
—
(109,319)
21,935
(87,384)
(85,915)
23,676
(62,239)
(149,623)
34,113
(115,510)
(681,117)
1,112
(36,104)
20,424
(11,180)
(44,917)
23,523
(21,394)
(32,574)
3,896
(28,678)
(322,600) (284,029)
(92,876)
(76,467)
(14,959)
(18,543)
(124,398) (126,756)
—
(538,424) (522,204)
—
(13,163)
18,384
5,221
(27,391)
1,352
(26,039)
(20,818)
(2,415)
(23,233)
—
(44,307)
7,381
(36,926)
(36,411)
49,310
12,899
(24,027)
(68,189)
(92,216)
(332,356)
(108,977)
(12,850)
(129,154)
— (19,599)
(602,936)
—
24,186
25,799
49,985
(25,470)
2,961
(22,509)
27,476
(8,595)
18,881
Weighted average number of ordinary shares (thousands) . . . . . . . . . .
Diluted weighted average number of ordinary shares (thousands)(3) . .
Basic (loss)/earnings per share (pence) (1)/(2) . . . . . . . . . . . . . . . . . . . . . .
Diluted (loss)/earnings per share (pence) (1)/(2)/(3) . . . . . . . . . . . . . . . . . .
163,062
163,062
(17.59)
(17.59)
163,001
163,001
(70.86)
(70.86)
162,939
162,939
(56.60)
(56.60)
164,253
164,253
(14.14)
(14.14)
164,526
164,666
11.48
11.47
(1) Revenue for the years ended 30 June 2021 and 30 June 2020 was significantly impacted by the novel coronavirus COVID-19
(“COVID-19”) pandemic and governmental measures to manage the spread of the disease.
v
For the year ended 30 June 2021, the Old Trafford Stadium, Museum and Stadium Tour operations remained closed to visitors
throughout the financial year until part way through the fourth fiscal quarter. In line with government guidelines, and with a variety of
safety measures and protocols in place, including reduced fan capacity, Old Trafford Stadium welcomed back 10,000 supporters for
the final home match of the season. All matches prior to this were played behind closed doors. Furthermore, the first team’s pre-
season tour, scheduled for the start of fiscal 2021, had to be cancelled due to travel restrictions and the Old Trafford Megastore was
closed for parts of the year due to government-imposed restrictions. The impact of the above is a reduction in Matchday and
Commercial revenues for the year ended 30 June 2021. This was partially offset by increased Broadcasting revenues due to the men’s
first team’s participation in the Union of European Football Association (“UEFA”) Champions League, strong performance in both
the Premier League and the UEFA Europa League, and the impact of completing the 2019/20 domestic and UEFA competitions at the
start of fiscal 2021 as well as a decrease in other operating expenses due to reduced business activity as a result of COVID-19. The
Group did not rely on the government furlough scheme available during the COVID-19 pandemic. Accordingly, the above resulted in
a loss for the year ended 30 June 2021 and basic and diluted loss per share.
For the year ended 30 June 2020, government-imposed restrictions resulted in the suspension of all Premier League, FA Cup and
UEFA Europa League matches beginning 13 March 2020. The Premier League and FA Cup resumed in June 2020 and the UEFA
Europa League resumed in August 2020. All remaining matches were played behind closed doors. The postponement resulted in the
deferral of a number of matches, originally expected to be played in the financial year ended 30 June 2020, as well as the remaining
matches being played behind closed doors, the impact of which was to reduce Broadcasting and Matchday revenues for the year ended
30 June 2020. Broadcasting revenue was further impacted by rebates due to broadcasters following disruption of the 2019/20
competitions. Further, Old Trafford and its flagship Megastore operations as well as Museum, Stadium Tour and Red Café operations
were closed in mid-March 2020. The Old Trafford Megastore re-opened during June 2020 with a variety of safety measures in place in
line with Government guidance. The stadium and Museum and Stadium Tour operations remained closed. This has been partially
offset by a decrease in other operating expenses due to reduced business activity as a result of COVID-19. The Group did not rely on
the government furlough scheme available during the COVID-19 pandemic. Accordingly, the above resulted in a loss for the year
ended 30 June 2020 and basic and diluted loss per share.
(2) During the fourth quarter of the year ended 30 June 2021, the UK Corporation tax rate increase from 19% to 25%, effective April
2023, was substantively enacted, necessitating a remeasurement of the existing UK deferred tax liability position. This resulted in a
non-cash deferred tax charge of £11.2 million in the period. Furthermore, given the current US federal corporate income tax rate of
21%, we expect future US tax liabilities to be sheltered by future foreign tax credits arising from UK tax paid. Consequently, in the
year ended 30 June 2021, the US deferred tax asset was written down on the basis it was no longer expected to give rise to a future
economic benefit. This resulted in a non-cash deferred tax charge of £66.6 million in the year ended 30 June 2021. Future increases in
the US federal corporate income tax rate could result in a reversal of the US deferred tax asset write down.
vi
(3) For the years ended 30 June 2023, 2022, 2021 and 2020, potential ordinary shares are anti-dilutive, as their inclusion in the
diluted loss per share calculation would reduce the loss per share, and hence have been excluded. For the year ended 30 June 2019,
potential ordinary shares have been treated as dilutive, as their inclusion in the diluted earnings per share calculation decreases
earnings per share.
Other data:
Commercial revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Analyzed as:
Sponsorship revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail, merchandising, apparel & products licensing revenue .
2023
302,886
189,496
113,390
2022
Year ended 30 June
2021
(£’000, unless otherwise indicated)
232,205
2020
279,044
257,820
147,881
109,939
140,209
91,996
182,709
96,335
Dividends declared per share ($) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends declared per share (£ equivalent) . . . . . . . . . . . . . . . . . .
—
—
0.27
0.21
0.09
0.07
0.18
0.14
2019
275,093
173,010
102,083
0.18
0.14
Balance sheet data:
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
76,019
1,317,944
1,213,994
103,950
121,223
1,293,665
1,166,157
127,508
As of 30 June
2021
(£’000)
110,658
2020
2019
51,539
1,260,310 1,383,466
987,798 1,032,234
351,232
272,512
307,637
1,496,525
1,081,323
415,202
We define Adjusted EBITDA as (loss)/profit for the year before depreciation and impairment, amortization, profit on disposal of
intangible assets, exceptional items, net finance costs/income, and tax. Adjusted EBITDA is a non-IFRS measure and not a uniformly
or legally defined financial measure. Adjusted EBITDA is not a substitute for IFRS measures in assessing our overall financial
performance. Because Adjusted EBITDA is not a measurement determined in accordance with IFRS, and is to varying calculations,
Adjusted EBITDA may not be comparable to other similarly titled measures presented by other companies. Adjusted EBITDA is
included in this Annual Report because it is a measure of our operating performance and we believe that Adjusted EBITDA is useful
to investors because it is frequently used by securities analysts, investors and other interested parties in their evaluation of the
operating performance of companies in industries similar to ours. We also believe Adjusted EBITDA is useful to our management and
investors as a measure of comparative operating performance from year to year and among companies as it is reflective of changes in
pricing decisions, cost controls and other factors that affect operating performance, and it removes the effect of our asset base
(primarily depreciation, impairment and amortization), material volatile items (primarily profit on disposal of our intangible assets and
exceptional items), capital structure (primarily finance costs/income), and items outside the control of our management (primarily
taxes).
Our management also uses Adjusted EBITDA for planning purposes, including the preparation of our annual operating budget and
financial projections. Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a
substitute for an analysis of our results as reported under IFRS as issued by the IASB.
vii
The following is a reconciliation of (loss)/profit for the years presented to Adjusted EBITDA:
(Loss)/profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(28,678)
(115,510)
2023
2022
Year ended 30 June
2021
(£’000)
(92,216)
2020
2019
(23,233)
18,881
Adjustments:
Tax (credit)/expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net finance costs/(income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on disposal of intangible assets . . . . . . . . . . . . . . . . . . . . .
Exceptional items(a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Home games played(4):
Premier League . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic Cups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Away games played(4):
Premier League . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic Cups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total games played(4):
Premier League . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European Games . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic Cups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(3,896)
21,394
(20,424)
—
172,684
13,848
154,928
(34,113)
62,239
(21,935)
24,692
151,462
14,314
81,149
68,189
(12,899)
(7,381)
—
124,398
14,959
95,050
2,415
26,039
(18,384)
—
126,756
18,543
132,136
8,595
22,509
(25,799)
19,599
129,154
12,850
185,789
2023
2022/23
Season
2022
2021/22
Season
2021
2020/21
Season
2019/20
carryover
2020
2019/20
Season
2019
2018/19
Season
19
6
8
19
6
4
38
12
12
19
4
3
19
4
—
38
8
3
19
7
4
19
8
4
38
15
8
3
1
—
3
2
1
6
3
1
16
4
4
16
5
6
32
9
10
19
5
2
19
5
3
38
10
5
(a) See Notes 2.7 and 6 to our audited consolidated financial statements included elsewhere in this Annual Report for more
information.
(4) As a direct consequence of COVID-19, and the resulting government-imposed restrictions, all Premier League, FA Cup and
UEFA Europa League matches were suspended beginning 13 March 2020. The Premier League and FA Cup resumed in June
2020 and completed in July 2020 and August 2020 respectively. The UEFA Europa League resumed and completed in August
2020. The temporary postponement of all competitions resulted in four home and six away matches relating to 2019/20
competitions being played at the start of the 2020/21 financial year. This includes three home and three away Premier League
matches, the FA Cup semi-final, one Europa League home match and the Europa League single-leg quarter-final and semi-final.
From June 2020 until mid-May 2021, all matches were played behind closed doors. The final home match of the 2020/21 season
and the UEFA Europa League final were played with fans in attendance at a reduced capacity. All matches in the 2021/22 and
2022/23 season operated at full capacity.
viii
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. RESERVED
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
Investment in our Class A ordinary shares involves a high degree of risk. We expect to be exposed to some or all of the risks described
below in our future operations. Any of the risk factors described below, as well as additional risks of which we are not currently
aware, could affect our business operations and have a material adverse effect on our business, results of operations, financial
condition, cash flow and prospects and cause the value of our shares to decline. Moreover, if and to the extent that any of the risks
described below materialize, they may occur in combination with other risks which would compound the adverse effect of such risks
on our business, results of operations, financial condition, cash flow and prospects.
Risks Related to Our Business
If we are unable to maintain and enhance our brand and reputation, particularly in new markets, or if events occur that damage
our brand and reputation, our ability to expand our follower base, sponsors, and commercial partners or to sell significant
quantities of our products may be impaired.
The success of our business depends on the value and strength of our brand and reputation. Our brand and reputation are also integral
to the implementation of our strategies for expanding our follower base, sponsors and commercial partners. To be successful in the
future we believe we must preserve, grow and leverage the value of our brand across all of our revenue streams. For instance, we have
in the past experienced, and we expect that in the future we will continue to receive, a high degree of media coverage. Unfavorable
publicity regarding our men’s first team’s performance in league and cup competitions or their behavior off the field, our ability to
attract and retain certain players and coaching staff or actions by or changes in our ownership, could negatively affect our brand and
reputation. Failure to respond effectively to negative publicity could also further erode our brand and reputation. In addition, events in
the football industry, even if unrelated to us, may negatively affect our brand or reputation. As a result, the size, engagement and
loyalty of our follower base and the demand for our products may decline. Damage to our brand or reputation or loss of our followers’
commitment for any of these reasons could impair our ability to expand our follower base, sponsors and commercial partners or our
ability to sell significant quantities of our products, which would result in decreased revenue across our revenue streams and have a
material adverse effect on our business, results of operations, financial condition and cash flow, as well as require additional resources
to rebuild our brand and reputation.
In addition, maintaining and enhancing our brand and reputation may require us to make substantial investments. We cannot assure
you that such investments will be successful. Failure to successfully maintain and enhance the Manchester United brand or our
reputation or excessive or unsuccessful expenses in connection with this effort could have a material adverse effect on our business,
results of operations, financial condition and cash flow.
1
Our business is dependent upon our ability to attract and retain key personnel, including players.
We are highly dependent on members of our management, coaching staff and our players. Competition for talented players and staff
is, and will continue to be, intense. Our ability to attract and retain the highest quality players for our men’s first team and youth
academy, as well as coaching staff, is critical to our men’s first team’s success in league and cup competitions, increasing popularity
and, consequently, critical to our business, results of operations, financial condition and cash flow. Our success and many
achievements over the last twenty years does not necessarily mean that we will continue to be successful in the future, whether as a
result of changes in player personnel, coaching staff or otherwise. A downturn in the performance of our men’s first team could
adversely affect our ability to attract and retain coaches and players. Further, in 2020, the United Kingdom formally left the EU and as
a result we are no longer able to rely on European regulations relating to the movement of players between the United Kingdom and
the European Economic Area (“EEA”). See “—The departure of the United Kingdom from the European Union may adversely affect
our operations and financial results.” In addition, our popularity in certain countries or regions may depend, at least in part, on fielding
certain players from those countries or regions. While we enter into employment contracts with each of our key personnel with the aim
of securing their services for the term of the contract, the retention of their services for the full term of the contract cannot be
guaranteed due to possible contract disputes or approaches by other clubs. Our failure to attract and retain key personnel could have a
negative impact on our ability to effectively manage and grow our business.
We are dependent upon the performance and popularity of our men’s first team.
Our revenue streams are driven by the performance and popularity of our men’s first team. Significant sources of our revenue are the
result of historically strong performances in English domestic and European competitions, specifically the Premier League, the FA
Cup, the EFL Cup, the Champions League and the Europa League. Our revenue varies significantly depending on our men’s first
team’s participation and performance in these competitions. Our men’s first team’s performance can affect all four of our revenue
streams:
sponsorship revenue through sponsorship relationships;
retail, merchandising, apparel & product licensing revenue through product sales;
•
•
• Broadcasting revenue through the frequency of appearances, performance based share of league broadcasting revenue,
Champions League/Europa League/Europa Conference League distributions and MUTV distribution through linear and
digital platforms; and
• Matchday revenue through ticket sales.
Our men’s first team currently plays in the Premier League, the top football league in England. Our performance in the Premier
League directly affects, and a weak performance in the Premier League could adversely affect, our business, results of operations,
financial condition and cash flow. For example, our revenue from the sale of products, media rights, tickets and hospitality would fall
considerably if our men’s first team were relegated from, or otherwise ceased to play in, the Premier League, the Champions League,
the Europa League or the Europa Conference League.
We cannot ensure that our men’s first team will be successful in the Premier League or in the other leagues and tournaments in which
it plays. Relegation from the Premier League or a general decline in the success of our men’s first team, particularly in consecutive
seasons, would negatively affect our ability to attract or retain talented players and coaching staff, as well as supporters, sponsors and
other commercial partners, which would have a material adverse effect on our business, results of operations, financial condition and
cash flow.
It may not be possible to renew or replace key commercial agreements on similar or better terms, or attract new sponsors.
Our Commercial revenue for each of the years ended 30 June 2023, 2022 and 2021 represented 46.7%, 44.2% and 47.0% of our total
revenue, respectively. The substantial majority of our Commercial revenue is generated from commercial agreements with our
sponsors, and these agreements have finite terms. When these contracts expire, we may not be able to renew or replace them with
contracts on similar or better terms or at all. Our most important commercial contracts include contracts with global, regional and
supplier sponsors representing industries including sportswear, remote connectivity software, blockchain, spirits, automotive, Wi-Fi,
betting and kitchen and bathroom fixtures and generators, which typically have contract terms of two to five years.
If we fail to renew or replace these key commercial agreements on similar or better terms, we could experience a material reduction in
our Commercial revenue. Such a reduction could have a material adverse effect on our overall revenue and our ability to continue to
compete with the top football clubs in England and Europe.
2
As part of our business plan, we intend to continue to grow our commercial portfolio by developing and expanding our product
categorized approach, which will include partnering with additional sponsors. We may not be able to successfully execute our
business plan in promoting our brand to attract new sponsors. We cannot assure you that we will be successful in implementing our
business plan or that our Commercial revenue will continue to grow at the same rate as it has in the past or at all. Any of these events
could negatively affect our ability to achieve our development and commercialization goals, which could have a material adverse
effect on our business, results of operations, financial condition and cash flow.
The underlying probability of being unable to renew or replace key contracts on similar or more favorable terms, or to partner with
additional sponsors, has increased as economic pressures are felt across the global economy. As a result, there may be a shift in focus
for the majority of companies in the short- to medium-term, as these companies reduce perceived “excess” spend on marketing in
favor of protecting the operational and financial stability of the entity.
Negotiation, pricing and terms of key media contracts are outside of our control and those contracts may change in the future.
For each of the years ended 30 June 2023, 2022 and 2021, 83.4%, 65.3% and 67.5% of our Broadcasting revenue, respectively, was
generated from the media rights for Premier League matches, and 13.7%, 31.4% and 29.0% of our Broadcasting revenue, respectively,
was generated from the media rights for UEFA matches. Contracts for these media rights and certain other revenue for those
competitions (both domestically and internationally) are negotiated collectively by the Premier League and UEFA respectively. We
are not a party to the contracts negotiated by the Premier League and UEFA. Further, we do not participate in and therefore do not
have any direct influence on the outcome of contract negotiations. As a result, we may be subject to media rights contracts with media
distributors with whom we may not otherwise contract or media rights contracts that are not as favorable to us as we might otherwise
be able to negotiate individually with media distributors. Furthermore, the limited number of media distributors bidding for Premier
League and UEFA club competition media rights may result in reduced prices paid for those rights and, as a result, a decline in
revenue received from media contracts.
In addition, although an agreement has been reached for the sale of Premier League broadcasting rights through the end of the 2024/25
football season and for the sale of UEFA club competition broadcasting rights through the end of the 2023/24 football season, future
agreements may not maintain our current level of Broadcasting revenue.
Future intervention by the European Commission (“EC”), the Court of Justice of the European Union (“CJEU”), UK authorities, or
other competent authorities and courts having jurisdiction may also have a negative effect on our revenue from media rights in the
EEA. Enforcement of competition laws and changes to copyright regimes may require changes to sales models that could negatively
affect the amount which copyright holders, such as the Premier League, are able to derive from the exploitation of rights within the
EU. As a result, our Broadcasting revenue from the sale of those rights could decrease.
It is likely that there will be future regulatory intervention by the EC relating to the grant of exclusive licenses of content on a
territorial basis within the EEA insofar as they prohibit or limit the cross-border provision by satellite or internet transmission of retail
pay-TV services in response to unsolicited demand (so-called “passive sales”). In the cases of the Premier League & others vs. QC
Leisure & Others / Karen Murphy vs. Media Protection Services, the CJEU ruled that EU free movement rules prevented enforcement
of national laws to prevent importation and sale of decoding devices marketed in other Member States. The CJEU held further that EU
competition rules prohibit any agreement designed to guarantee absolute territorial exclusivity by restricting passive sales within the
EU (i.e. by obliging broadcasters not to meet unsolicited demand for decoding devices enabling access to the right holder’s protected
subject-matter with a view to their use outside the territory covered by the license agreement).
3
Subsequently, in January 2014 the EC launched a competition investigation into exclusive licensing arrangements between US Studios
and various platforms in Europe (the major platform in each of the five largest Member States). In July 2015, the EC issued a
Statement of Objections in Case COMP/40023 – Cross-border access to pay-TV setting out its preliminary view that certain
provisions in the license agreements between the studios and Sky UK would eliminate cross-border competition and constitute a
violation of EU competition rules. According to the EC, these provisions require Sky UK to block or limit access to films through geo-
blocking its online services or through its satellite pay-TV services to consumers outside of the United Kingdom and Ireland (and thus
prevent Sky UK from responding to passive sales requests). The EC was carrying out parallel investigations into cross-border access
to pay-TV services in France, Italy, Germany and Spain. Studios and platforms argue that EU law does not preclude enforcement of
their copyright and that the restrictions are necessary to ensure adequate financing of content creation because content value varies
considerably across Member States.
On 22 April 2016, the EC announced that Paramount had offered to settle the case by offering a series of commitments, including an
undertaking not to enter into pay-TV agreements that prohibit their licensees from responding to passive sales requests. The
commitments cover both linear pay-TV services and (when covered by the broadcaster’s licenses) subscription video-on-demand
services. The EC accepted these commitments on 27 July 2016. On 8 December 2016, the French TV broadcaster Groupe Canal +
brought an action seeking annulment of the EC’s decision to accept the commitments. On 12 December 2018, the EU General Court
dismissed the appeal and upheld the EC decision as lawful in identifying competition concerns and finding the commitments suitable
to resolve them. Shortly before and on the same and following day of the General Court’s judgment, Disney, NBC Universal, Sony
Pictures, Warner Bros. and Sky also offered commitments, which the EC accepted on 7 March 2019 and closed the investigation. The
commitments foresee that the restrictive clauses will not be applied nor re-introduced in the film licensing contracts, without prejudice
to the studios’ rights under copyright law or the Portability Regulation.
On 20 December 2020, the CJEU overturned the General Court’s judgment of 12 December 2018; the CJEU found that the General
Court had erred in law in its assessment of the proportionality of the adverse effects on the interests of third parties, such as Canal +,
resulting from the EC acceptance of the commitments offered by Paramount. In particular, the CJEU considered that the General
Court could not refer such contracting partners to the national courts in order to have their contractual rights enforced; national courts
could not decide contrary to an EC decision by declaring the relevant clauses compatible or requiring an operator to breach its
commitments which have been made binding by that decision. On 31 March 2021 the EC withdraw its decision of 7 March 2019
accepting the commitments by Sky and four Hollywood studios and closed the proceedings in the case. While these investigations had
targeted film content, any future decision could be applicable to any pay-TV content, including sport.
In addition to this regulatory action, the EU as part of its Digital Single Market (“DSM”) strategy adopted on 8 June 2017 the
Portability Regulation, which is designed to enable consumers to access their content services while travelling across Europe. The
Portability Regulation became applicable in the EU on 1 April 20. The EU has also adopted a regulation on unjustified geo-blocking,
which became applicable on 3 December 2018. Copyright protected content is excluded but the EC must review and report on the
exclusion.
As part of the DSM initiative, the EC has also sought to modernize EU copyright rules to allow for wider access to online content
across the EU, including by extending rights clearance mechanisms in the Satellite and Cable Directive. The EC published its proposal
for a Regulation on Online Transmissions on 14 September 2016, which in particular contains the proposal that the country of origin
principle be extended to online broadcast services. In practice, this would mean that licenses for simulcast and catch-up rights, for
example, for the United Kingdom would be construed as covering the entire EEA (as long as the United Kingdom remains subject to
EU law). The European Parliament and the Council subsequently turned the draft Regulation on Online Transmissions into a
Directive, including substantial amendments limiting the country of origin principle. As a result, the country of origin principle will
apply to radio broadcasts, but not to television broadcasts of sports events. In parallel, the revised Copyright Directive has inter alia
strengthened the position of rights owners by making online platforms responsible for taking certain actions against user-uploaded
content which violates copyright. Both Directives were adopted in April 2019. On 15 February 2023, the EC referred 11 Member
States to the CJEU for failing to implement the Directives into national law including Bulgaria, Denmark, Finland, Latvia, Poland and
Portugal.
In addition, also as part of the DSM initiative, the European Parliament and the Council adopted on 6 November 2018, a revision of
the Audiovisual Media Services. This Directive applies to traditional TV broadcasters, with the revision inter alia extending the scope
for some provisions to also cover video-sharing platforms. The revision has not affected Article 14 on the possibility of national
measures ensuring the non-exclusive broadcast of events of major importance for society.
Finally, as part the DSM initiative and following stakeholder consultations, on 15 December 2020, the EC proposed two legislative
initiatives to upgrade rules governing digital services in the EU: the Digital Services Act (“DSA”) and the Digital Markets Act
4
(“DMA”). The DSA seeks to update the rules concerning e-commerce, for instance, by providing for enforceable obligations and
increased accountability rules for all digital services that connect consumers to goods, services, or content, in relation to, for example,
users’ safety and trust, harmful/illegal online content, content moderation and removal, and advertisement targeting. These rules will
be enforced by designated national competent authorities. The DMA, which will be enforced by the EC, seeks to address market
imbalances associated with large online platforms acting as gatekeepers, defined under certain criteria (e.g., Facebook, Google, Apple
or Amazon). To this end, the DMA foresees obligations on their daily operations, for example, by enabling transparency for
advertisers, ensuring portability of data to end users and business users of the online platforms, including the provision of continuous
and real time access to such data, ensuring interoperability with competing third-party software in certain cases, and prohibiting
gatekeepers to block users from un-installing software or apps. The DMA entered into force on 1 November 2022 and became
applicable on 2 May 2023. The EC will adopt the decisions designating gatekeepers and their covered services at the beginning of
September 2023. The gatekeepers will then have 6 months to comply with the DMA (ETA: March 2023). The DSA entered into force
on 16 November 2022 and the provisions will apply to all in-scope providers by 17 February 2024. The United Kingdom has
introduced a new regulatory regime for the digital sector analogous to the DMA, which was enacted by the Digital Markets,
Competition and Consumers Bill published on 25 April 2023. The regime will apply to providers of digital services designated as
having ‘strategic market status’. The Bill could come into force in the autumn of 2023, at the earliest, which would mean that conduct
requirements would kick in in Q2 2024.
European competitions cannot be relied upon as a source of income.
Qualification for the Champions League is largely dependent upon our men’s first team’s performance in the Premier League and, in
some circumstances, the Champions League or Europa League in the previous season. Qualification for the Champions League
cannot, therefore, be guaranteed. Failure to qualify for the Champions League would result in a material reduction in revenue for each
season in which our men’s first team did not participate. To help mitigate this impact the majority of playing contracts for our men’s
first team include step-ups in remuneration which are contingent on participation in the group stage of the Champions League.
Inclusive of Broadcasting revenue, prize money and Matchday revenue, our combined Broadcasting and Matchday revenue related to
European competitions was £37.5 million, £75.0 million and £73.8 million for each of the years ended 30 June 2023, 2022 and 2021,
respectively. As a result of our men’s first team performance during the 2022/23 season, our men’s first team will participate in the
2023/24 Champions League.
In addition, our participation in the Champions League, Europa League or Europa Conference League may be influenced by other
factors beyond our control. For example, the number of places in each European competition available to the clubs of each national
football association in Europe can vary from year to year based on a ranking system. If the performance of English clubs in Europe
declines, the number of places in each European competition available to English clubs may decline and it may be more difficult for
our men’s first team to qualify for European competition in future seasons. Further, the rules governing qualification for European
competitions (whether at the European or national level) may change and make it more difficult for our men’s first team to qualify for
European competition in future seasons.
We are a founder member of the European Club Association (“ECA”), an independent organization set up to work with football
governing bodies to protect and promote the interests of football clubs at the European level. In addition, UEFA Club Competitions
SA (“UCC SA”) was established by UEFA to advise and make recommendations to UEFA on strategic business matters and
opportunities concerning club competitions. Half of the administration board is appointed by UEFA and the other half by the ECA.
The current format of the Champions League is structured so that the top four clubs from the four top-ranked UEFA national
associations (of which England is currently one) qualify automatically for the group stage of the Champions League. With respect to
the financial distribution methodology, there is a four pillar system being starting fee, performance fees, market pool and individual
club coefficient. The individual club coefficient is determined by reference to past performance in UEFA club competitions over a ten-
year period with additional points for historical winners of UEFA club competitions.
In addition to the Champions League, UEFA host the UEFA Europa League and the UEFA Europa Conference League. The UEFA
Europa Conference League (“Europa Conference League”), was introduced in 2021/22 and all three competitions are currently held
with 32 teams competing. The winner of the Europa Conference League is entitled to enter the following season’s UEFA Europa
League group stage, while the winner of the Europa League is entitled to enter the following season’s UEFA Champions League. The
top four clubs from the four top-ranked UEFA national associations automatically qualify for the Champions League group stage. The
team finishing in fifth position in the Premier League and the FA Cup winners qualify for the Europa League group stage, unless the
FA Cup winners finish in positions one to five in the Premier League, in which case the team finishing in sixth position also qualifies
for the Europa League group stage. The EFL Cup winners qualify for the Europa Conference League play-offs unless they have
5
already qualified for the Champions League or Europa League, in which case the team finishing in sixth position (or seventh position
if the sixth has already qualified for the Champions League or Europa League) take their place.
In May 2022, UEFA announced a new format for the UEFA Champions League which will begin in the 2024/25 season. This format
sees the introduction of a new league-style format, the number of participating teams increased from 32 to 36 and the number of
Group Stage matches increased from 6 to 8. The new format provides scope for one more place for an English club in the competition
dependent on the collective performance of clubs from that nation in the previous season. Two places in the competition will be
allocated in this manner, one to each nation that performed best collectively in the preceding season. The new format will also see a
change to the financial distribution methodology. Whilst exact details are yet to be confirmed, this will be a three pillar system being
starting fee, performance fee and a new value fee which is a combination of market pool and club coefficient. The club coefficient will
now be based on a five-year period, compared to a ten-year period under the current methodology.
Moreover, because of the prestige associated with participating in the European competitions, particularly the Champions League,
failure to qualify for any European competition could negatively affect our ability to attract and retain talented players and coaching
staff, as well as supporters, sponsors and other commercial partners. On 21 July 2023, we signed an extension to our agreement with
adidas under which a £10 million deduction from the minimum annual guarantee is made for each season of non-Champions League
qualification from 2025/26 to 2034/35. Any one or more of these events could have a material adverse effect on our business, results
of operation, financial condition and cash flow.
Our business depends in part on relationships with certain third parties.
We consider the development of our commercial assets to be central to our ongoing business plan and a driver of future growth. For
example, our current contract with adidas that began with the 2015/16 season provides them with certain global technical sponsorship
and dual-branded licensing rights. While we expect to be able to continue to execute our business plan in the future with the support of
adidas, we remain subject to these contractual provisions and our business plan could be negatively impacted by non-compliance or
poor execution of our strategy by adidas. Further, any interruption in our ability to obtain the services of adidas or other third parties
or deterioration in their performance could negatively impact this portion of our operations. Furthermore, if our arrangement with
adidas is terminated or modified against our interest, we may not be able to find alternative solutions for this portion of our business
on a timely basis or on terms favorable to us or at all.
In the future, we may enter into additional arrangements permitting third parties to use our brand and trademarks. The steps we take to
carefully select our partners may not lead to successful arrangements. Our partners may fail to fulfill their obligations under their
agreements or have interests that differ from or conflict with our own. For example, we are dependent on our sponsors and
commercial partners to effectively implement quality controls over products using our brand and/or trademarks. The inability of such
sponsors and commercial partners to meet our quality standards could negatively affect consumer confidence in the quality and value
of our brand, which could result in lower product sales. Any one or more of these events could have a material adverse effect on our
business, results of operation, financial condition and cash flow.
We are exposed to credit related losses in the event of non-performance by counterparties to Premier League and UEFA media
contracts as well as our key commercial and transfer contracts.
We derive the substantial majority of our Broadcasting revenue from media contracts negotiated by the Premier League and UEFA
with media distributors, and although the Premier League obtains guarantees to support certain of its media contracts, typically in the
form of letters of credit issued by commercial banks, it remains our single largest credit exposure. We derive our Commercial and
sponsorship revenue from certain corporate sponsors, including global, regional and supplier sponsors (which includes new businesses
operating in emerging markets) in respect of which we may manage our credit risk by seeking advance payments, installments and/or
bank guarantees where appropriate. The substantial majority of this revenue is derived from a limited number of sources. We are also
exposed to other football clubs globally for the payment of transfer fees on players. Depending on the transaction, some of these fees
are paid to us in installments. We try to manage our credit risk with respect to those clubs by requiring payments in advance or, in the
case of payments on installment, requiring bank guarantees on such payments in certain circumstances. However, we cannot ensure
these efforts will eliminate our credit exposure to other clubs. A change in credit quality at one of the media broadcasters for the
Premier League or UEFA, one of our sponsors or a club to whom we have sold a player can increase the risk that such counterparty is
unable or unwilling to pay amounts owed to us. The failure of a major television broadcaster for the Premier League or UEFA club
competitions to pay outstanding amounts owed to its respective league or the failure of one of our key sponsors or a club to pay
outstanding amounts owed to us could have a material adverse effect on our business, results of operations, financial condition and
cash flow.
6
Matchday revenue from our supporters is a significant portion of overall revenue.
A significant amount of our revenue derives from ticket sales and other Matchday revenue for our men’s first team matches at Old
Trafford and our share of gate receipts from domestic cup matches. In particular, the revenue generated from ticket sales and other
Matchday revenue at Old Trafford will be highly dependent on the continued attendance at matches of our individual and corporate
supporters as well as the number of home matches we play each season. During each of the 2022/23, 2021/22 and 2020/21 seasons,
we played 33, 26 and 34 home matches respectively and our Matchday revenue was £136.4 million, £110.5 million and £7.1 million
for the years ended 30 June 2023, 2022 and 2021, respectively. Matchday revenue for the year ended 30 June 2021 was significantly
impacted by the COVID-19 pandemic with 33 of our 34 home matches being played behind closed doors. Fans were in attendance for
the final home match of the season at a reduced capacity in line with government guidelines. All matches during the years ended
30 June 2023 and 30 June 2022 were played with Old Trafford operating at full capacity. Match attendance is influenced by a number
of factors, some of which are partly or wholly outside of our control. These factors include the success of our men’s first team,
broadcasting coverage and general economic conditions in the United Kingdom, which affect personal disposable income and
corporate marketing and hospitality budgets. A reduction in Matchday attendance could have a material adverse effect on our
Matchday revenue and our overall business, results of operations, financial condition and cash flow.
The markets in which we operate are highly competitive, both within Europe and internationally, and increased competition could
cause our profitability to decline.
We face competition from other football clubs in England and Europe. In the Premier League, investment from wealthy team owners
has led to teams with deep financial backing that are able to acquire top players and coaching staff, which could result in improved
performance from those teams in domestic and European competitions. As the Premier League continues to grow in popularity, the
interest of wealthy potential owners may increase, leading to additional clubs substantially improving their financial position.
Competition from European clubs also remains strong. Despite the adoption of the UEFA Financial Sustainability regulations, a set of
financial monitoring rules on clubs participating in the Champions League, Europa League and Europa Conference League and the
Premier League Profitability and Sustainability Rules, a similar set of rules monitoring Premier League clubs, European and Premier
League football clubs are spending substantial sums on transfer fees and player salaries. Competition from inside and outside the
Premier League has led to higher salaries for our players as well as increased competition on the field. The increase in competition
could result in our men’s first team finishing lower in the Premier League than we have in the past and jeopardizing our qualification
for or results in European competitions. Competition within England could also cause our men’s first team to fail to advance in the FA
Cup and EFL Cup.
In addition, from a commercial perspective, we actively compete across many different industries and within many different markets.
We believe our primary sources of competition, both in Europe and internationally, include, but are not limited to:
•
•
•
•
•
other businesses seeking corporate sponsorships and commercial partners such as sports teams, other entertainment events
and television and digital media outlets;
providers of sports apparel and equipment seeking retail, merchandising, apparel & product licensing opportunities;
digital content providers seeking consumer attention and leisure time, advertiser income and consumer e-commerce activity;
other types of television programming seeking access to broadcasters and advertiser income; and
alternative forms of corporate hospitality and live entertainment for the sale of Matchday tickets such as other live sports
events, concerts, festivals, theater and similar events.
All of the above forms of competition could have a material adverse effect on any of our four revenue streams and our overall
business, results of operations, financial condition and cash flow.
A cyber-attack on, or disruption to, our IT systems or other systems utilized in our operations could compromise our operations,
adversely impact our reputation and subject us to liability.
As a high-profile brand we are susceptible to the risk of a cyber-attack on our IT systems or other third-party systems utilized in our
operations. We experience cyber-attacks and other security incidents of varying degrees from time to time. For example, we
experienced such an attack in or about November 2020, which resulted in certain non-consumer data being compromised and the
disruption of our enterprise systems and applications, prior to restoration of secure computing operations. In response, we have
implemented controls and taken other preventative actions to strengthen our systems against such attacks. However, we cannot assure
you that such measures will provide absolute security, that we will be able to react in a timely manner, or that our remediation efforts
following any past or future attacks will be successful. A cyber-attack could disable the information technology systems we use or
depend on to operate our business and give rise to the loss of significant amounts of personal data or other sensitive information,
7
potentially subjecting us to criminal or civil sanctions or other liability. See “—We are subject to governmental regulation and other
legal obligations related to privacy, data protection, data security and safeguarding. Our actual or perceived failure to comply with
such obligations could harm our business.” Similarly, any disruption to or failures in our IT systems or other third-party systems
utilized in our operations could have an adverse impact on our ability to operate our business and lead to reputational damage. Any of
these events could have a material adverse effect on our business, results of operations, financial condition and cash flow.
Furthermore, as attempted attacks continue to evolve in scope and sophistication, we may incur significant costs in modifying or
enhancing our IT security systems and processes in an attempt to defend against such attacks. There can be no assurance, however,
that any security systems or processes we, or third party providers on which we rely, currently have in place or that may be
implemented in the future will be successful in preventing or mitigating the harm from such attacks.
We are subject to special rules and regulations regarding insolvency and bankruptcy.
We are subject to, among other things, special insolvency or bankruptcy-related rules of the Premier League and the Football
Association (the “FA”). Those rules empower the Premier League board to direct certain payments otherwise due to us to the FA and
its members, associate members and affiliates, certain other English football leagues and certain other entities if it is reasonably
satisfied that we have failed to pay certain creditors including other football clubs, the Premier League and the Football League.
If we experience financial difficulty, we could also face sanctions under the Premier League rules, including suspension from the
Premier League, European competitions, the FA Cup and certain other competitions, the deduction of league points from us in the
Premier League or Football League and loss of control of player registrations. For example, the Premier League could prevent us from
playing, thereby cutting off our income from ticket sales and putting many of our other sources of revenue at risk. Any of these events
could have a material adverse effect on our business, results of operation, financial condition, or cash flow, as well as our ability to
meet our financial obligations.
Premier League voting rules may allow other clubs to take action contrary to our interests.
The Premier League is governed by its 20 club shareholders with most rule changes requiring the support of a minimum of 14 of the
clubs. This allows a minority of clubs to block changes they view as unfavorable to their interests. In addition, it allows a concerted
majority of the clubs to pass rules that may be disadvantageous to the remaining six clubs. Our interests may not always align with the
majority of clubs and it may be difficult for us to effect changes that are advantageous to us. At the same time, it is possible that other
clubs may take action that we view as contrary to our interests. If the Premier League clubs pass rules that limit our ability to operate
our business as we have planned or otherwise affect the payments made to us, we may be unable to achieve our goals and strategies or
increase our revenue.
Our digital media strategy may not generate the revenue we anticipate.
We maintain contact with, and provide entertainment to, our global follower base through a number of digital and other media
channels, including the internet, mobile services and applications, and social media. While we have attracted a significant number of
followers to our digital media assets, including our website and mobile application, the associated future revenue and income potential
is uncertain. You should consider our business and prospects in light of the challenges, risks and difficulties we may encounter in this
new and rapidly evolving market, including:
•
•
•
•
•
•
•
our ability to retain our current global follower base, build our follower base and increase engagement with our followers
through our digital media assets, particularly those on third-party digital media platforms;
our ability to enhance the content offered through our digital media assets and increase our subscriber base;
our ability to effectively generate revenue from interaction with our followers through our digital media assets;
our ability to attract new sponsors and advertisers, retain existing sponsors and advertisers and demonstrate that our digital
media assets will deliver value to them;
our ability to develop our digital media assets in a cost-effective manner and operate our digital media services profitably and
securely;
our ability to identify and capitalize on new digital media business opportunities; and
our ability to compete with other sports and other media for users’ time.
In addition, as we expand our digital and other media channels, including mobile services, applications, and social media, revenue
from our other business sectors may decrease, including our Broadcasting revenue. As a consequence of our utilization of third-party
media platforms, particularly social media, we are subject to third-party algorithms which we do not have control over. A change to
these algorithms or the business strategy and operating models of these platforms may have a knock-on impact on our business.
8
Moreover, the increase in subscriber base in some of these digital and other media channels may limit the growth of the subscriber
base and popularity of other channels. Further, governmental or other regulatory actions against social media platforms could result in
a loss of some or all of our social media followers on such platform. Failure to successfully address these risks and difficulties could
affect our overall business, financial condition, results of operations, cash flow, liquidity and prospects.
Serious injuries to or losses of playing staff may affect our performance, and therefore our results of operations and financial
condition.
Injuries to members of the playing staff, particularly if career-threatening or career-ending, could have a detrimental effect on our
business. Such injuries could have a negative effect upon our men’s first team’s performance and may also result in a loss of the
income that would otherwise have resulted from a transfer of that player’s registration. In addition, depending on the circumstances,
we may write down the carrying value of a player on our balance sheet and record an impairment charge in our operating expenses to
reflect any losses resulting from career-threatening or career-ending injuries to that player. Our strategy is to maintain a squad of
men’s first team players sufficient to mitigate the risk of player injuries. However, this strategy may not be sufficient to mitigate all
financial losses in the event of an injury, and as a result such injury may affect the performance of our men’s first team, and therefore
our business, results of operations financial condition and cash flow.
Inability to renew our insurance policies could expose us to significant losses.
We insure against the accidental death (including death by natural causes) or permanent disablement (resulting in an inability to
continue their playing career with Manchester United and/or any other club in one of the top five European leagues) of certain
members of our men’s first team, although typically not at such player’s full market value. Such insurance also excludes incidents
which occur while playing matches or training. We also have catastrophe coverage in the event of an incident (such as travel or
terrorist related incidents) that results in the accidental death or permanent disablement of multiple members of our men’s first team
playing squad. We also carry non-player related insurance typical for our business (including combined liability, property damage,
business interruption, terrorism and directors and officers insurance). When any of our insurance policies expire, it may not be
possible to renew them on the same terms, or at all. In such circumstances, some of our business activities and/or assets may be
uninsured. If any of these uninsured business activities or assets were to suffer damage, we could suffer a financial loss. Our most
valuable tangible asset is the Old Trafford stadium. An inability to renew insurance policies covering our players, Old Trafford, the
Carrington training ground (“Carrington”) or other valuable assets could expose us to significant losses.
In addition to the above, for the period ending 31 December 2026, the Fédération Internationale de Football Association (“FIFA”) has
confirmed that it will provide insurance coverage for loss of wages (temporary disablement), subject to a maximum period of 365 days
(excluding the first 28 days) and a cap of €7.5 million per claim per player, paid by the club to our players subsequent to an injury
incurred while playing for their senior national team in a match played under the FIFA international match calendar. The maximum
daily compensation is limited to €20,548 per claim. The maximum capacity (“aggregate limit”) of the FIFA Club Protection
Programme is €80,000,000 per annum. Neither FIFA nor national football associations are obliged to provide accidental death or
permanent disablement insurance coverage for players while on international duty. These terms are subject to review when the policy
is due for renewal.
Our international expansion and operations in foreign markets expose us to risks associated with international sales and
operations.
We intend to continue to expand internationally and operate in select foreign markets. Managing a global organization is difficult,
time consuming and expensive. Our inexperience in operating the club’s businesses globally increases the risk that any future
international expansion efforts that we may undertake will not be successful. In addition, conducting international operations subjects
us to risks such as the lack of familiarity with and unexpected changes in foreign regulatory requirements; difficulties in managing and
staffing international operations; fluctuations in foreign exchange rates; potentially adverse tax consequences, including foreign value
added tax systems, and restrictions on repatriation of earnings; the burdens of complying with a wide variety of foreign laws and legal
standards; increased financial accounting and reporting burdens and complexities; the lack of strong intellectual property regimes and
political, social and economic instability abroad. Operating in international markets also requires significant management attention
and financial resources. The investment and additional resources required to establish operations and manage growth in other
countries may not produce desired levels of revenue or profitability.
In many foreign countries, particularly in certain developing economies, it is not uncommon to encounter business practices that are
prohibited by certain regulations, such as the UK Bribery Act 2010, the US Foreign Corrupt Practices Act and similar laws. Our and
our subsidiaries’ efforts undertaken to comply with respect to these laws may not prevent our employees, contractors and agents, as
9
well as those companies to which we outsource certain of our business operations from taking actions in violation of such policies and
procedures. Any such violation, even if prohibited by our or our subsidiaries’ policies and procedures or the law, could have a material
adverse effect on our reputation, results of operations, financial condition and the price of our Class A ordinary shares.
Fluctuations in exchange rates may adversely affect our results of operations.
Our functional and reporting currency is pounds sterling and substantially all of our costs are denominated in pounds sterling.
However, Broadcasting revenue from our participation in UEFA club competitions, as well as certain other revenue, is generated in
Euros. We also occasionally enter into transfer agreements, commercial partner agreements and other contracts which are payable in
Euros. In addition, we have US dollar foreign exchange exposure relating to our secured term loan facility and senior secured notes as
well as Commercial revenue from certain sponsors. We hedge the foreign exchange risk on our future US dollar revenues using a
portion of our US dollar denominated secured term loan facility and senior secured notes as the hedging instrument. We incurred
foreign exchange gains in our statement of profit or loss on our unhedged US dollar denominated secured term loan facility and senior
secured notes of £22.4 million in the year ended 30 June 2023, as well as £48.0 million in the year ended 30 June 2021. In the year
ended 30 June 2022, we recorded a loss of £58.7 million. For the years ended 30 June 2023, 2022 and 2021 approximately 4.4%,
11.6% and 15.0% of our total revenue was generated in Euros, respectively, and approximately 12.5%, 13.7% and 9.0% of our total
revenue was generated in US dollars, respectively. We may also enter into foreign exchange contracts to hedge a portion of this
transactional exposure. We offset the value of our non-sterling revenue and the value of the corresponding hedge before including
such amounts in our overall revenue. Our results of operations have in the past and will in the future fluctuate due to movements in
exchange rates.
Failure to adequately protect our intellectual property and curb the sale of counterfeit merchandise could injure our brand.
Like other popular brands, we are susceptible to instances of brand infringement (such as counterfeiting and other unauthorized uses
of our intellectual property rights). We seek to protect our brand assets by ensuring that we own and control certain intellectual
property rights in and to those assets and, where appropriate, by enforcing those intellectual property rights. For example, we own the
copyright in our logo, and our logo and trade name are registered as trademarks (or are the subject of applications for registration) in a
number of jurisdictions in Europe, Asia Pacific, Africa, North America and South America. However, it is not possible to detect all
instances of brand infringement. Additionally, where instances of brand infringement are detected, we cannot guarantee that such
instances will be prevented as there may be legal or factual circumstances which give rise to uncertainty as to the validity, scope and
enforceability of our intellectual property rights in the brand assets. Furthermore, the laws of certain countries in which we license our
brand and conduct operations, particularly those in Asia may not offer the same level of protection to intellectual property rights
holders as those in the United Kingdom, the rest of Europe and the United States, or the time required to enforce our intellectual
property rights under these legal regimes may be lengthy and delay recovery. For example, the unauthorized use of intellectual
property is common and widespread in Asia and enforcement of intellectual property rights by local regulatory agencies is
inconsistent. If we were to fail or be unable to secure, protect, maintain and/or enforce the intellectual property rights which vest in
our brand assets, then we could lose our exclusive right to exploit such brand assets. Infringement of our trademark, copyright and
other intellectual property rights could have an adverse effect on our business. We also license our intellectual property rights to third
parties. In an effort to protect our brand, we enter into licensing agreements with these third parties which govern the use of our
intellectual property and which require our licensees to abide by quality control standards with respect to such use. We cannot assure
you that our efforts to police our licensees’ use of our intellectual property will be sufficient to ensure their compliance. The failure of
our licensees to comply with the terms of their licenses could have a material adverse effect on our business, results of operations,
financial condition and cash flow.
We are subject to governmental regulation and other legal obligations related to privacy, data protection, data security and
safeguarding. Our actual or perceived failure to comply with such obligations could harm our business.
We are subject to diverse laws and regulations relating to data privacy and security, including the United Kingdom data protection
regime consisting primarily of the UK General Data Protection Regulation and the UK Data Protection Act 2018 and, in the EEA,
Regulation 2016/679, known as the EEA General Data Protection Regulation. In key jurisdictions where we operate, including China,
Singapore and Thailand, new global privacy rules are being enacted and existing ones are being updated and strengthened. We are
likely to be required to expend significant capital and other resources to ensure ongoing compliance with these laws and regulations.
Claims that we have violated individuals’ privacy rights or breached our data protection obligations, even if we are not found liable,
could be expensive and time-consuming to defend and could result in adverse publicity that could harm our business.
10
We collect and process personal data from our followers, customers, members, suppliers, business contacts and employees as part of
the operation of our business (including online merchandising), and therefore we must comply with data protection and privacy laws
in the United Kingdom and, in certain situations, other jurisdictions where we operate or where our followers reside. The United
Kingdom’s data protection regime imposes stringent operational requirements for controllers of personal data, including, for example,
higher standards for obtaining consent from individuals to process their personal data (including, in certain circumstances for
marketing and other follower engagement), more robust disclosures to individuals and a strengthened individual data rights regime,
shortened timelines for data breach notifications, limitations on retention of information, additional obligations when we contract
third-party processors in connection with the processing of personal data, and certain restrictions when transferring personal data
outside of the UK. The EEA General Data Protection Regulation imposes similarly onerous obligations for our operations in the EEA.
In addition, we are exposed to the risk that the personal data we control could be wrongfully accessed and/or used, whether by
employees, followers or other third parties, or otherwise lost or disclosed or processed in breach of data protection regulations. If we
or any of the third-party service providers on which we rely fail to process such personal data in a lawful or secure manner or if any
theft or loss of personal data were to occur, we could face liability under data protection laws, and we may be subject to litigation,
regulatory investigations, enforcement notices requiring us to change the way we use personal data and/or fines of up to £17.5 million
(in the UK)/20 million Euros (in the EU) or up to 4% of the total worldwide annual turnover of the preceding financial year,
whichever is higher. In addition to statutory enforcement and other administrative penalties, a personal data breach can lead to
compensation claims by affected individuals, negative publicity and a potential loss of business.
In recent years, US and European lawmakers and regulators have expressed concern over electronic marketing and the use of third-
party cookies, web beacons and similar technology for online behavioral advertising. In the United Kingdom, marketing is defined
broadly to include any promotional material and the rules specifically on electronic marketing are currently set out in the ePrivacy
Directive (which is implemented in the United Kingdom by the Privacy and Electronic Communications Regulations; this remains in
force following the United Kingdom’s departure from the European Union), which requires informed consent for the placement of a
cookie or similar technologies on a user’s device and for certain direct electronic marketing. The regime also imposes conditions on
obtaining valid consent, such as a prohibition on pre-checked consents and a requirement to ensure separate consents are sought for
each type of cookie or similar technology, and non-compliance with marketing and cookies laws could lead to litigation, regulatory
investigations, enforcement notices or monetary penalties. Further regulation or more stringent enforcement of cookies and similar
technologies, and any decline of cookies or similar online tracking technologies as a means to identify and potentially target users,
may lead to broader restrictions on our online activities, including efforts to understand followers’ internet usage and promote
ourselves to them.
We are also subject to legislation associated with child protection, adult protection, safeguarding and the rights of children. We aim to
operate in compliance with the guiding principles of the United Nations Convention on the Rights of the Child (“UNCRC”) which sets
out the civil, political, economic, social and cultural rights of every child, regardless of their race, religion or abilities.
Both in the United Kingdom and internationally there have been increases in disclosures of institutional sexual abuse, most notably by
the Football Association (England), US Gymnastics (USA) and Oxfam (Haiti/ United Kingdom), where the outcome has been
significant fines, reductions in funding and sponsorship, and substantial media reputational damage along with a lack of trust in those
organizations. We are required to demonstrate to government and regulatory bodies our processes and systems to demonstrate what
proactive steps we take to ensure the safety and well-being of children and adults at risk in our duty of care, as well as managing any
civil liability or other claims by individuals against historical abuse disclosures.
We collect, process and retain personal data associated with safeguarding cases and criminal records in order to take steps to safeguard
children and adults at risk, and create a safer culture for them to thrive and for staff/volunteers to work within, in accordance with
legal and regulatory requirements. Safeguarding legislation is in flux with the key focus that the welfare of the child and/or adult at
risk is paramount. Failure to maintain compliance with these changes could harm our business.
11
Piracy and illegal live streaming may adversely impact our Broadcasting revenue.
For each of the years ended 30 June 2023, 2022 and 2021, Broadcasting revenue constituted 32.2%, 36.8% and 51.6%, respectively, of
our total revenue. Our Broadcasting revenue is principally generated by the broadcasting of our matches on pay and free-to-air
television channels as well as content delivered over the internet and through our own television channel, MUTV. In recent years,
piracy and illegal live streaming of subscription content over the internet has caused, and is continuing to cause, lost revenue to media
distributors showing our matches. For example, the Premier League previously initiated litigation against Google and YouTube for
facilitating piracy and illegal streaming of subscription content. While this litigation matter has been settled there can be no guarantee
that this or similar actions will prevent or limit future piracy or illegal streaming of subscription content. If these trends increase or
continue unabated, they could pose a risk to subscription television services. The result could be a reduction in the value of our share
of football broadcasting rights and of our online and MUTV services, which could have a material adverse effect on our business,
results of operations, financial condition and cash flow.
Changes in consumer viewing habits and the emergence of new content distribution platforms could adversely affect our business.
The manner in which consumers view televised sporting events is changing rapidly with the emergence of alternative distribution
platforms. Digital cable, internet and wireless content providers are continuing to improve technologies, content offerings, user
interface, and business models that allow consumers to access video-on-demand or internet-based tools with interactive capabilities
including start, stop and rewind. Such developments may impact the profitability or effectiveness of our existing media contracts and
strategy, including our television channel, MUTV. If we are unsuccessful in adapting our licensing practices and/or media platforms
as consumer viewing habits change, our viewership levels (whether on traditional or new platforms), our Broadcasting revenue and/or
the value of our advertising and sponsorship contracts may decrease, which could have a material adverse effect our business, results
of operations and financial condition.
In addition, even if we are able to successfully adapt, we will be subject to risks associated with these alternative distribution
platforms. Delivery of video programming over the internet is done through a series of carriers, and any point of failure in this
distribution chain may disrupt or degrade the quality of our services. Service disruption or degradation for any reason, including as a
result of a cyber-attack, natural disaster or other failure in our or a third-party’s IT systems, could diminish the overall attractiveness
of our services to subscribers, causing us to lose subscribers and/or credit subscribers affected by such disruption, which could have a
material adverse effect on our business, results of operations and financial condition.
Our operating results may fluctuate due to seasonality.
Our operating results are subject to seasonal variation, limiting the overall comparability and predictability of interim financial
periods. The seasonality of our operating results is primarily attributable to the number of games played in each financial period and
therefore Matchday and Broadcasting revenue recognized. Similarly, certain of our costs derive from hosting games at Old Trafford,
and these costs will also vary based on the number of games played in the period. We have historically generated higher revenue in the
second and third quarters of our fiscal year. Our business might be affected by our men’s first team reaching the later stages of
European and domestic competitions, which would generally generate significant additional Broadcasting and Matchday revenue
during the fourth quarter of our fiscal years. Our cash flows may also vary among interim periods due to the timing of significant
payments from major commercial and player transfer agreements. As a result, our interim results and any quarterly financial
information that we publish should not be viewed as an indicator of our performance for the fiscal year.
We are subject to tax in multiple jurisdictions, and changes in tax laws (or in the interpretations thereof) in the United States,
United Kingdom or in other jurisdictions could have an adverse effect on us.
Although we are incorporated as a Cayman Islands exempted company, we report as a US domestic corporation for US federal income
tax purposes and we are subject to US federal corporate income tax (at a statutory rate of 21% as of the filing of this Annual Report)
on our worldwide income. As the majority of the Group is UK tax resident, then we are also subject to UK corporation tax (currently
at a statutory rate of 25%). We expect to utilize a credit in the United States for UK taxes paid and therefore we do not expect to be
double taxed on our income.
12
In addition, we are subject to income and other taxes in various other jurisdictions. The amount of tax we pay is subject to our
interpretation and application of tax laws in jurisdictions in which we operate. Changes in current or future laws or regulations, or the
imposition of new or changed tax laws or regulations or new related interpretations by taxing authorities in the US, UK or foreign
jurisdictions, could adversely affect our business, results of operations, financial condition and cash flow. For example, on August 16,
2022, President Biden signed into law the Inflation Reduction Act, which introduced a corporate minimum tax that would be imposed
on certain corporations at a 15% rate and an excise tax of 1% that would, in some cases, be imposed on stock buybacks and stock
redemptions by corporations. These changes could impact our tax liabilities and the recognition of the US deferred tax asset in the
future, among other impacts. See “—If we repurchase shares of our stock including our Class A ordinary shares, we may be subject to
a 1% U.S. federal excise tax.” The Internal Revenue Service or other authorities may also issue regulations or other guidance in the
future that could modify how these taxes or other provisions of the Inflation Reduction Act will be applied. In addition, other changes
to the US federal tax law have also been proposed from time to time; however, it is not yet clear if or what additional changes will be
made or when, or what impact any such changes will have on us.
If we repurchase shares of our stock including our Class A ordinary shares, we may be subject to a 1% U.S. federal excise tax.
In August 2022, the Inflation Reduction Act of 2022 was signed into law in the United States, which, among other changes, imposed a
1% excise tax on the fair market value of stock repurchased by certain publicly traded corporations, subject to certain exceptions. If
we repurchase or are deemed to repurchase shares of our stock, including our Class A ordinary shares, as part of our share repurchase
program, a strategic transaction or otherwise, we could be subject to that excise tax unless we qualify for one of the exceptions. In
such case, the excise tax would be a liability of the Company and not of our shareholders. The U.S. Department of Treasury has
released preliminary guidance on the implementation of this excise tax, but how it applies to stock repurchases is still subject to some
uncertainty.
We establish tax provisions, where appropriate, on the basis of amounts expected to be paid to (and recovered from) tax authorities
and, as a result, changes in tax laws (or in the interpretations thereof) could have an adverse effect on us.
Tax is calculated on the basis of the tax laws enacted or substantively enacted at the reporting date in the countries where we operate
and generate taxable income. We establish provisions where appropriate on the basis of amounts expected to be paid to (or recovered
from) the tax authorities. From time to time we are involved in discussions with tax authorities in relation to ongoing tax matters and,
where appropriate, provisions are made based on our assessment of each case. We are currently in active discussions with UK tax
authorities over a number of tax areas in relation to arrangements with players and players’ representatives. It is possible that in the
future, as a result of these discussions, as well as discussions that UK tax authorities are holding with other stakeholders within the
football industry, interpretations of applicable rules will be challenged, which could result in liabilities in relation to these matters. The
future income tax expense or credit may be higher or lower than estimates made when we determined whether it was appropriate to
record a provision and the amount to be recorded. Furthermore, changes in the legislative framework or applicable tax case law (or in
the interpretation thereof) could adversely affect our business, results of operations, financial condition and cash flow.
Business interruptions due to natural disasters, terrorist incidents and other events, such as a pandemic, epidemic or outbreak of
an infectious disease, could adversely affect us and Old Trafford.
Our operations can be subject to natural disasters, terrorist incidents and other events beyond our control, such as earthquakes, fires,
power failures, telecommunication losses, acts of war and pandemics, epidemics or any other outbreak of an infectious disease. For
example, our business was significantly affected by the COVID-19 pandemic which resulted in matches being played behind closed
doors and the closure of our Museum, Stadium Tours and Megastore operations. Such events, whether natural or manmade, could
cause severe destruction or interruption to our operations, and as a result, our business could suffer serious harm. Our men’s first team
regularly tours the world for promotional matches, visiting various countries with a history of terrorism and civil unrest, and as a
result, we and our players could be potential targets of terrorism when visiting such countries. In addition, any prolonged business
interruption at Old Trafford could cause a decline in Matchday revenue. Our business interruption insurance only covers some, but not
all, of these potential events, and even for those events that are covered, it may not be sufficient to compensate us fully for losses or
damages that may occur as a result of such events, including, for example, loss of market share and diminution of our brand,
reputation and client loyalty. Any one or more of these events could have a material adverse effect on our business, results of
operation, financial condition and cash flow.
We are subject to risks relating to weather and climate change.
Extreme weather conditions may cause property damage or interrupt our Matchday operations both at Old Trafford and at other away
match locations, which could harm our business and results of operations or incur additional costs. Climate change may affect the
13
frequency or severity of these conditions. Our property and business interruption insurance coverage for certain conditions is subject
to deductibles and limits on maximum benefits, including limitation on the coverage period for business interruption, and we cannot
assure you that we will be able to fully insure such losses or fully collect, if at all, on claims resulting from such conditions.
If we fail to properly manage our anticipated growth, our business could suffer.
The planned growth of our commercial operations may place a significant strain on our management and on our operational and
financial resources and systems. To manage growth effectively, we will need to maintain a system of management controls and attract
and retain qualified personnel, as well as, develop, train and manage management-level and other employees. Failure to manage our
growth effectively could cause us to over-invest or under-invest in infrastructure, and result in losses or weaknesses in our
infrastructure, which could have a material adverse effect on our business, results of operations, financial condition and cash flow.
Any failure by us to manage our growth effectively could have a negative effect on our ability to achieve our development and
commercialization goals and strategies.
Non-compliance with health and safety legislation could lead to physical harm.
The safety, health, and well-being of all our employees and customers is fundamental to delivering sustainable and positive economic
performance. We are obligated to comply with various rules and conditions imposed by government and regulatory bodies, including
but not limited to those set out by the Sports Ground Safety Authority (SGSA), ISO 45001:2018 certification (Health & Safety
Management Standard) and fire safety measures. Any incident involving non-compliance with respect to health and safety could
potentially not only affect staff but also others at the stadium including contractors, fans and visitors. Depending on the severity of the
non-compliance and the impact on those affected parties, this could lead to possible accident or injury claims, fines, damage to the
brand and reputation and prosecution, any of which could materially and adversely affect our business, results of operations, financial
condition and cash flow. In an effort to mitigate these risks, we have dedicated significant resources to establishing health and safety
operational policies and procedures, ongoing employee training protocols, and both monthly/ annual compliance and affirmation
reporting obligations. Incidents involving non-compliance may still occur despite our efforts, and it is possible that these and any
similar actions we may take in the future to mitigate these risks may divert resources away from our revenue-generating activities
without yielding a corresponding benefit.
Risks Related to Our Industry
An economic downturn or other adverse economic conditions may harm our business.
Economic downturns and other adverse conditions in the United Kingdom and markets globally, including the current economic
downturn, interest rates, inflation rates and other economic pressures, have negatively affected, and any further downturns or other
adverse conditions that occur in the future may also negatively affect, our operations. Our Matchday and Broadcasting revenues in
part depend on personal disposable income and corporate marketing and hospitality budgets. Further, our Commercial revenue is
contingent upon the expenditures of businesses across a wide range of industries. Any economic downturn or other deterioration in
economic conditions, such as inflation, slower growth, unemployment levels, credit availability, fuel prices, interest rates, tax rates,
trade relations and regulations, or other factors, whether resulting from geopolitical issues and uncertainty, the impact of pandemics,
epidemics or other outbreaks of infectious disease, or any number of other conditions or events outside of our control, are likely to
have a negative impact on consumer and corporate discretionary spending and otherwise lead companies in affected industries to cut
costs in response to these changed circumstances. As a result, any economic downturn or other weakening in economic conditions
could cause a reduction in our Commercial revenue, as well as our Broadcasting and Matchday revenues, each of which could have a
material adverse effect on our business, results of operations, financial condition and cash flow.
The departure of the United Kingdom from the European Union may adversely affect our operations and financial results.
The United Kingdom formally withdrew from the EU on 31 January 2020 and entered into a transition period which ended on
31 December 2020. While a number of significant agreements were ratified during the transitional period or shortly thereafter, there
remains a degree of political and economic uncertainty regarding the potential impact of the different relationships.
These developments may continue to impact the economic outlook of the EU and the United Kingdom, and associated global
implications remain uncertain. Lack of clarity about future UK laws and regulations could decrease foreign direct investment in the
United Kingdom, increase costs, depress economic activity and restrict our access to capital and could have a material adverse effect
on our business, results of operations, financial condition, cash flow and the price of our Class A ordinary shares.
14
Furthermore, following the departure of the United Kingdom from the EU, there are greater restrictions on the movement of players
(and football technical staff including Head Coaches) between the United Kingdom and EU member states, and other increased
regulatory complexities. Any EU resident player or technical staff that the club is seeking to employ must now be granted a Governing
Body Endorsement (“GBE”) from The Football Association. The FA will grant a GBE automatically if certain “auto-pass” criteria are
met which for players is based on their record of senior international appearances, typically reviewed over a 2-year period and the
auto-pass thresholds being determined by the FIFA ranking of the player’s national association. If the player does not meet the auto-
pass threshold, a points system based on a number of football-related criteria (in addition to senior international appearances) is used
to determine whether a GBE will be granted.
In addition to EU resident football players now requiring a GBE (similar to other workers not entitled to work in the UK), the
departure of the United Kingdom means we are no longer able to rely on the exemption that permits the transfer of players between
the ages of 16 and 18 within the territory of the EU or the EEA (subject to the satisfaction of certain conditions) as an exception to the
FIFA rules which prohibit the international transfer of players under the age of 18 (subject to certain limited exceptions). As a
response to these restrictions impacting the ability to obtain top talent compared to the Premier League’s European competitors, the
FA, Premier League and EFL have agreed to additional opportunities for players under an Elite Significant Contribution (“ESC”)
criteria. Whilst the ESC route will open up wider recruitment opportunities, clubs will be limited in the number of ESC players they
may employ with quotas ties into the total minutes played by English qualified players across the season.
An increase in the relative size of salaries or transfer costs could adversely affect our business.
Our success depends on our ability to attract and retain the highest quality players and coaching staff. As a result, we are obliged to
pay salaries generally comparable to our main competitors in England and Europe. Any increase in salaries may adversely affect our
business, results of operations, financial condition and cash flow.
Other factors that affect player salaries, such as significant investment in players by non-European leagues, changes in personal tax
rates, changes to the treatment of income or other changes to taxation in the United Kingdom and the relative strength of pounds
sterling, may make it more difficult to attract top players and coaching staff from Europe or elsewhere or require us to pay higher
salaries to compensate for higher taxes or less favorable exchange rates. In addition, if our revenue falls and salaries remain stable (for
example, as a result of fixed player or coaching staff salaries over a long period) or increase, our results of operations would be
materially adversely affected.
An increase in transfer fees would require us to pay more than expected for the acquisition of players’ registrations in the future. In
addition, certain players’ transfer values may diminish after we acquire them, and we may sell those players for transfer fees below
their net book value, resulting in a loss on disposal of players’ registrations. Net transfer costs could also increase if levies imposed by
FIFA, the Premier League or any other organization in respect of the transfer of players’ registrations were to increase.
We remain committed to attracting and retaining the highest quality players and key football management staff for our men’s first
team. Our average annual net registrations cash outflow over the last five years has been £124.0 million and we continue to expect it
to vary significantly from period to period. We may explore new player acquisitions in connection with future transfer periods that
may materially increase the amount of our net capital expenditure on intangible assets. As part of any material increase in net capital
expenditure on intangible assets, we may also experience a material increase in our expenditure for player salaries. The actual amount
of cash we use on player acquisitions will also depend, in part, on the amount of any cash we receive as a result of the sale of any
players. Any increase in net capital expenditure on intangible assets compared to historic levels will also result in an increase in
amortization expenses in future periods.
15
UEFA, Premier League and FIFA regulations could negatively affect our business.
As the primary governing body of European football, UEFA continually evaluates the dynamics in the football industry and considers
changes to the regulatory framework governing European football clubs. Clubs participating in UEFA club competitions are subject to
the UEFA Club Licensing and Sustainability regulations. Breaches in the rules may result in, among other things, withholding of prize
money, bans on registering new players for UEFA club competitions and ultimately disqualification from UEFA club competitions.
Amongst other things, these rules are intended to discourage clubs from continually operating at a loss and to ensure that clubs settle
their football, staff and tax creditors on time. Participating clubs were previously subject to Financial Fair Play (“FFP”) regulations
where relevant costs (which includes all wage costs and the amortization of player capital expenditures, but excludes depreciation of
tangible fixed assets, youth development, women’s team and community expenditure) exceed revenues on a cumulative basis over a
three-year period, or serious delays in settling creditors. Breaches have resulted in clubs being punished by way of significant fines
and even exclusion from UEFA club competitions. The rules were amended and renamed Financial Sustainability Regulations
(“FSR”) and became effective from 1 July 2022, to include a squad cost rule, with the existing “break-even” rule remaining in place
but with an increased allowable loss limit of €60m over a 3-year period (based on certain criteria being achieved) compared to €30m
under the previous regulations. This could be increased to €90m if certain good financial health criteria are also achieved.
The new regulations also subject clubs to squad cost controls for the first time. The cost control rule restricts spending on player and
coach wages, transfers, and agent fees to 70% of club revenues in a calendar year. Revenue includes operating revenue and an average
of the previous 36 months of player trading result. The gradual implementation sees the percentage at 90% in 2023/24 based on
calendar year 2023, 80% in 2024/25 based on calendar year 2024, and 70% in 2025/26 based on calendar year 2025. The percentage
remains at 70% thereafter and is tested on a calendar year basis.
Finally, the FSR include a positive net equity test as of the 31 December each year preceding each deadline, and increased overdue
payables reporting under which clubs must have no overdue payables as of 28 February each year in respect of other football clubs,
social & tax authorities and employees.
Under the previous FFP rules, the club suffered a minor technical breach of the allowable loss limit for the 22/23 break-even test. The
test covered a 5-year period with 2019/20 and 2020/21 deemed to be one averaged year as a result of the COVID-19 pandemic and the
special regulations put in place by UEFA in June 2020. The club’s reported loss for this period was €34.4 million which was
€29.4 million greater than the allowable loss of €5 million. UEFA allowed the increase of the allowable loss to €30 million if the
deficit was reduced to the €5.0 million acceptable deviation by equity contributions from equity participants and/or related parties.
However, as the club’s loss was in excess of €30m, this option was not available. The club had a number of mitigating factors for the
loss, having consistently reported surplus profits under UEFA’s regulations prior to the COVID-19 pandemic and these are discussed
further under the ‘UEFA Club Licensing and Financial Sustainability Regulations’ within ‘Item 4. Information on the Company’ of
this report. As a result, the Club Financial Control Body (“CFCB”) issued the club with a €0.3 million fine with no go-forward
restrictions and so this breach will have no bearing on the future performance of the club.
The Premier League also operates under regulations that aim to promote sustainability through profitability. The Premier League
Profitability and Sustainability Rules contain a break-even test, similar to that in UEFA’s regulations but with an increased allowable
loss limit of £15 million, or up to £105 million dependent on the ability of the club to meet its’ liabilities. Our most recent submission
was based on the fiscal years ended 30 June 2022 and 2021, and the average of fiscal years ended 2020 and 2019, and provided a
positive result. Wide-ranging sanctions, including significant fines, player transfer restrictions and Premier League points deduction,
may be imposed by the Premier League for a breach of these regulations.
There is a risk that application of the UEFA Financial Sustainability regulations and Premier League Profitability and Sustainability
Rules could have a material adverse effect on the performance of our men’s first team and our business, results of operations, financial
condition and cash flow.
The club is also bound by FIFA and Premier League regulations in respect of the status and transfer of players’ registrations across all
age groups internationally and domestically. Sanctions for significant non-compliance or breaches could include restrictions on
incoming player transfers and monetary fines, which could have a material adverse effect on the performance of our men’s first team
and our business, results of operations, financial condition and cash flow.
16
We could be negatively affected by current and future Premier League, FA, UEFA, FIFA or other regulations.
Future changes to the Premier League, FA, UEFA, FIFA or other regulations may adversely affect our results of operations. These
regulations could cover various aspects of our business, such as the format of competitions, the eligibility of players, the operation of
the transfer market and the distribution of Broadcasting revenue. FIFA is currently going through a process of reforming the
regulations which govern the transfer of player registrations, including: (a) how clubs involved in the training of a professional player
are compensated for their contribution to the development of that player when that player’s registration is transferred from one club to
another; (b) the transfer of players on a temporary basis (so-called player loans); and (c) the activities and remuneration of
intermediaries (so-called football agents) with respect to player transfers. It is possible that this regulatory reform will impact our
ability to acquire players and/or increase our costs with respect to the recruitment and retention of players. In addition, changes are
being considered to address the financial sustainability of clubs such as more robust ownership rules and tests in relation to board
directors and significant shareholders. In particular, changes to football regulations designed to promote competition could have a
significant impact on our business. Such changes could include changes to the distribution of broadcasting income and changes to the
relegation structure of English football. In addition, rules designed to promote the development of local players, such as the Home-
Grown Player Rule, which requires each Premier League club to include at least eight “home grown” (i.e., players that have been
registered for at least three seasons at an English or Welsh club between the ages of 16 and 21) players in their squads, could limit our
ability to select players. Any of these changes could make it more difficult for us to acquire top quality players and, therefore,
adversely affect the performance of our men’s first team.
Changes in the format of the league and cup competitions in which our men’s first team plays, or might in the future play, could have
a negative impact on our results of operations. In addition, in the event that new competitions are introduced to replace existing
competitions (for example, a European league), our results of operations may be negatively affected.
Changes in the wider regulatory framework for English football could impact our business, following the Fan-led Review of Football
Governance initiated by the UK Government in April 2021. Preliminary findings from the Review were published in July 2021 and
included a recommendation for the creation of an Independent Regulator for English Football, established by legislation, to take over
some responsibilities currently held by the FA. It was proposed that such a body would likely oversee matters, including financial
regulation, corporate governance and ownership. In February 2023, the UK government confirmed plans to introduce an independent
regulator and consultations and planning on this matter are ongoing.
While the Club has positively engaged with the Review and supports many of its objectives, the creation of an Independent Regulator
could result in new restrictions and requirements for our business. These could include cost controls, minimum governance standards
and revised tests for owners and directors.
There could be a decline in our popularity or the popularity of football.
There can be no assurance that football will retain its popularity as a sport around the world and its status in the United Kingdom as
the so-called “national game,” together with the associated levels of media coverage. In addition, we could suffer a decline in
popularity. Any decline in popularity could result in lower ticket sales, Broadcasting revenue, sponsorship revenue, a reduction in the
value of our players or our brand, or a decline in the value of our securities, including our Class A ordinary shares. Any one of these
events or a combination of such events could have a material adverse effect on our business, results of operations, financial condition
and cash flow.
Risk Related to Our Indebtedness
Our indebtedness could adversely affect our financial health and competitive position.
As of 30 June 2023, we had total indebtedness of £613.3 million. Our indebtedness increases the risk that we may be unable to
generate cash sufficient to pay amounts due in respect of our indebtedness. It could also have negative effects on our business. For
example, it could:
•
•
•
•
limit our ability to pay dividends;
increase our vulnerability to general adverse economic and industry conditions;
require us to dedicate a material portion of our cash flow from operations to make payments on our indebtedness, thereby
reducing the availability of our cash flow to fund the hiring and retention of players and coaching staff, working capital,
capital expenditures and other general corporate purposes;
limit our flexibility in planning for, or reacting to, changes in our business and the football industry;
17
•
•
affect our ability to compete for players and coaching staff; and
limit our ability to borrow additional funds.
In addition, our revolving facilities, our secured term loan facility and the note purchase agreement governing the senior secured notes
contain, and any agreements evidencing or governing other future indebtedness may contain, certain restrictive covenants that will
limit our ability to engage in certain activities that are in our long-term best interests. See “— Our indebtedness may restrict our ability
to pursue our business strategies.” We have not previously breached and are not in breach of any of the covenants under any of these
facilities; however our failure to comply with those covenants could result in an event of default which, if not cured or waived, could
result in the acceleration of all of our indebtedness.
To service our indebtedness, we require cash, and our ability to generate cash is subject to many factors beyond our control.
Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability
to generate cash in the future. This, to a certain extent, is subject to the performance and popularity of our men’s first team as well as
general economic, financial, competitive, regulatory and other factors that are beyond our control.
We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available
to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or
a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on
commercially reasonable terms or at all. Failure to refinance our indebtedness on terms we believe to be acceptable could have a
material adverse effect on our business, financial condition, results of operations and cash flow.
Our indebtedness may restrict our ability to pursue our business strategies.
Our revolving facilities, our secured term loan facility and the note purchase agreement governing the senior secured notes limit our
ability, among other things, to:
incur additional indebtedness;
pay dividends or make other distributions or repurchase or redeem our shares;
•
•
• make investments;
•
•
•
•
•
•
sell assets, including capital stock of restricted subsidiaries;
enter into agreements restricting our subsidiaries’ ability to pay dividends;
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
enter into sale and leaseback transactions;
enter into transactions with our affiliates; and
incur liens.
Our ability to comply with these covenants and restrictions may be affected by events beyond our control. If we breach any of these
covenants or restrictions, we could be in default under our revolving facilities, our secured term loan facility and the note purchase
agreement governing the senior secured notes. This would permit the lending banks under our revolving facilities and our secured
term loan facility to take certain actions, including declaring all amounts that we have borrowed under our revolving facilities, secured
term loan facility and other indebtedness to be due and payable, together with accrued and unpaid interest. This would also result in an
event of default under the note purchase agreement governing the senior secured notes. Furthermore, lending banks could refuse to
extend further credit under the revolving facilities. If the debt under our revolving facilities, our secured term loan facility, the note
purchase agreement governing the senior secured notes or any other material financing arrangement that we enter into were to be
accelerated, our assets, in particular liquid assets, may be insufficient to repay our indebtedness. The occurrence of any of these events
could have a material adverse effect on our business, financial condition and results of operations.
18
Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase
significantly.
We are subject to interest rate risk in connection with borrowings under our revolving facilities and our secured term loan facility,
which bear interest at variable rates. Interest rate changes could impact the amount of our interest payments, and accordingly, our
future earnings and cash flow, assuming other factors are held constant. We have entered into an interest rate swap related to a portion
of our secured term loan facility that involves the exchange of floating for fixed rate interest payments in order to reduce interest rate
volatility. As of 30 June 2023, we had £175.2 million of variable rate indebtedness outstanding under our secured term loan facility
and £100.0 million of variable rate indebtedness outstanding under our revolving facilities. We cannot assure you that any hedging
activities entered into by us will be effective in fully mitigating our interest rate risk from our variable rate indebtedness.
Risks Related to Ownership of Our Class A Ordinary Shares
Because of their increased voting rights, the holders of our Class B shares will be able to exert control over us and our significant
corporate decisions.
Trusts and other entities controlled by six lineal descendants of Mr. Malcolm Glazer collectively own 4.37% of our issued and
outstanding Class A ordinary shares and all of our issued and outstanding Class B ordinary shares, representing 95.62% of the voting
power of our outstanding capital stock. See “Item 7. Major Shareholders and Related Party Transactions – A. Major Shareholders.”
Each Class A ordinary share is entitled to one vote per share and is not convertible into any other class of shares. Each Class B
ordinary share is entitled to 10 votes per share and is convertible into one Class A ordinary share at any time. In addition, our Class B
ordinary shares will automatically convert into Class A ordinary shares upon certain transfers and other events, including upon the
date when holders of all Class B ordinary shares cease to hold Class B ordinary shares representing at least 10% of the total number of
Class A and Class B ordinary shares outstanding. For special resolutions, which require the vote of two-thirds of the votes cast, at any
time that Class B ordinary shares remain outstanding, the voting power permitted to be exercised by the holders of the Class B
ordinary shares will be weighted such that the Class B ordinary shares shall represent, in the aggregate, 67% of the voting power of all
shareholders. As a result, the holders of our Class B shares will be able to exert a significant degree of influence or actual control over
our management and affairs and control all matters submitted to our shareholders for approval, including the election and removal of
directors and any merger, consolidation, or sale of all or substantially all of our assets. The interests of the holders of our Class B
shares might not coincide with the interests of the other shareholders. This concentration of voting power in our Class B shares may
harm the value of our Class A ordinary shares, among other things:
•
•
•
delaying, deferring or preventing a change in control of our Company;
impeding a merger, consolidation, takeover or other business combination involving our Company; or
causing us to enter into transactions or agreements that are not in the best interests of all shareholders.
19
As a foreign private issuer within the meaning of the New York Stock Exchange’s corporate governance rules, we are permitted to,
and we do, rely on exemptions from certain of the New York Stock Exchange corporate governance standards and shareholder
approval requirements. Our reliance on such exemptions may afford less protection to holders of our Class A ordinary shares.
The New York Stock Exchange’s corporate governance rules require listed companies to have, among other things, a majority of
independent board members and independent director oversight of executive compensation, nomination of directors and corporate
governance matters. Additionally, the New York Stock Exchange’s rules require that a listed company obtain, in specified
circumstances, (1) shareholder approval to adopt and materially revise equity compensation plans, as well as (2) shareholder approval
prior to an issuance (a) of more than 1% of its common stock (including derivative securities thereof) in either number or voting
power to related parties, (b) of more than 20% of its outstanding common stock (including derivative securities thereof) in either
number or voting power or (c) that would result in a change of control. As a foreign private issuer, we are permitted to, and we do,
follow home country practice in lieu of the foregoing requirements. As long as we rely on the foreign private issuer exemptions under
the rules of the New York Stock Exchange, among other exemptions: a majority of the directors on our board of directors are not
required to qualify as “independent directors” as defined under the rules of the New York Stock Exchange; our remuneration
committee is not required to be comprised entirely of “independent directors”; our audit committee is not required to have at least
three members, each of whom qualifies as an “independent director”; we are not required to have a nominating and corporate
governance committee and, if we have such committee, it is not required to be comprised entirely of “independent directors”; and
shareholder approval is neither required for equity compensation plans and material revisions to those plans nor the issuance of more
than 1% of our outstanding ordinary shares (including derivative securities thereof) in either number or voting power, the issuance of
20% or more of our outstanding ordinary shares (including derivative securities thereof) in either number or voting power or an
issuance that would result in a change of control. Therefore, our board of directors’ approach to governance and securities issuances
may be different from that of a board of directors consisting of a majority of independent directors, and, as a result, the management
oversight of our Company may be more limited than if we were subject to all of the New York Stock Exchange corporate governance
standards and shareholder approval requirements.
Accordingly, our shareholders do not have the same protection afforded to shareholders of companies that are subject to all of the New
York Stock Exchange corporate governance standards and shareholder approval requirements, and the ability of our independent
directors to influence our business policies and affairs may be reduced.
The obligations associated with being a public company require significant resources and management attention.
As a public company in the United States, we incur legal, accounting and other expenses that we did not previously incur as a private
company. We are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “Exchange Act”),
and the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), the listing requirements of the New York Stock Exchange and other
applicable securities rules and regulations. Compliance with these rules and regulations increases our legal and financial compliance
costs, make some activities more difficult, time-consuming or costly and increases demand on our systems and resources. The
Exchange Act requires that we file annual and current reports with respect to our business, financial condition and results of
operations. The Sarbanes-Oxley Act requires, among other things, that we establish and maintain effective internal control over
financial reporting and requires our independent registered public accounting firm to attest to the effectiveness of such internal
control. Even if our management concludes that our internal controls over financial reporting are effective, our independent registered
public accounting firm may decline to attest to our management’s assessment or may issue a report that is qualified if it is not satisfied
with our internal controls or the level at which such controls are documented, designed, operated or reviewed, or if it interprets the
relevant requirements differently from us. Failure to comply with Section 404 could subject us to regulatory scrutiny and sanctions,
impair our ability to generate revenue, cause investors to lose confidence in the accuracy and completeness of our financial reports and
negatively affect our share price.
Furthermore, the demands of being a public company may divert management’s attention from implementing our growth strategy,
which could prevent us from improving our business, financial condition and results of operations. We have made, and will continue
to make, changes to our internal controls and procedures for financial reporting and accounting systems to continue to meet our
reporting obligations as a public company. However, the measures we have taken, and will continue to take, may not be sufficient to
satisfy our obligations as a public company. In addition, these rules and regulations increase our legal and financial compliance costs
and make some activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more
expensive for us to obtain director and officer liability insurance, and we may be required to incur substantial costs to maintain the
same or similar coverage. These additional obligations could have a material adverse effect on our business, financial condition,
results of operations and cash flow.
20
In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty
for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws,
regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their
application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in
continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance
practices. We intend to continue to invest resources to comply with evolving laws, regulations and standards, and this investment may
result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating
activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended
by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal
proceedings against us and our business, financial condition, results of operations and cash flow could be adversely affected.
We may lose our foreign private issuer status in the future, which could result in significant additional costs and expenses.
We are a “foreign private issuer,” as such term is defined in Rule 405 under the Securities Act, and therefore, we are not required to
comply with all the periodic disclosure and current reporting requirements of the Exchange Act and related rules and regulations.
Under Rule 405, the determination of foreign private issuer status is made annually on the last business day of an issuer’s most
recently completed second fiscal quarter and, accordingly, the next determination will be made with respect to us on 31
December 2023.
In the future, we would lose our foreign private issuer status if a majority of our shareholders, directors or management are US citizens
or residents and we fail to meet additional requirements necessary to avoid loss of foreign private issuer status. Although we have
elected to comply with certain US regulatory provisions, our loss of foreign private issuer status would make such provisions
mandatory. The regulatory and compliance costs to us under US securities laws as a US domestic issuer may be significantly higher. If
we are not a foreign private issuer, we will be required to file periodic reports and registration statements on US domestic issuer forms
with the US Securities and Exchange Commission (the “SEC”), which are more detailed and extensive than the forms available to a
foreign private issuer. For example, the annual report on Form 10-K requires domestic issuers to disclose executive compensation
information on an individual basis with specific disclosure regarding the domestic compensation philosophy, objectives, annual total
compensation (base salary, bonus, equity compensation) and potential payments in connection with change in control, retirement,
death or disability, while the annual report on Form 20-F permits foreign private issuers to disclose compensation information on an
aggregate basis. We will also have to mandatorily comply with US federal proxy requirements, and our officers, directors and
principal shareholders will become subject to the short-swing profit disclosure and recovery provisions of Section 16 of the Exchange
Act. We may also be required to modify certain of our policies to comply with good governance practices associated with US
domestic issuers. Such conversion and modifications will involve additional costs. In addition, we may lose our ability to rely upon
exemptions from certain corporate governance requirements on US stock exchanges that are available to foreign private issuers.
Anti-takeover provisions in our organizational documents and Cayman Islands law may discourage or prevent a change of control,
even if an acquisition would be beneficial to our shareholders, which could depress the price of our Class A ordinary shares and
prevent attempts by our shareholders to replace or remove our current management.
Our amended and restated memorandum and articles of association contain provisions that may discourage unsolicited takeover
proposals that shareholders may consider to be in their best interests. In particular, our amended and restated memorandum and
articles of association permit our board of directors to issue preference shares from time to time, with such rights and preferences as
they consider appropriate. Our board of directors could also authorize the issuance of preference shares with terms and conditions and
under circumstances that could have an effect of discouraging a takeover or other transaction. We are also subject to certain provisions
under Cayman Islands law which could delay or prevent a change of control. In particular, any merger, consolidation or amalgamation
of the Company would require the active consent of our board of directors. Our board of directors may be appointed or removed by
the holders of the majority of the voting power of our ordinary shares (which is controlled by the holders of our Class B ordinary
shares). Together these provisions may make more difficult the removal of management and may discourage transactions that
otherwise could involve payment of a premium over prevailing market prices for our Class A ordinary shares.
The price of our Class A ordinary shares might fluctuate significantly, and you could lose all or part of your investment.
Volatility in the market price of our Class A ordinary shares may prevent investors from being able to sell their Class A ordinary
shares at or above the price they paid for such shares. The trading price of our Class A ordinary shares may be volatile and subject to
wide price fluctuations in response to various factors, including:
•
performance of our men’s first team;
21
•
•
•
•
•
•
•
•
•
the overall performance of the equity markets;
industry related regulatory developments;
issuance of new or changed securities analysts’ reports or recommendations;
additions or departures of key personnel;
investor perceptions of us and the football industry, changes in accounting standards, policies, guidance, interpretations or
principles;
sale of our Class A ordinary shares by us, our principal shareholders or members of our management;
general economic conditions, including the economic impact of any pandemic, epidemic or outbreak of an infectious disease;
changes in interest rates; and
availability of capital.
These and other factors might cause the market price of our Class A ordinary shares to fluctuate substantially, which might limit or
prevent investors from readily selling their Class A ordinary shares and may otherwise negatively affect the liquidity of our Class A
ordinary shares. In addition, in recent years, the stock market has experienced significant price and volume fluctuations. This volatility
has had a significant impact on the market price of securities issued by many companies across many industries. The changes
frequently appear to occur without regard to the operating performance of the affected companies. Accordingly, the price of our
Class A ordinary shares could fluctuate based upon factors that have little or nothing to do with our Company, and these fluctuations
could materially reduce our share price. Securities class action litigation has often been instituted against companies following periods
of volatility in the overall market and in the market price of a company’s securities. This litigation, if instituted against us, could result
in substantial costs, divert our management’s attention and resources, and harm our business, operating results and financial condition.
Future sales of our Class A ordinary shares, or the perception in the public markets that these sales may occur, may depress our
stock price.
Sales of substantial amounts of our Class A ordinary shares, or the perception that these sales could occur, could adversely affect the
price of our Class A ordinary shares and could impair our ability to raise capital through the sale of additional shares. As of 2
September 2023, we had 54,631,231 Class A ordinary shares outstanding. The Class A ordinary shares are freely tradable without
restriction under the Securities Act, except for any of our Class A ordinary shares that may be held or acquired by our directors,
executive officers and other affiliates, as that term is defined in the Securities Act, which will be restricted securities under the
Securities Act. Restricted securities may not be sold in the public market unless the sale is registered under the Securities Act or an
exemption from registration is available.
All of our Class A ordinary shares outstanding as of the date of this Annual Report may be sold in the public market by existing
shareholders, subject to applicable Rule 144 volume limitations and other limitations imposed under federal securities laws.
In the future, we may also issue our securities if we need to raise capital in connection with a capital raise or acquisition. The amount
of our Class A ordinary shares issued in connection with a capital raise or acquisition could constitute a material portion of our then-
outstanding Class A ordinary shares.
22
Our ability to pay regular dividends is subject to restrictions in our revolving facilities, our secured term loan facility, the note
purchase agreement governing the senior secured notes, results of operations, distributable reserves and solvency requirements;
our Class A ordinary shares have no guaranteed dividends and holders of our Class A ordinary shares have no recourse if
dividends are not declared.
No dividend was paid for fiscal year 2023. The declaration and payment of any future dividends will be at the sole discretion of our
board of directors or a committee thereof and will depend upon our results of operations, financial condition, distributable reserves,
contractual restrictions, restrictions imposed by applicable law, capital requirements and other factors our board of directors (or such
committee thereof) deems relevant. Furthermore, neither our Class A ordinary shares nor our Class B ordinary shares have any
guaranteed dividends and holders of our Class A ordinary shares and holders of our Class B ordinary shares have no recourse if
dividends are not declared. Our ability to pay dividends on the Class A ordinary shares and Class B ordinary shares is limited by our
revolving facilities, our secured term loan facility and the note purchase agreement governing the senior secured notes, which contain
restricted payment covenants. The restricted payment covenants allow dividends in certain circumstances, including to the extent
dividends do not exceed 50% of the cumulative consolidated net income of Red Football Limited and its restricted subsidiaries,
provided there is no event of default and Red Football Limited is able to meet the principal and interest payments on its debt under a
fixed charge coverage test. Our ability to pay dividends may be further restricted by the terms of any of our future debt or preferred
securities. Additionally, because we are a holding company, our ability to pay dividends on our Class A ordinary shares and Class B
ordinary shares is limited by restrictions on the ability of our subsidiaries to pay dividends or make distributions to us, including
restrictions under the terms of the agreements governing our indebtedness. As a consequence of these limitations and restrictions, we
may not be able to make, or may have to reduce or eliminate, the payment of dividends on our Class A ordinary shares. Accordingly,
you may have to sell some or all of your Class A ordinary shares after price appreciation in order to generate cash flow from your
investment. You may not receive a gain on your investment when you sell your Class A ordinary shares and you may lose the entire
amount of the investment. Additionally, any change in the level of our dividends or the suspension of the payment thereof could
adversely affect the market price of our Class A ordinary shares. See “Item 8. Financial Information – A. Consolidated Financial
Statements and Other Financial Information – Dividend Policy.”
The rules of the Premier League, UEFA and our amended and restated memorandum and articles of association impose certain
limitations on shareholders’ ability to invest in more than one football club.
The rules of the Premier League prohibit any person who holds an interest of 10% or more of the total voting rights exercisable in a
Premier League or English Football League (“EFL”) football club from holding an interest in voting rights exercisable in any other
Premier League football club or EFL football club. As a result, our amended and restated memorandum and articles of association
prohibit the acquisition of (i) 10% or more of our Class A ordinary shares if they hold any interest in voting rights exercisable in
another Premier League football club and (ii) any Class A ordinary shares if they hold an interest of 10% or more of the total voting
rights exercisable in another Premier League football club. Further, UEFA regulations prevent clubs under common ownership from
taking part in the same competition, which may limit our shareholders’ ability to invest in other football clubs. In addition, under our
amended and restated memorandum and articles of association, if any shareholder is determined by us, at our absolute discretion, to be
holding any Class A ordinary shares in violation of this rule or the rules of certain other relevant governing bodies, we have the right
to repurchase shares from such person or direct that shareholder to transfer those shares to another person.
Exchange rate fluctuations may adversely affect the foreign exchange value of the Class A ordinary shares and any dividends.
Our Class A ordinary shares are quoted in US dollars on the New York Stock Exchange. Our financial statements are prepared in
pounds sterling. Fluctuations in the exchange rate between the pounds sterling and the US dollar will affect, among other matters, the
US dollar value of the Class A ordinary shares and of any dividends.
23
The rights afforded to shareholders are governed by the laws of the Cayman Islands.
Our corporate affairs and the rights afforded to shareholders are governed by our amended and restated memorandum and articles of
association and by the Companies Law (as amended) of the Cayman Islands (the “Companies Law”) and common law of the Cayman
Islands, and these rights differ in certain respects from the rights of shareholders in typical US corporations. In particular, the laws of
the Cayman Islands relating to the protection of the interests of minority shareholders differ in some respects from those established
under statutes or judicial precedent in existence in the United States. The laws of the Cayman Island provide only limited
circumstances under which shareholders of companies may bring derivative actions and (except in limited circumstances) do not
afford appraisal rights to dissenting shareholders in the form typically available to shareholders of a US corporation other than in
limited circumstances in relation to certain mergers. A summary of Cayman Islands law on the protection of minority shareholders is
set out in “Item 10. Additional Information — B. Memorandum and Articles of Association and Other Share Information.”
We report as a US domestic corporation for US federal corporate income tax purposes.
As discussed more fully under “Item 10. Additional Information – E. Taxation,” due to the circumstances of our formation and the
application of Section 7874 of the Code, we report as a US domestic corporation for all purposes of the Code. As a result, we are
subject to US federal income tax on our worldwide income. In addition, if we pay dividends to a Non-US Holder, as defined in the
discussion “Item 10. Additional Information — E. Taxation,” we will be required to withhold US federal income tax at the rate of
30%, or such lower rate as may be provided in an applicable income tax treaty. Each investor should consult its own tax adviser
regarding the US federal income tax position of the Company and the tax consequences of holding the Class A ordinary shares.
Withholding under the Foreign Account Tax Compliance Act may apply to our dividends.
Under legislation incorporating provisions referred to as the Foreign Account Tax Compliance Act (“FATCA”), a 30% withholding
tax will generally apply to certain types of payments, including US source dividends made to “foreign financial institutions” (as
defined under those rules) and certain other non-US entities, unless such foreign financial institutions or other entities comply with
requirements under FATCA. Because we report as a US domestic corporation for all purposes of the Code, including for purposes of
FATCA, our dividends paid to a foreign financial institution or other non-US entity may be subject to potential withholding under
FATCA. Under the applicable US Treasury Regulations and administrative guidance, withholding under FATCA generally applies to
payments of dividends on our Class A ordinary shares. While withholding under FATCA would have also applied to payments of
gross proceeds from the sale or other disposition of stock on or after 1 January 2019, proposed Treasury Regulations eliminate
FATCA withholding on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations
until final Treasury Regulations are issued.
If securities or industry analysts do not publish research or reports or publish unfavorable research about our business, our stock
price and trading volume could decline.
The trading market for our Class A ordinary shares depends in part on the research and reports that securities or industry analysts
publish about us, our business or our industry. If one or more of the analysts who covers us downgrades our stock, our share price will
likely decline. If one or more of these analysts ceases to cover us or fails to publish regular reports on us, interest in the purchase of
our Class A ordinary shares could decrease, which could cause our stock price or trading volume to decline.
It may be difficult to enforce a US judgment against us, our directors and officers and certain experts named in this Annual Report
outside the United States, or to assert US securities law claims outside of the United States.
The majority of our directors and executive officers are not residents of the United States, and the majority of our assets and the assets
of these persons are located outside the United States. As a result, it may be difficult or impossible for investors to effect service of
process upon us within the United States or other jurisdictions, including judgments predicated upon the civil liability provisions of
the federal securities laws of the United States. Additionally, it may be difficult to assert US securities law claims in actions originally
instituted outside of the United States. Foreign courts may refuse to hear a US securities law claim because foreign courts may not be
the most appropriate forums in which to bring such a claim. Even if a foreign court agrees to hear a claim, it may determine that the
law of the jurisdiction in which the foreign court resides, and not US law, is applicable to the claim. Further, if US law is found to be
applicable, the content of applicable US law must be proved as a fact, which can be a time-consuming and costly process, and certain
matters of procedure would still be governed by the law of the jurisdiction in which the foreign court resides.
24
In particular, investors should be aware that there is uncertainty as to whether the courts of the Cayman Islands would recognize and
enforce judgments of United States courts obtained against us or our directors or management as well as against the selling
shareholder predicated upon the civil liability provisions of the securities laws of the United States or any state in the United States or
entertain original actions brought in the Cayman Islands courts against us or our directors or officers as well as against the selling
shareholder predicated upon the securities laws of the United States or any state in the United States. As a result of the difficulty
associated with enforcing a judgment against us, you may not be able to collect any damages awarded by either a US or foreign court.
ITEM 4. INFORMATION ON THE COMPANY
Our Company — Manchester United
Manchester United Ltd., an exempted company with limited liability incorporated under the Companies Law (as amended) of the
Cayman Islands, was incorporated on 30 April 2012. On 8 August 2012, Manchester United Ltd. changed its legal name to
Manchester United plc. The principal executive office address is Sir Matt Busby Way, Old Trafford, Manchester M16 0RA, United
Kingdom.
The SEC maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file
electronically with the SEC. The address of that site is www.sec.gov. We also make available on our website, free of charge, our
annual reports on Form 20-F and the text of our reports on Form 6-K, including any amendments to these reports, as well as certain
other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our website
address is https://ir.manutd.com/. The information contained on or through our website, or any other website referred to herein, is not
incorporated by reference in this Annual Report.
We are one of the most popular and successful sports teams in the world, playing one of the most popular spectator sports on Earth.
Through our 145-year heritage we have won 67 trophies, including a record 20 English league titles, enabling us to develop what we
believe is one of the world’s leading sports brands and a global community of 1.1 billion fans and followers. Our large, passionate
community provides us with a worldwide platform to generate significant revenue from multiple sources, including sponsorship,
merchandising, product licensing, broadcasting and Matchday. We attract leading global companies such as adidas, Chevrolet, DXC,
TeamViewer and Tezos that want access and exposure to our community of followers and association with our brand.
Our global community of followers engages with us in a variety of ways:
• Premier League games at our home stadium, Old Trafford, played in front of a crowd, have been virtually sold out since the
1997/98 season. In the 2020/21 season, due to COVID-19 and associated government restrictions, 33 of our 34 home games
were played behind closed doors. From the start of the 2021/22 season, Old Trafford stadium welcomed back fans at full
capacity and all matches in the year operated at full capacity.
• We undertake exhibition games and promotional tours on a global basis, enabling our worldwide followers to see our team
play. These games are in addition to our competitive matches and take place during the summer months or during gaps in the
football season. Over the last 6 years, we have played 29 exhibition games in Australia, China, Ireland, Norway, Singapore,
Thailand, the United States and the United Kingdom.
• Our customer relationship management (“CRM”) database, a proprietary data repository that includes contact and
transactional details of followers and customers around the globe, enables us to analyze and better understand prospects and
customers to drive revenues. As of 30 June 2023, we estimate that the CRM database holds approximately 60.0 million
records.
• As of 30 June 2023, we also had more than 240.9 million total social connections. Last year we reported a year-end figure as
of 30 June 2022 of 220.8 million total social connections (a 9.1% increase). Total social connections include the following:
o We have a very popular brand page on Facebook with approximately 76.2 million connections as of 30 June 2023.
In comparison, the New York Yankees had just over 9 million connections and the Dallas Cowboys had
approximately 8.3 million connections as of 30 June 2023.
o As of 30 June 2023, our X (formerly known as Twitter) accounts had more than 41.7 million followers, an increase
of 15.2% from 30 June 2022.
o We have over 62.1 million followers on Instagram as of 30 June 2023, an increase of 5.6% from 30 June 2022. We
continue to be the most-followed Premier League club on Instagram.
o As of 30 June 2023, our YouTube channel had over 7.8 million subscribers, an increase of 30.0% from 30 June
2022.
o We have developed a significant presence on TikTok, with our channel reaching 22.7 million followers following its
launch in October 2020.
25
o We also have a significant presence on Chinese social media. Ahead of the 2022/23 season, we launched on Chinese
platform Xiaohongshu (also known as RED). We continue to be the most-followed football club on Sina Weibo,
with over 11 million followers as of 30 June 2023.
• After launching our website ManUtd.com and our free global mobile application in 2018, focus has turned to developing
digital media opportunities in a number of key strategic areas.
• Since 2013 we have wholly owned our in-house television network MUTV, ensuring that we have both a greater degree of
control over the production, distribution and quality of our proprietary content and better insight into how to evolve our
digital media strategy as we continue to develop and roll out carefully targeted new products and services. Distributed
globally, MUTV enables our fans to watch our men’s first-team tour matches live, our Academy and selected women’s team
matches live, as well as exclusively produced original productions and interviews with players and our team manager and the
manager’s weekly press conference. Furthermore, the new app had been enhanced to better integrate our podcast offering to
allow fans to listen to our podcasts as they are meant to be consumed.
In May 2022 we further expanded the reach of our in-house television network by incorporating MUTV into our main global
application and removing the need for fans to have multiple iOS or Android apps. At the same time we brought in several
new features including messaging, matchday audio streaming and providing access to our Premier League archive collection
for the first time. Opening up this archive of Premier League matches has significantly enhanced our digital offering,
providing fans with full access to over 1,100 games and 2,100 goals over a thirty-year period.
•
• We have expanded the reach of MUTV, which can now be accessed via 476 TV or connected device manufacturers
following launch on Samsung, LG and Android TV’s, in addition to Apple TV, Xbox, Amazon fire and Roku. Our linear
television network, MUTV, is distributed in 72 markets via 13 partners and we recently renewed our long-standing
partnership with Sky in the UK & Ireland until June 2025.
• During fiscal year 2023, according to Futures Data, our 2022/23 season games generated a cumulative audience reach of
2.8 billion viewers; thus on a per game basis our 62 games attracted an average cumulative audience reach of over
45.2 million viewers.
• We have one of the strongest online global brands providing us with significant opportunities to further engage with our
followers and develop our media assets and revenue streams.
Our Business Model and Revenue Drivers
We operate and manage our business as a single reporting segment – the operation of professional sports teams. However, we review
our revenue through three principal sectors – Commercial, Broadcasting and Matchday.
• Commercial: Within the Commercial revenue sector, we monetize our global brand via two revenue streams: sponsorship
and retail, merchandising, apparel & product licensing.
•
Sponsorship: We monetize the value of our global brand and community of followers through marketing and
sponsorship relationships with leading international and regional companies around the globe. To better leverage the
strength of our brand, we have developed a segmentation sponsorship strategy. Our sponsorship revenue was
£189.5 million, £147.9 million and £140.2 million, for each of the years ended 30 June 2023, 2022 and 2021,
respectively. Revenue for the years ended 30 June 2022 and 30 June 2021 was affected by the first team’s pre-season
tours being impacted by COVID-19 restrictions.
• Retail, Merchandising, Apparel & Product Licensing: We market and sell sports apparel, training and leisure wear and
other clothing featuring the Manchester United brand on a global basis. In addition, we also sell other licensed products,
from coffee mugs to bed spreads, featuring the Manchester United brand and trademarks. These products are distributed
through Manchester United branded retail centers and e-commerce platforms, as well as our partners’ wholesale
distribution channels. Our retail, merchandising, apparel & product licensing revenue was £113.4 million, £109.9 million
and £92.0 million for each of the years ended 30 June 2023, 2022 and 2021, respectively. Revenue for the year ended
30 June 2021 was impacted by COVID-19 and the partial closure of the Old Trafford Megastore.
Our Commercial revenue was £302.9 million, £257.8 million and £232.3 million for each of the years ended 30 June
2023, 2022 and 2021, respectively.
Our other two revenue sectors, Broadcasting and Matchday, ordinarily provide predictable cash flow and global media
exposure that enables us to continue to invest in the success of the teams and expand our brand.
26
• Broadcasting: We benefit from the distribution of live football content directly from the revenue we receive and indirectly
through increased global exposure for our commercial partners. Broadcasting revenue is derived from the global television
rights relating to the Premier League, UEFA club competitions and other competitions. In addition, our wholly-owned global
television channel, MUTV, delivers Manchester United programming to territories around the world. In addition to our
broadcasting channel, we have also launched a MUTV D2C subscription mobile application which is available on iOS,
Android, Amazon Fire, Apple TV, Roku and Xbox. Broadcasting revenue including, in some cases, prize money received by
us in respect of various competitions, will vary from year to year as a result of variability in the amount of available prize
money and the performance of our men’s first team in such competitions. Our Broadcasting revenue was £209.1 million,
£214.9 million and £254.8 million for each of the years ended 30 June 2023, 2022 and 2021, respectively. Revenue for the
year ended 30 June 2021 includes the impact of ten matches related to 2019/20 competitions played at the start of fiscal 2021
following the deferral of all competitions as a result of COVID-19.
• Matchday: We believe Old Trafford is one of the world’s iconic sports venues. It seats 73,925 inclusive of accessible
platforms accommodating 556 disabled supporters, and is the largest football club stadium in the United Kingdom. We have
averaged over 99% of attendance capacity for our Premier League matches played in front of a crowd in each of the last
25 years. Matchday revenue will vary from year to year as a result of the number of home games played and the performance
of our men’s first team in various competitions. Our Matchday revenue was £136.4 million, £110.5 million and £7.1 million
for each of the years ended 30 June 2023, 2022 and 2021, respectively. COVID-19 had a significant impact on Matchday
revenue for the year ended 30 June 2021, during which 33 out of 34 home matches were played behind closed doors.
Total revenue for the years ended 30 June 2023, 2022 and 2021 was £643.9 million, £583.2 million and £494.1 million, respectively.
Our Competitive Strengths
We believe our key competitive strengths are:
• One of the most successful sports teams in the world: Founded in 1878, Manchester United is one of the most successful
sports teams in the world — playing one of the world’s most popular spectator sports. We have won 67 trophies in nine
different leagues, competitions and cups since 1908. Our ongoing success is supported by our highly developed football
infrastructure and global scouting network.
• A globally recognized brand with a large, worldwide following: Our 145-year history, our success and the global popularity
of our sport have enabled us to become, we believe, one of the world’s most recognizable brands. We enjoy the support of
our worldwide community of 1.1 billion fans and followers. The composition of our follower base is far reaching and diverse,
transcending cultures, geographies, languages and socio-demographic groups, and we believe the strength of our brand goes
beyond the world of sports.
• Ability to successfully monetize our brand: The popularity and quality of our globally recognized brand make us an
attractive marketing partner for companies around the world. Our community of followers is strong in more emerging
markets which enables us to deliver media exposure and growth to our partners in these markets.
• Well established marketing infrastructure driving Commercial revenue growth: We have a large global team dedicated to
the development and monetization of our brand and to the sourcing of new revenue opportunities. The team has considerable
experience and expertise in sponsorship sales, customer relationship management, marketing execution, advertising support
and brand development. In addition, we have developed an increasing range of case studies, covering multiple sponsorship
categories and geographies, which in combination with our many years’ experience enables us to demonstrate and deliver an
effective set of marketing capabilities to our partners on a global and regional basis. Our team is dedicated to the
development and monetization of our brand and to the sourcing of new revenue opportunities.
27
• Sought-after content capitalizing on the proliferation of digital and social media: We produce content that is followed
year-round by our global community of fans and followers. Our content distribution channels are international and diverse,
and we actively adopt new media channels to enhance the accessibility and reach of our content. We believe our ability to
generate proprietary and exclusive content, which we distribute on our own global platforms as well as via popular
third- party social media platforms such as Facebook, Instagram, X (formerly known as Twitter), YouTube, TikTok, Sina
Weibo and others, constitute an ongoing growth opportunity. We continue to grow our dominant presence on social media.
Over the 2022/23 season, we generated over 1.9 billion interactions gained 18.8 million net new followers drew
approximately 8 billion video views. We are the most-followed Premier League club on all major social media platforms.
Following the successful D2C launch of MUTV on iOS, Android, and MUTV.com, and building on the global success of its
linear distribution, in July 2018 we launched MUTV applications on ‘connected TV’ platforms – namely, AppleTV, Roku,
Amazon Fire and Xbox. This gives our fans the ability to watch MUTV without a cable subscription. Existing subscribers to
the MUTV mobile application and web platforms can access these new platforms for free via a universal login feature which
allows the same credentials to be used across several devices. This continued expansion provides MUTV access to a new
demographic of the club’s fan base. Recent figures show that connected TV usage is highest amongst young Millennials
(born 1980 - 1995) and Generation Z (born after 1995), representing a growing trend of younger audiences accessing
programming on over the top (“OTT”) platforms in place of traditional linear television.
• Seasoned management team and committed ownership: Our senior management has considerable experience and expertise
in the football, commercial, media, legal and finance industries.
Our Strategy
We aim to increase our revenue and profitability by expanding our high growth businesses that leverage our brand, global community
and marketing infrastructure. The key elements of our strategy are:
• Continue to invest in our team, facilities and other brand enhancing initiatives: Dating back to our first league
championship in 1908 through present day, where we have earned a record number of English League titles, we have enjoyed
a rich tradition of football excellence. We believe our many years of on field success coupled with an iconic stadium and high
level of fan engagement has driven our leading global brand. We are well positioned to continue reinvesting our free cash
flow in brand enhancing initiatives. Our brand begins with strong on-field performance, and we remain committed to
attracting and retaining the highest quality players for our first teams and coaching staff. To maintain our high standard of
performance we will continue to invest in our team. We will also continue to invest in our facilities, including the Old
Trafford Stadium, to maintain the quality of service, enhance the fan experience and drive their high level of engagement and
loyalty, such as the stadium-wide Wi-Fi network that we launched ahead of the 2023/24 season. We have undertaken several
initiatives at Old Trafford to enhance our Matchday fan experience, revenue and profitability including restructuring the
composition of our stadium, with a particular emphasis on developing premium seating and hospitality facilities. Our
commitment to the fan experience has resulted in strong fan loyalty with over 99% average attendance for all of our Premier
League games played in front of a crowd since the 1997/98 season other than the 2019/20 and 2020/21 seasons which were
impacted by COVID-19 and related government regulations. Furthermore, we continue to invest in several other areas
including our digital media assets and emerging markets to grow our global fan base and increase our ability to engage with
our fans in multiple ways. We remain committed to investing in our team, our facilities and other initiatives to continue our
many years of success and enhance our brand globally. We expect these initiatives will continue to be key drivers of our
sales, profit and leading brand recognition going forward.
• Expansion and renewal of sponsors: We are well-positioned to continue to secure sponsorships with leading brands and
further develop our relationships with existing sponsors. We have historically implemented a proactive approach to
identifying, securing and supporting sponsors, including expanding our sponsorship team to bolster our analytical capabilities
and effectiveness. We continue to place great emphasis on working with our existing sponsors and maintaining a strong
renewals base. During fiscal year 2023, we announced five new global and regional partnerships and extensions to three
existing partnerships.
28
• Further develop our retail, merchandising, apparel & product licensing business: On 21 July 2023, we extended our
agreement with adidas with respect to our global technical sponsorship and dual-branded licensing rights, which began on
1 August 2015 and now terminates on 30 June 2035. The agreement with adidas does not include the rights with respect to
mono-branded licensing rights or the right to create and operate Manchester United branded soccer schools, physical retail
channels and e-commerce retail channels. In the future, we plan to invest to expand our portfolio of product licensees to
enhance the range of product offerings available to our followers. Additionally, we may also seek to refine how we segment
the different elements of this business. We may also increase our focus on developing these rights more proactively, alone or
with other partners.
Our e-commerce platform, ‘United Direct’ is currently operated under license by Fanatics in close partnership with
Manchester United. We believe that the reach and engagement of our Media platform, when combined with our segmented
product range, provides the platform for growth in this business.
• Exploit digital media opportunities: The rapid shift of media consumption towards digital, mobile and social media
platforms presents us with multiple growth opportunities and new revenue streams. Our digital media platforms, applications
and social media channels are one of the primary methods by which we engage and transact with our fans around the world.
We continue to evolve our media team’s capability to address these opportunities and deliver our strategic objectives.
We maintain a D2C subscription mobile application which can be accessed via 476 TV or connected device manufacturers
and as of May 2022 has been incorporated into our main mobile application. These applications have enabled us to directly
access new overseas territories and develop our fan base further domestically.
The launch of MUTV D2C gave access to new demographics of the club’s fan base. Recent figures show that connected TV
usage is highest amongst young Millennials (born 1985-1995) and Generation Z (born after 1995), representing a growing
trend of younger audiences accessing programming on OTT platforms and services in place of traditional linear television.
We publish content on a daily basis on to the club’s website and mobile application. Our website provides commercial
benefits for our business with greater e-commerce opportunities and more digital inventory for our commercial partners to
benefit from. Our improved media products have driven a significant increase in registrations for our App and Website, up
75% from the 2021/22 season to the 2022/23 season. Subscriptions to our linear television network, MUTV, have also seen a
significant increase, up 31% in fiscal year 2023 compared to fiscal year 2022.
In addition, the proliferation of mobile devices has resulted in a need for our content to be consumed ‘on the go’ and in real
time. The official mobile application builds upon the aforementioned benefits of the new website and increases the
distribution of our content. We constantly iterate and improve the functionality of the club website and club mobile
application, using fan insight and data to drive improvements which ultimately enhance our engagement with our fan base.
Since launch, we have reached number one in the App Store’s sports category download charts in 110 markets around the
world, top 10 within the sports category in 169 markets and currently have active users in over 230 markets globally.
In addition to developing our own digital properties, we intend to leverage third-party media platforms and other social media
as a means of further engaging with our fans and creating a source of traffic for our digital media assets. Our digital media
offerings are in the early stages of development and present opportunities for future growth.
Further, we continue to monitor the development of emerging technologies and how we can capitalize on these to create
engaging fan experiences, which, in turn, can lead to new monetization opportunities. We have partnered with leading IT
services company DXC as our new digital transformation partner. Across this multi-year global deal, DXC will use its
expertise in digital transformation to improve the way we engage with fans through our digital platforms, including
ManUtd.com and the Manchester United App by harnessing the power of data and analytics technologies.
The partnership with DXC follows the agreement with global technology company TeamViewer to become our principal
shirt partner. Our partnership with TeamViewer provides the club with access to innovative remote connectivity software
which has been implemented throughout the organization, helping individuals and teams save time, reduce travel and
improve performance.
29
The club also has partners who offer new fields of expertise as seen by our multi-year training kit partnership with blockchain
Tezos. In the year ended 30 June 2023, we launched our digital collectibles range and launched our Discord community,
providing a gateway to younger audiences. As part of the club’s partnership with Konami, Manchester United also now
operates an official esports team, which is featured in global tournaments and provides new content and engagement
opportunities for our platforms.
• Enhance the reach and distribution of our broadcasting rights: We are well-positioned to benefit from any increased value
and related growth in club distributions associated with the Premier League, the Champions League and other competitions.
Season 2023/24 will be the second year of a three-year Premier League broadcasting rights cycle (2022/23 – 2024/25). All
seven live UK packages were sold to the incumbent broadcasters – five to Sky Sports, one to BT Sport and the final one to
Amazon Prime Video, which was a new entrant in the previous cycle. The value generated from the sale was consistent with
the prior cycle and the terms were agreed during the COVID-19 pandemic. The international broadcasting rights for the new
cycle represent a 28% uplift on the previous cycle, with international rights equaling domestic rights for the first time driven
primarily by increases in North America and Europe. Overall growth for the current cycle is 16%. The ratio between the
maximum and minimum broadcasting revenue that a club can receive from the Premier League in a season is capped at 1.8:
1. The international revenue growth has been allocated to merit payments, as this cap has not yet been reached, and will
therefore benefit the higher placed teams. This was partially offset by an increase in the inflation rate in the UK. The Premier
League inflate international equal share for inflation cycle-on-cycle before allocating growth to international merit payments.
The UEFA club competition’s three-year media rights agreement which commenced in the 2021/22 season, is worth
€3.5 billion per season, marking an increase of 9% on the previous contract. The new format is anticipated to drive increased
revenues for the new cycle and UEFA are currently in the market for this cycle, commencing 2024/25.
We believe these contracts underline the continuing demand for, and popularity of, live sports content and football in
particular. Unlike other television programming, the unpredictable outcomes of live sports ensure that individuals consume
sports programming in real time and in full, resulting in higher audiences and increased interest from television broadcasters
and advertisers.
Furthermore, MUTV, our global broadcasting platform, delivers Manchester United programming to territories around the
world. We plan to continue to expand the distribution of MUTV supported by improving the quality of its content and its
production capabilities.
COVID-19 resulted in the temporary postponement of the 2019/20 Premier League, FA Cup and UEFA Europa League
competitions with matches suspended from 13 March 2020. The delay to 2019/20 season completion, and broadcast schedule
changes to the season as a whole, had implications for the agreements between the Premier League and both UK and
international broadcasters, resulting in a rebate due to broadcasters on the annual fees for the 2019/20 Season of
£285 million. The mechanism for allocating the impact of the rebate resulted in a reduction of approximately £11 million to
amounts we typically would have earned. Half of the cash impact of this rebate was deducted in the 2021/22 season and the
remaining half was deducted in 2022/23. UEFA announced in its circular letter 75/2020 that gross revenues from the 2019/20
club competitions were adversely impacted by COVID-19 by a total amount of approximately €566 million, representing
16% of total revenues. This shortfall is being recouped against distributions to clubs who participate in their competitions
over the five seasons from 2019/20 through to 2023/24. The reduction for each individual club is calculated in proportion to
each individual club’s related revenue and therefore depends upon competition participation and progress. For 2022/23
UEFA competitions, we have not accrued a rebate based on correspondence with UEFA that a potential surplus from the
2022/23 season will offset this amount.
• Diversify revenue and improve margins: We aim to increase the revenue and operating margins of our business as we
further expand our high growth commercial businesses, including sponsorship, retail, merchandising and licensing.
Our Market Opportunity
We believe that we are one of the world’s most recognizable global brands with a community of 1.1 billion fans and followers.
Manchester United is at the forefront of live football, which is a key component of the global sports market.
Other markets driving our business include the global advertising market, the global pay television market and the global apparel
market.
30
While our business represents only a small portion of our addressable markets and may not grow at a corresponding rate, we believe
our global reach and access to emerging markets position us for continued growth.
Our Men’s Team’s History
Founded in 1878 as Newton Heath L&YR Football Club, our club has operated for over 145 years. The team first entered the English
First Division, then the highest league in English football, for the start of the 1892/93 season. Our club name changed to Manchester
United Football Club in 1902, and we won the first of our 20 English League titles in 1908. In 1910, we moved to Old Trafford, our
current stadium.
In the late 1940s, we returned to on-field success, winning the FA Cup in 1948 and finishing within the top four league positions
during each of the first five seasons immediately following the Second World War. During the 1950s, we continued our on-field
success under the leadership of manager Sir Matt Busby, who built a popular and famous team based on youth players known as the
“Busby Babes.”
In February 1958, an airplane crash resulted in the death of eight of our men’s first team players. Global support and tributes followed
this disaster as Busby galvanized the team around such popular players as George Best, Bobby Charlton and Denis Law. Rebuilding of
the club culminated with a victory in the 1968 European Cup final, becoming the first English club to win this title.
This storied history preceded the highly successful modern era of Manchester United which began in earnest in 1986 when the club
appointed Sir Alex Ferguson as manager, and in 1990 we won the FA Cup and began a long period of sustained success winning the
Premier League title a record 13 times. In total, we have won a record 20 English League titles, 12 FA Cups, 6 EFL Cups,
3 European/Champions League Cups, 1 European Europa League Cup, and 1 FIFA Club World Cup, making us one of the most
successful clubs in England.
At the end of the 2012/13 season, Sir Alex Ferguson retired as team manager. Sir Alex remains a key member of the club as he is a
director of Manchester United Football Club Limited.
Our current team manager, Erik ten Hag, began his role in May 2022 and was appointed on a three-year contract with an option to
extend for a further year. Erik ten Hag previously managed Ajax where he won the Eredivisie on three occasions, the KNVB Cup
twice and reached the semi-finals of the UEFA Champions League in 2018/19.
Since the inception of the Premier League in 1992, our club has enjoyed consistent success and growth with popular players such as
Bryan Robson, Ryan Giggs, Eric Cantona, David Beckham, Paul Scholes, Wayne Rooney, Cristiano Ronaldo, Marcus Rashford and
David de Gea. The popularity of these players, our distinguished tradition and history, and the on-field success of our men’s first team
have allowed us to expand the club into a global brand with an international follower base.
Our Old Trafford stadium, commonly known as “The Theatre of Dreams,” was originally opened on 19 February 1910 with a capacity
of approximately 80,000. During the Second World War, Old Trafford was used by the military as a depot, and on 11 March 1941 was
heavily damaged by a German bombing raid. The stadium was rebuilt following the war and re-opened on 24 August 1949. The
addition of floodlighting, permitting evening matches, was completed in 1957 and a project to cover the stands with roofs was
completed in 1959. After a series of additions during the 1960s, 1970s and early 1980s, capacity at Old Trafford reached 56,385 in
1985. The conversion of the stadium to an all-seater reduced capacity to approximately 44,000 by 1992, the lowest in its history.
Thereafter, we began to expand capacity throughout the stadium, bringing capacity to approximately 58,000 by 1996, approximately
68,000 by 2000, and over 74,000 in 2006. Currently, Old Trafford seats 73,925 supporters.
31
The following chart shows the historical success of our men’s first team by trophies won:
Premier League/Football League
Division One
1965
1967
1993
1994
1996
1997
1999
2000
2001
2003
1908
1911
1952
1956
1957
1909
1948
1963
FA Cup
1977
1983
1985
1990
1994
1996
European Cup/Champions League
1968
1999
2008
FIFA Club World Cup
2008
European Cup Winners’ Cup
1991
Industry Overview
TROPHIES WON
1908
1911
1952
1956
1957
1965
2007
2008
2009
2011
2013
1999
2004
2016
2011
2013
2016
FA Charity/Community Shield
1967
1977
1983
1990
1993
1994
1996
1997
2003
2007
2008
2010
EFL/Football League Cup
2010
2017
2023
1992
2006
2009
Europa League
2017
UEFA Super Cup
1991
Intercontinental Cup
1999
Football is one of the most popular spectator sports on Earth and global follower interest has enabled the sport to commercialize its
activities through sponsorship, retail, merchandising, apparel & product licensing, broadcasting, and Matchday. As a consequence,
football constitutes a significant portion of the overall global sports industry, according to AT Kearney.
Football’s growth and increasing popularity is primarily a product of consumer demand for and interest in live sports, whether viewed
in person at the venue or through television and digital media. The sport’s revenue growth has been driven by the appetite among
consumers, advertisers and media distributors for access to and association with these live sports events, in particular those featuring
globally recognized teams.
The major football leagues and clubs in England, Germany, Spain, Italy and France have established themselves as the leading global
entities due to their history as well as their highly developed television and advertising markets, according to AT Kearney. The
combination of historical success and media development in the core European markets has helped to drive revenue, which in turn
enables those leagues to attract the best players in the world, further strengthening their appeal to followers.
As television and digital media such as broadband internet and mobile extend their reach globally, the availability of and access to live
games and other content of the leading European leagues has increased and live games are now viewed worldwide. In addition,
advances in new technology continue to both improve the television and digital media user experience and the effectiveness of
sponsorships and advertising on these platforms. These trends further strengthen the commercial benefit of associating with football
for media distributors and advertisers and increase the global opportunities for the sport.
League Structure
Manchester United is a member of the English Premier League, the top league in the United Kingdom, which has been, for a long
time, and continues to be, one of the elite leagues in the world.
The Premier League is a private company wholly-owned by its 20 member clubs, with responsibility for the competition, its Rule
Book, the centralized broadcasting rights and other commercial rights. The Premier League works proactively with the member clubs
and other football authorities domestically and internationally including the Football Association, UEFA and FIFA. Each member club
is an independent shareholder of the Premier League and works within the rules of football defined by the various governing bodies.
32
Governing Bodies
Manchester United operates under three different levels of governing bodies, ranging from worldwide to continental to national
jurisdiction.
FIFA is the international governing body of football around the world. Headquartered in Zurich, Switzerland, FIFA is responsible for
the regulation, promotion and development of football worldwide. All football played at any level must abide by the Laws of the
Game, as set forth by FIFA. FIFA’s rules and regulations are decided by the International Football Association Board (“IFAB”) and
reviewed on an annual basis. FIFA also sets the international fixture calendar which, along with European and domestic cup dates,
takes precedence over the domestic football league.
UEFA is a competition organizer and is responsible for the organization and regulation of cross-border football in Europe. UEFA is
primarily known for its European club competitions, the Champions League, the Europa League, and the Europa Conference League.
Currently the Premier League gets four teams into the Champions League, two into the Europa League and one into the Europa
Conference League. The representative structures for UEFA are primarily national association-based with the FA representing English
football on numerous committees.
The FA is the national governing body for football in England and is responsible for sanctioning competition Rule Books, including
the Premier League’s, and regulating on-field matters. The FA also organizes the FA Cup competition, in which the 20 Premier
League member clubs participate. The FA is a special shareholder of the Premier League that has the ability to exercise a vote on
certain specific issues, but has no role in the day-to-day running of the league. Each year the Premier League submits its rules to the
FA for approval and sanction. For the Premier League, the FA ensures that throughout the season the Laws of the Game are applied on
the field by officials, clubs and players including on- and off-field discipline. The FA is also involved in refereeing, youth
development and the United Kingdom’s largest sports charity, the Football Foundation.
Our Football Operations
Our football operations are primarily comprised of the following activities: our men’s first team, our youth academy, our global
scouting networks, our women’s team and other operations such as our sport science, medical and fitness operations at Carrington.
Men’s first team
Our men’s first team plays professional football in the Premier League, domestic cup competitions in England including the FA Cup
and EFL Cup and, subject to qualifying, international cup competitions, including the Champions League.
Our men’s first team is led by our manager Erik ten Hag, supported by his Assistant Coaches Mitchell Van der Gaag and Steve
McClaren and Football Director John Murtough. They are all supported by a team of over 225 individuals, including coaches and
scouts for our men’s first team and youth academy, medical and physiotherapy staff, sports science and performance and match
analysis staff.
We have 60 players under contract of whom 32 have made an appearance for our men’s first team. The remaining players may play
for the youth academy teams but are being developed such that they may make it to a starting position on our men’s first team or the
first team of other clubs. This structure has been put in place with the aim of developing some of the world’s best football players and
maximizing our men’s first team’s chances of winning games, leagues and tournaments.
33
Domestic transfers of players between football clubs are governed by the Premier League Rules and the FA Rules, which allow a
professional player to enter into a contract with and be registered to play for any club, and to receive a signing-on fee in connection
with such contract. Players are permitted to move to another club during the term of their contract if both clubs agree on such transfer.
In such circumstances a compensation fee may be payable by the transferee club. FIFA Regulations on the Status and Transfer of
Players (the “FIFA Regulations”) govern international transfers of players between clubs and may require the transferee club to
distribute 5% of any compensation fee to the clubs that trained the relevant player. In addition, a 4% levy on any such compensation
fee would also be payable to the Premier League. The transferor club in an international transfer may also be entitled to receive
payment of “training compensation” under the FIFA Regulations when certain conditions are met. If an out-of-contract player (i.e. a
player whose contract with a club has expired or has been terminated) wishes to play for another club, the player’s former club will be
entitled to a compensation fee if certain conditions are satisfied. For a domestic transfer, these include conditions regarding the
player’s age and requiring the former club to offer the player a new contract on terms which are no less favorable than his current
contract. For an international transfer, these include conditions regarding the player’s age only. Subject to limited exceptions, transfers
of professional players may only take place during one of the “transfer windows,” which for the Premier League is ordinarily a mid-
season winter transfer window during the month of January, and a post-season summer transfer window spanning a maximum of
twelve weeks throughout June and August. The summer 2023 transfer window began on 14 June 2023 and ran through until 1
September 2023.
Our players enter into contracts with us that follow a prescribed model based on FA and Premier League rules. Players on our men’s
first team typically also enter into an image rights agreement with us, which grants us enhanced rights and protections with respect to
use of their image. Our men’s first team players generally enter into contracts of between two and five years’ duration.
As of 5 September 2023, our men’s first team(1) was comprised of the following players:
Age Apps(2)
Player
Altay Bayindir . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tom Heaton . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Andre Onana . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diogo Dalot . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jonny Evans. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alvaro Fernandez(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Victor Lindelof . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Harry Maguire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tyrell Malacia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lisandro Martinez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sergio Reguilon(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Luke Shaw . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Raphael Varane . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Aaron Wan-Bissaka . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Brandon Williams(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sofyan Amrabat(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carlos Casemiro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amad Diallo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Christian Eriksen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruno Fernandes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kobbie Mainoo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Scott McTominay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hannibal Mejbri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mason Mount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Facundo Pellestri . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Donny van de Beek . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Antony dos Santos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alejandro Garnacho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mason Greenwood(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rasmus Hojlund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Anthony Martial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marcus Rashford . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Jadon Sancho . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shola Shoretire . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Position
Goalkeeper
Goalkeeper
Goalkeeper
Defender
Defender
Defender
Defender
Defender
Defender
Defender
Defender
Defender
Defender
Defender
Defender
Midfielder
Midfielder
Midfielder
Midfielder
Midfielder
Midfielder
Midfielder
Midfielder
Midfielder
Midfielder
Midfielder
Midfielder
Forward
Forward
Forward
Forward
Forward
Forward
Forward
Nationality
Turkish
English
Cameroonian
Portuguese
Northern Irish
Spanish
Swedish
English
Dutch
Argentinian
Spanish
English
French
English
English
Moroccan
Brazilian
Ivorian
Danish
Portuguese
English
Scottish
Tunisian
English
Uruguayan
Dutch
Brazilian
Argentinian
English
Danish
French
English
English
English
(1) The table includes all men’s first team players as of 5 September 2023.
(2) Apps means appearances for our men’s first team through 5 September 2023.
(3) Caps means appearances for senior national football team through 5 September 2023.
(4) Currently out on loan to other clubs.
(5) Currently in on loan from other clubs.
34
26
37
27
24
35
20
29
30
24
25
26
28
30
25
22
27
31
21
31
28
18
26
20
24
21
26
23
19
21
20
27
25
23
19
Caps(3)
0
3
4
110
199
0
234
176
39
49
0
262
66
164
50
0
55
9
48
189
1
211
3
2
12
60
48
33
129
1
301
363
82
5
5
3
34
12
102
0
59
57
9
16
6
31
93
0
0
49
71
4
122
57
-
41
24
36
12
19
16
2
1
6
30
53
23
0
Women’s team
The club launched its first professional women’s team in the 2018/19 season, winning the FA Women’s Championship in their first
season thereby securing promotion to the FA Women’s Super League (the top tier in England). The team finished in 2nd place in the
2022/23 season, qualifying for the 2023/24 UEFA Women’s Champions League, as well as reaching the Women’s FA Cup final.
Currently led by Head Coach Marc Skinner, our aims are to contribute to the growth of the women’s game, to develop a team capable
of competing at the highest level in the women’s game both domestically and in Europe which has a core consisting of players who
have graduated from our long-established and highly successful Manchester United Girls’ Regional Talent Club, and to offer academy
players a clear route to top level football within the club. 8 players from our Women’s team represented their countries at the 2023
FIFA Women’s World Cup including 3 that were part of the England squad that reached the final.
Youth academy
The aim of our youth academy is to create a flow of talent from the youth teams up to our men’s first team and we are proud to have
included a home grown player in every matchday squad for the last eighty-five years. Developing academy players is embedded as
part of the history and culture of our club, and also means that we can avoid the expense of purchasing players in those positions from
the transfer market. As part of their development plan for reaching our first team, our academy players may be loaned to other clubs
such that they gain first team experience elsewhere. This also enables these players to enhance their standing and value within the
game, and those who do not make it into our men’s first team frequently achieve places at other professional football clubs, often
generating income for the club through transfer fees as a result.
Our youth academy program consists of 10 junior teams ranging from under 9s to under 23s. Each team consists of 15 to 30 players,
each of whom takes part in an age specific elite player development and games program during the season.
Scouting network
Together with our youth academy, our scouting system is another source of our football talent. Through our scouting system, we
recruit players for both our men’s first team and youth academy. Our scouting system consists of a professional network of staff who
scout in general and for specific positions and age groups.
As well as being an established domestic network that allows us to identify and attract the best talent within Manchester and England,
we have an enhanced scouting infrastructure, with a presence in all major footballing nations. We believe this will enhance our ability
to identify and recruit the best players for our academy and first team for many years to come.
Training facilities
We have invested significant resources into developing a performance center which contains advanced sports and science equipment.
We have highly experienced training staff working at the performance center, where we provide physiotherapy, bio-mechanical
analysis and nutritional guidance to our players as part of our drive to ensure that each player is able to achieve peak physical
condition. We believe the quality of our performance center differentiates our club from many of our competitors. Fiscal year 2023
has seen a refurbishment and upgrade program take place including the swimming pool, gymnasium and associated facilities as well
as office relocations and improvements.
Revenue Sectors
Commercial
Within the Commercial revenue sector, we monetize our brand via two revenue streams: sponsorship; and retail, merchandising,
apparel & product licensing. The primary source of revenue in this sector comes from sponsorship, which allows highly diverse and
global companies to partner with Manchester United, regionally or internationally, in order to realize sponsorship benefits and
associate themselves with our brand.
35
Sponsorship
Our sponsorship agreements are negotiated directly by our commercial team. Our sponsors are granted various rights, which can
include:
•
•
•
•
•
•
•
•
rights in respect of our brand, logo and other intellectual property;
rights in respect of our player and manager imagery;
exposure on our television platform, MUTV;
exposure on our website and mobile application;
exposure on our club branded social media channels;
exposure on digital perimeter advertising boards at Old Trafford;
exposure on interview backdrops; and
the right to administer promotions targeted at customers whose details are stored on our CRM database.
Any use of our intellectual property rights by sponsors is under license. However, we retain the ownership rights to our intellectual
property.
Sponsorship development and strategy
We pursue our sponsorship deals through a developed infrastructure for commercial activities. We have a dedicated sales team that
focuses on developing commercial opportunities and sourcing new sponsors. We target potential sponsors that we believe will benefit
from association with our brand and have the necessary financial resources to support an integrated marketing relationship. By
cultivating strong relationships with our sponsors, we generate significant revenue and leverage our sponsors’ co-branded marketing
strategies to further grow our brand. We are successful in executing a geographic and product categorized approach to selling our
sponsorship rights.
We offer category exclusivity on a global basis to companies within particular industries, such as beverage, logistics and hotels. We
also offer sponsorship exclusivity within a particular geography for certain industries, such as travel.
In seeking any individual partnership, we aim to establish an indicative value for that sponsorship based on the prospective sponsor’s
industry and marketing objectives. We will only pursue a sponsorship if we believe it reflects the value that we deliver. Our current
strategy is to focus more closely on larger, established global brands rather than regional partnerships.
We believe that certain key sectors play an active role in sports sponsorship. We have sponsors in a number of these sectors and we
believe that there is significant potential to expand this platform by selectively targeting companies within the remaining sectors and
by growing revenue in existing sectors through additional sponsorship arrangements. High growth markets such as Asia, which we
expect to be a key focus for many of our prospective sponsors, are an important element of our sponsorship efforts.
36
Our sponsors
The following graph shows our annual sponsorship revenue for each of the last five fiscal years:
Sponsorship Revenue
Note: Sponsorship revenue does not include revenue generated from our agreement with adidas.
The table below highlights some of our global and regional sponsors as of 1 July 2023:
Type of sponsorship
Sponsor
Apollo Tyres . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Betfred . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Canon Medical Systems . . . . . . . . . . . . . . . . . . Global sponsor
Chivas . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Concha y Toro. . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
DHL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Doo Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Ecolab . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Product category
Tyres
Betting
Medical scanners
Spirits
Wine
Logistics
Online financial trading
B2B Hygiene Products, Food Safety, Pest Management
and Water Treatment Services
Wi-Fi
Automobiles
Global sponsor
Extreme Networks . . . . . . . . . . . . . . . . . . . . . . Global Sponsor
General Motors (Chevrolet) . . . . . . . . . . . . . . . Global sponsor
DXC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor (sleeve) Digital platform development
Kohler . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Konami . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Malta Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Marriott . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Maui Jim . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Melitta . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Mlily . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Mondelez . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Qualcomm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Spectrum (Remington) . . . . . . . . . . . . . . . . . . . Global sponsor
TeamViewer . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor (shirt)
Tezos . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Therabody . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Global sponsor
Clarity Sports . . . . . . . . . . . . . . . . . . . . . . . . . . Regional sponsor
Dream Set Go . . . . . . . . . . . . . . . . . . . . . . . . . . Regional sponsor
Estée Lauder . . . . . . . . . . . . . . . . . . . . . . . . . . . Regional sponsor
Hong Kong Jockey Club . . . . . . . . . . . . . . . . . Regional sponsor
Kitchen and bathroom fixtures and generators
Football computer games
Destination Partner
Hotels
Eyewear
Coffee
Mattresses and pillows
Confectionary, sweet biscuits, cakes and savory crackers
Technology
Electronic grooming
Remote connectivity software
Blockchain
Percussive therapy devices
Travel
Travel
Skincare
Racecourses and private members’ clubs
37
Global, regional and supplier sponsors
In addition to revenue from our shirt sponsor TeamViewer and training kit partner Tezos, we generated a further £123.1 million in the
year ended 30 June 2023 from other global, regional and other sponsors. The length of these sponsorship deals is generally between
two and five years. The majority of these sponsorship deals have minimum revenue guarantees and some have additional revenue
sharing arrangements.
Global sponsors are granted certain marketing and promotional rights with respect to our brand and intellectual property as well as
exposure on our media, such as digital perimeter boards at Old Trafford, MUTV and our website. These rights are granted on a global
basis and are exclusive by category. Regional sponsors are granted certain marketing and promotional rights and media exposure,
however, these rights are granted for a limited number of territories. Regional sponsors are able to use the rights in their designated
territory on an exclusive basis, however they are not granted global category exclusivity.
Financial services affinity sponsorship
There is a significant growth opportunity to further develop Manchester United branded financial services products. These financial
services products include credit cards and debit cards, which we believe represent key commercial opportunities within the financial
services sector, and also serve as a means of follower expression and loyalty. Depending on the product category, we may pursue
affinity agreements on a territory specific or regional basis. Examples of our financial services affinity sponsors include Co-operative
Bank (Myanmar), Emirates NBD Bank (UAE), Eurobank (Serbia), Guild Technology Inc. (US), ICICI (India), Invex (Mexico),
Krungsri (Thailand), Maybank Group (Malaysia), Shinsei (Japan) and Virgin Money (UK).
Exhibition games and promotional tours
We conduct exhibition games and promotional tours on a global basis. Our promotional tours enable us to engage with our followers,
support the marketing objectives of our sponsors and extend the reach of our brand in strategic markets. The tour matches are
broadcast and/or streamed live to subscribers of MUTV. These promotional tours are in addition to our competitive matches and take
place during the summer months or during gaps in the football season. Over the last 6 years, we played 29 exhibition games in
Australia, China, Ireland, Norway, Singapore, Thailand, the United Kingdom and the United States. We normally receive a guaranteed
fee for such tours. We also generate revenue from tour sponsorship opportunities sold to existing and new partners.
Commercial income from the Premier League
In addition to revenue from contracts that we negotiate ourselves, we receive revenue from commercial arrangements negotiated
collectively by the Premier League on behalf of its member teams. Income from these commercial contracts negotiated by the Premier
League is shared equally between the clubs that are to be in the Premier League for the season to which the income relates. Our pro
rata income received from the other commercial contracts negotiated by the Premier League is not material to the Company’s results
of operations.
Retail, Merchandising, Apparel & Product Licensing
Unlike American teams in the NFL, MLB and NHL, Manchester United retains full control of the use and monetization of its
intellectual property rights worldwide in the areas of retail, merchandising, apparel & product licensing.
Our retail, merchandising, apparel & product licensing business includes the sale of sports apparel, training and leisure wear and other
clothing featuring Manchester United brands as well as other licensed products from high fashion and luxury products to children’s
toys and household items such as mugs and bedspreads. These products are distributed on a global basis through Manchester United
branded retail stores and e-commerce platform, as well as through our partners’ wholesale distribution channels.
38
Subsequent to the balance sheet date, on 21 July 2023, the Group signed a 10-year extension to its agreement with adidas which began
on 1 August 2015 and now terminates on 30 June 2035. The minimum guarantee payable over the term of this extended agreement is
£750 million per the original term and an additional £900 million due under the extension, resulting in a total of £1,650 million,
subject to certain adjustments. Payments due in a particular year may increase dependent on performance in league, domestic and
continental competitions, with the maximum possible increase being £4.4 million per annum. Payments may decrease if the men’s
first team fails to participate in the UEFA Champions League. Under the original term, if the men’s first team did not participate in the
UEFA Champions League for two or more consecutive seasons, a deduction of 30% was made in the second or other consecutive year
of non-participation. As a result of the men’s first team qualifying for the 2023/24 UEFA Champions League, no deductions are due
under the original term to 30 June 2025. Under the extended term, this clause has been amended to state that a £10 million deduction
will be applied for each year of non-participation in the UEFA Champions League, commencing from the 2025/26 season.
The minimum guarantee from adidas does not include mono-branded licensing rights or the right to create and operate Manchester
United branded soccer schools, physical retail channels and e-commerce retail channels, which rights may generate additional revenue
for the club. We may also benefit from additional royalty payments upon exceeding a threshold of sales.
The agreement with adidas is subject to reciprocal termination provisions in respect of material breach and insolvency. Adidas may
reduce the applicable payments for a year by 50% if the men’s first team is not participating in the English Premier League during that
year. In addition, adidas may terminate the agreement by giving one full-season’s notice if the men’s first team is relegated from the
English Premier League or if it is otherwise determined that the men’s first team shall not be participating in the Premier League or
the top English league.
The Manchester United match jersey and training wear collections are completely redesigned for each season by adidas. The annual
launch of the new jerseys is always a much-anticipated day for our global community of followers. The result is a robust adidas
collection apparel business.
In addition to our adidas collection, we have a number of premium brands utilizing Manchester United intellectual property for the
creation of dual-branded merchandise, where we receive a royalty payment and a sponsorship fee from the partner.
Retail
We operate our flagship retail store at the Old Trafford stadium, which ordinarily trades year-round, and not just on Matchdays. In
addition to the Old Trafford store, we have a Manchester United branded retail location in Macau (which is operated under franchise
by a third-party licensee).
Merchandising & product licensing
We grant product licenses across a wide range of Manchester United products which are highly sought after by our followers around
the world. Under our product licensing agreements, we receive royalties from the sales of specific Manchester United branded
products. Under some product licensing agreements, we receive a minimum guaranteed payment from the licensee. The majority of
licenses are granted on a non-exclusive rights basis for specific product categories, within a specific country or geographic region.
E-commerce
We currently have arrangements in place whereby Fanatics has been granted separate licenses to use our brand and/or trademarks to
operate the official online store, branded as “United Direct”, in the United States and the rest of the world. The online store sells a
range of Manchester United branded merchandise including official replica kit and other clothing from adidas. In addition, the online
store offers a broad range of other apparel, equipment such as balls, luggage and other accessories, homewares such as bedroom,
kitchen and bathroom accessories, and collectibles, souvenirs and other gifts. We currently receive a percentage of net sales from the
online store as a royalty payment.
We believe there is a significant opportunity for us to expand our e-commerce capabilities through improved leverage of our digital
media platform, and focusing on delivering a tailored digital shopping experience at a regional level. Specifically, we intend to
improve our ability to offer targeted merchandise to our followers, complemented by more efficient fulfillment mechanics, including
product delivery, availability and payment methods.
39
Broadcasting
Central Media
The Premier League and UEFA negotiate their own media rights contracts independently of the participating clubs. In respect of the
Premier League, media agreements are typically three years in duration (although some longer deals have been agreed in certain
overseas territories) and are centrally negotiated and entered into with media distributors by the Premier League on behalf of the
member clubs. Under the agreements, Broadcasting revenue for each season is typically shared between the clubs that are to be in the
Premier League for that season and a part-share for the clubs that were relegated from the Premier League in the previous four
seasons. After certain deductions approved by the Premier League (for example, donations to “grass roots” football development and
other causes), the income from the sale of the domestic broadcasting rights is allocated to the current and relegated clubs according to
a formula based on, among other things, finishing position in the league and the number of live television appearances. Under the
current Premier League broadcasting cycle which commenced in the 2022/23 season, international broadcasting rights are fixed at the
previous cycle’s equal share adjusted for inflation. The increase in rights values above this are allocated to the twenty Premier League
clubs based upon finishing position in the league.
COVID-19 resulted in the postponement of the 2019/20 Premier League, UEFA competitions and FA Cup competition with matches
suspended from 13 March 2020. The delay to 2019/20 season completion, and broadcast schedule changes to the season as a whole,
had implications for the agreements between the Premier League and both UK and international broadcasters, resulting in a rebate due
to broadcasters on the annual fees for the 2019/20 Season of £285 million. The mechanism for allocating the impact of the rebate on
individual clubs was approved by the 20 Premier League clubs and resulted in a reduction of approximately £11 million to amounts
we typically would have earned. Half of the cash impact of this rebate was deducted from distributions to clubs in the 2021/22 season
and the remaining half was deducted in 2022/23.
In the Champions League, Europa League and Europa Conference League, media agreements are also typically three years in duration
and are collectively negotiated and entered into by UEFA on behalf of the participating clubs. Each club receives a fixed amount for
qualifying for the group stage plus bonuses based on performance. Further fixed amounts are received for participation in the
knock- out rounds; knockout play off (Europa League and Europa Conference League only), round of 16, quarter-final, and semi-final.
The runner-up and winner of the competition also earn additional amounts.
For the current 3-year agreement (which commenced in the 2021/22 season) amounts are distributed to each club as follows:
Champions
Europa
League (“UCL”) League (“UEL”)
€’million
€’million
Europa Conference
League (“UECL”)
€’million
Bonus for group stage participation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus for each group stage win (maximum 6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus for each group stage draw(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus for group runners-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus for group winners . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus for knockout round play-off participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus for round of 16 participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus for quarter-final participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bonus for semi-final participation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Runner-up bonus (inclusive of ticketing revenue share) . . . . . . . . . . . . . . . . . . . . . . . .
Winner bonus (inclusive of ticketing revenue share) . . . . . . . . . . . . . . . . . . . . . . . . . . .
Maximum total of the above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
€
€
€
€
€
€
€
€
€
15.65 €
2.80 €
0.93 €
N/A €
N/A €
N/A €
9.60 €
10.60 €
12.50 €
15.50 €
20.0 €
85.14 €
3.63
0.63
0.21
0.55
1.10
0.50
1.20
1.80
2.80
4.60
8.60
22.91
€
€
€
€
€
€
€
€
€
€
€
€
2.94
0.50
0.17
0.33
0.65
0.30
0.60
1.00
2.00
3.00
5.00
15.19
(1) In the event of a draw, the non-distributed balance will be aggregated and split among the clubs that won matches at the group
stage in proportion to the number of matches won.
In August of each season, the previous season’s Champions League winner and Europa League winner will play in the UEFA Super
Cup where each team can expect to receive a further €3.5 million participation fee, with the winner receiving an additional
€1.0 million.
40
Total fixed distribution amounts are €1.101 billion for Champions League, €255.8 million for Europa League and €188 million for the
Europa Conference League. In addition to the fixed amounts, UEFA allocates monies to a market pool which is also distributed to
clubs who reach the group-stage and beyond. The total market pool for the Champions League is €300.3 million per annum and the
total coefficient ranking allocation is €600.6 million per annum giving a combined annual total of €900.9 million. The total market
pool for the Europa League is €139.5 million per annum and the total coefficient ranking allocation is €69.8 million per annum giving
a combined annual total of €209.3 million. The total market pool for the Europa Conference League is €23.5 million per annum and
the total coefficient ranking allocation is €23.5 million per annum giving a combined annual total of €47 million.
The individual club coefficient is determined by reference to past performance in UEFA club competitions over a ten-year period with
additional points for historical winners of UEFA club competitions. On the basis of these parameters, a ranking has been established.
The total Champions League amount of €600.6 million is divided into ‘coefficient shares’, with each share worth €1.137 million. The
lowest-ranked team will receive one share (€1.14 million). One share will be added to every rank and so the highest-ranked team will
receive 32 shares (€36.38 million). The total Europa League amount of €69.8 million is divided into ‘coefficient shares’, with each
share worth €132,000. The lowest-ranked team will receive one share (€132,000). One share will be added to every rank and so the
highest-ranked team will receive 32 shares (€4.22 million). The total Europa Conference League amount of €23.5 million is divided
into ‘coefficient shares’, with each share worth €44,500. The lowest-ranked team will receive one share (€44,500). One share will be
added to every rank and so the highest-ranked team will receive 32 shares (€1.42 million).
The market pool for each country is calculated based on the proportional value of its broadcasting agreements with UEFA relative to
the total value of broadcasting agreements from all countries represented at the group stage. The total English market pool for the
2022/23 Europa League competition, in which Manchester United participated, was approximately €15 million. This amount can vary
from season to season subject to the composition of the clubs taking part in the group stage. 50% of each country market pool is
distributed to its group-stage representatives based on each club’s domestic performance in the previous season. For the Champions
League this is based on league finishing position. For the Europa League this is based on league finishing position and potentially both
domestic cup competitions (the winners of the FA Cup, if participating in the Europa League, earn the highest share). Any club which
qualifies for the Champions League group-stage by virtue of winning the Europa League in the previous season does not receive a
distribution of the 50% market pool based on domestic performance in the previous season. England has one spot in the Europa
Conference League, against which 100% of fixed market pool monies are allocated.
The remaining 50% of the market pool is distributed as follows:
•
•
•
for the Champions League, based on the number of games played in the current competition relative to teams from the same
country.
for the Europa League, split across each round of the competition (40% to the group stage, 15% to the round of 32, 20% to
the round of 16, 13% to the quarter-finals, 8% to the semi-finals and 4% to the final) which is distributed to teams who
participate in the relevant round based on the proportional value of the country broadcasting rights relative to the value of all
broadcasting agreements for countries represented at each stage.
for the Europa Conference League, split across each round of the competition (40% to the group stage, 15% to the round of
32, 20% to the round of 16, 13% to the quarter-finals, 8% to the semi-finals and 4% to the final) which is distributed to teams
who participate in the relevant round based on the proportional value of the country broadcasting rights relative to the value
of all broadcasting agreements for countries represented at each stage.
Broadcasting revenue including, in some cases, prize money received by us in respect of various competitions, will vary from year to
year as a result of variability in the amount of available prize money and the performance of our men’s first team in such competitions.
UEFA announced in its circular letter 75/2020 that gross revenues from the 2019/20 club competitions were adversely impacted by
COVID-19 by a total amount of approximately €566 million, representing 16% of total revenues. This shortfall is being recouped
against distributions to clubs who participate in their competitions over the five seasons from 2019/20 through to 2023/24. As a result,
going forward through to season 2023/24, we expect approximately a 3.5% annual reduction to the above distributions. The reduction
for each individual club is calculated in proportion to each individual club’s related revenue and is therefore dependent upon
competition participation and progress.
41
Digital media
Our website,ManUtd.com, is published in seven languages and is available globally. We use our website, which incorporates e-
commerce services and venue microsites (United Events, Exec Club, Foundation, Matchday VIP), to communicate with our followers,
promote the Manchester United brand and provide a platform for our sponsors to reach a global audience. Our website is designed
with a mobile first approach, with content including exclusive articles, exclusive videos, real-time match updates, live blogging
capabilities, social integration and sharing capabilities, improved search and discoverability, content recommendations, fan polls,
voting trivia and statistics.
The proliferation of digital television, broadband and fibre internet, smartphones, mobile applications and social media globally
provides our business with many opportunities to extend the reach of our content. Specifically, we intend to use our digital media
platforms to generate value through extended sponsor positioning, driving e-commerce, and direct-to-consumer opportunities,
including selling premium services such as video and exclusive content subscriptions. We will also continue to leverage our digital
media platform to generate customer data and information as well as follower profiles of commercial value to us, our sponsors and our
media partners. We believe that in the future, digital media will be one of the primary means through which we engage and interact
with our follower base. Recent measures to improve the fan digital experience include: single sign-on (SSO) on our United Direct site
whereby now a single login is required; improving security; enhancing the design of our United Direct site to improve the user
experience and reducing our environmental footprint.
Content and localization
Our digital media properties are an increasingly important means through which we engage with our fan base, domestically and
internationally. To take advantage of that opportunity, we are constantly developing our premium, localized and exclusive content to
enhance the proposition for our followers, members and paid subscribers around the world.
Our followers generally prefer to consume our content in their language and context. We believe we can effectively deliver tailored
services to our followers globally through various language offerings, geographic targeting and personalized content. Our mobile
application is available in Simplified Chinese. We also currently have international language websites in English, Spanish, French,
Arabic, Simplified Chinese, Korean and Japanese. On our social channels we have international language feeds in English, Spanish,
Portuguese, Arabic, Simplified Chinese, Korean, Japanese, Malay and Thai. This enables us to engage with our followers in their
native language and to produce content that is specific to each region. This focus on true localization, not translation, can be seen
across all our social media platforms. For example, on TikTok we use local trends, hashtags and culturally relevant music to speak to
fans in a truly global, local way.
Mobile services and applications
Mobile devices running the iOS or Android operating system enable consumers to browse websites, watch video, share content, access
dedicated applications and conduct e-commerce and, as a consequence, the majority of our followers access our website and digital
content via their mobile devices.
In 2018 we launched our first free global mobile application. This application was developed in conjunction with our website to
provide benefits to our fans, through a clean and easy navigation interface. We believe our mobile application also provides significant
benefits to our business through better e-commerce functionality and more digital inventory for our commercial partners to benefit
from. Since launch, further enhancements were made to our mobile application to incorporate our direct-to-consumer MUTV offering
and provide additional functionality including messaging, Matchday audio streaming and providing access to our Premier League
archive collection for the first time. These additional features have been successful in driving additional data acquisition and have
further enhanced our personalization capabilities within the mobile application. We believe our focus on our owned and operated
products will lead to an improved customer experience via the mining of owned data, which will lead to more personalization and a
more engaged fan base, as users spend more time on our platforms and return regularly.
We launched a free content section allowing all fans access to our exclusive programming, with subscribers then having access to our
full range of programming, including both on demand and linear experiences around full match commentary for all Premier League,
Champions League and domestic cup matches, as well as live tour matches and coverage. Subscribers can also view pre- and post-
match analysis for all matches by club legends, exclusive interviews with the team manager and men’s first-team players, award-
winning documentaries, celebrity features, and live broadcasts of Academy team matches and more recently women’s team matches.
42
We intend to continue developing the functionality of our mobile applications to facilitate greater engagement and to satisfy global
demand.
Video on demand
The proliferation of broadband internet and mobile access also allows us to offer video on demand to our followers around the world.
Through our new website, official club mobile application and the MUTV D2C applications, we provide live video and video on
demand to our followers in a variety of formats and commercial models. Some video on-demand content is free to all users, some
content is only accessible upon registration and some content, as in the case of live pre-season tour matches, is available on a
subscription basis.
Depending on the market, going forward we may offer video on demand services via our media partners as part of a comprehensive
suite of content rights, as well as on a direct-to-consumer basis.
Social media
With a global fan base, we believe there is a significant opportunity to leverage the capabilities of social media platforms to augment
our relationships with our followers around the world. By establishing an official presence on these platforms, we believe we will be
able to deepen the connections with our follower base and improve our ability to market and sell products and services to our
followers.
As of 30 June 2023, we had over 240.9 million social connections including approximately 76.2 million connections on our Facebook
page, over 62.1 million followers on Instagram and over 41.7 million followers to our X (formerly known as Twitter) accounts. For
the 2022/23 season we generated over 1.9 billion interactions across all platforms.
We use our social footprint as a means to communicate news and other club updates, engage with our followers, identify active
followers, solicit feedback from our users, tailor future digital media offerings and enhance the overall follower experience.
We intend to continue to expand our reach through new and different social media and mobile chat platforms by launching additional
Manchester United branded presences on global platforms as well as regional and language-specific platforms.
We believe this continuous expansion will enable us to broaden the reach of our brand and the content we produce, enhance our
engagement with followers in many of our key international and emerging markets as well as opening up a new demographic of fans.
While there is no guarantee that our social connections will continue to grow at comparable rates in the future, we believe the
combination of platforms on which we have an official presence will provide an increasing source of traffic to our club branded digital
media services and e-commerce properties, enhance our ability to convert users into customers through video and exclusive content
subscriptions and e-commerce, and continue to provide extensive positioning opportunities for our partners.
Customer relationship management
One of our ongoing strategic objectives is to further develop our understanding of and deepen the relationships with our fans and
followers. We operate a CRM database in order to better understand the size, location, demographics and characteristics of our fan and
follower base on an aggregated basis. We believe our CRM database enables us to more effectively deliver targeted communications
to our fan base which ultimately leads to upsell opportunities through our product and service offerings such as digital subscription
services, merchandise and tickets. A deep understanding of our follower base is also valuable to sponsors and media partners who seek
to access specific customer categories with targeted and relevant advertising.
MUTV
MUTV is our wholly owned global television channel and is broadcast in numerous countries. MUTV broadcasts a wide variety of
content which is compelling to our global community of followers, including live first team football from our pre-season tours,
academy and women’s team live football, club news, game highlights, and exclusive “behind the scenes” coverage of our club.
Depending on the market, we may offer MUTV as a single product to television distributors for distribution to our fans on a linear
television basis or directly to our fans on a D2C basis which allows them to subscribe directly to the club via our OTT offering.
MUTV is currently available in 230 markets globally. (Markets are defined to reflect regional mobile application availability).
43
For example, in our domestic territory, the United Kingdom, MUTV is offered to consumers through the Sky and Virgin Media
distribution platforms and on a D2C basis via a subscription on MUTV mobile applications on iOS and GooglePlay App stores and
‘Connected TV’ applications on platforms such as Roku, Amazon Fire, AppleTV and Xbox. In addition, MUTV is available on
MUTV.com.
Outside the United Kingdom, we offer MUTV through distribution partners as part of a suite of media rights, which can be purchased
on a bundled or selective basis, and can include certain promotional rights, and via the OTT offerings (both on mobile application and
Connected TVs).
MUTV features a range of content, the primary categories of which are:
•
•
•
•
•
•
•
highlights from games and other time-delayed game footage (including full matches), both of which are subject to certain
holdback periods under the agreements between media distributors, the participating clubs and the Premier League and
UEFA;
live coverage of promotional tours and exhibition games;
lifestyle programming and other “behind the scenes” content profiling the club, our history, our manager and our players;
live coverage of women’s team games;
live coverage of academy and youth games;
live ‘Managers Press Conference’ before relevant men’s first team fixtures; and
various other award winning shows and documentaries.
Matchday
Our stadium, which we fully own, is called Old Trafford and is known as “The Theatre of Dreams.” We believe Old Trafford is one of
the most famous and historic stadiums in the world. Football followers travel from all over the world to attend a match at Old
Trafford, which is the largest football club stadium in the United Kingdom, with a capacity of 73,925. The stadium has approximately
10,000 executive club seats, including 133 luxury boxes, 24 restaurants and 4 sports bars.
We have one of the highest capacity utilizations among English clubs, with an average attendance for our home Premier League
matches played in front of a crowd of over 99% for each season since the 1997/98 season. The substantial majority of our tickets are
sold to both general admission and executive season ticket holders, the majority of whom pay for all their tickets in advance of the
first game of the season.
Other Matchday revenue includes match day catering, event parking, programme sales as well as membership, Manchester United
Museum revenue and a share of the ticket revenue from away matches in domestic cup competitions. Matchday revenue also includes
revenue from other events hosted at Old Trafford, including other sporting events (including the annual Rugby Super League Grand
Final) and entertainment events.
We operate a membership program for our supporters. Individuals who become official members have the opportunity to apply for
tickets to all home matches. Adult Official Members pay £35 per season to join our Lite Membership, £40 to join the Full Membership
or £60 to join the Premium membership scheme. At the end of the 2022/23 season we had over 360,000 members, one of the highest
in world sport.
The Manchester United Museum is located within Old Trafford. It chronicles Manchester United’s 144-year history and houses the
club’s most precious artifacts and trophies.
We aim to maximize ticket revenue by enhancing the mix of experiences available at each game and by providing a range of options
from general admission tickets to multi-seat facilities and hospitality suites. In particular, we have recently increased overall Matchday
revenue by restructuring the composition of our stadium, with an emphasis on developing hospitality facilities which sell at a higher
price and improve our margins. As part of this effort, we have invested in new and refurbished multi-seat hospitality suites as well as
improvements to our single-seat facilities. We expect our enhancements to our hospitality facilities to continue to be a key driver of
our profit from Matchday sales going forward.
44
UEFA Club Licensing and Financial Sustainability Regulations
UEFA oversees the Club Licensing and Financial Sustainability (formerly Financial Fair Play) regulations, which are intended to
ensure the financial self-sufficiency and sustainability of football clubs by discouraging them from continually operating at a loss,
introduce more discipline and rationality on club finances, ensure that clubs settle their liabilities on a timely basis and encouraging
long term investment in youth development and sporting infrastructure.
UEFA implemented an updated set of regulations from 1 July 2022 ahead of the commencement of a new cycle and competition
format in 2024/25. The “break-even” rule from the previous regulations remains, aimed at encouraging football clubs to operate on the
basis of their own revenue with some amendments. Owner investments of equity are allowed only within the acceptable deviation
thresholds, as described below. In addition, the regulations provide that football clubs who are granted a UEFA license by their
national association, based largely on physical infrastructure and personnel criteria set out by UEFA, and who then qualify for a
UEFA club competition based on sporting grounds, will then be required to comply with a “monitoring” process. The monitoring
process involves the submission of certain financial information (a break-even test and payables analysis) to the Club Financial
Control Body (“CFCB”). The CFCB is part of UEFA’s Organs for the Administration of Justice and comprises a team of independent
financial and legal experts. The CFCB will review financial submissions and decide what sanctions, if any, to apply to non-compliant
clubs. Any appeal must be made directly to the Court of Arbitration for Sport. Potential sanctions for non-compliance with the FFP
regulations include a reprimand/warning, withholding of prize money, fines, prohibition on registering new players for UEFA club
competitions and ultimately exclusion from UEFA club competitions.
With respect to the break-even assessment, a club must demonstrate that its relevant “football” income is equal to or exceeds its
“football” expenses. The prior permitted level of deficit was limited over the three-year assessment period to just €5 million, although
a larger deficit of up to €30 million was permitted provided the deficit was reduced to the €5 million acceptable deviation by equity
contributions from equity participants and/or related parties. Any club which exceeded the €30 million limit would automatically be in
breach of the break-even rule, unless it had sufficient surpluses in the two years prior to the assessment period, irrespective of any
equity contributions. With respect to the updated break-even assessment, a club must continue to demonstrate that its relevant
“football” income is equal to or exceeds its “football” expenses. The newly permitted level of deficit is still limited over the three-year
assessment period to just €5 million, although a larger deficit of up to €60 million permitted provided the deficit is reduced to the
€5 million acceptable deviation by equity contributions from equity participants and/or related parties or the club has existing positive
equity in excess of the loss. Any club which exceeds the €60 million limit will automatically be in breach of the break-even rule. It is
no longer possible to utilize surpluses gained in the two years prior to the assessment period. Another key change to the regulations is
that previously depreciation of tangible fixed assets, youth development, women’s team and community expenditure were excluded
from the break-even test. In the updated regulations, clubs must either have positive equity to the value of the expenditure to be able to
exclude them from the calculation or they must be covered by equity contributions from equity participants and/or related parties (in
addition to any allowable deficit contributions).
The larger deficit of up to €60 million over the three-year period can be increased to €90 million based on specific financial criteria
being met, aimed at benefitting clubs that are financially sustainable.
UEFA’s Financial Sustainability regulations see clubs subject to squad cost controls for the first time. The cost control rule restricts
spending on player and coach wages, transfers, and agent fees to 70% of club revenues. The cost control rule is a calendar year test
which will be tested during the season to place greater emphasis on current financial information. This allows UEFA to identify
breaches as they occur. The gradual implementation will see the percentage at 90% in 2023/24 based on calendar year 2023, 80% in
2024/25 based on calendar year 2024, and 70% in 2025/26 based on calendar year 2025. The percentage remains at 70% thereafter
and is tested on a calendar year basis. This requirement provides a direct measure between squad costs and income to encourage more
performance-related costs and to limit the market inflation of wages and transfer costs of players.
Ahead of registration for UEFA club competitions for the 2022/23 season we submitted our payables analysis and break-even
assessment under the previous FFP regulations. The payables analysis is typically carried out at 30 June prior to the competition
season and is required in respect of payments to other clubs for transfer fees, payments to staff including players and football staff and
payments to tax authorities. UEFA has already imposed sanctions on clubs who have breached the Licensing and FFP regulations,
ranging from monetary fines, restrictions on wages and first team squad size and limitation on transfer expenditures, to exclusion from
UEFA club competitions.
45
The break-even test result under the previous FFP regulations was initially assessed on the cumulative sum of the financial
information for the four years ended 30 June 2022, being 2021/22, the average of 2020/21 and 2019/20 due to COVID-19 special
regulations, and 2018/19. As this resulted in a loss above the allowable loss limit, under UEFA’s FFP rules, this was extended to five
years to include 2017/18 and 2016/17. The club reported a loss of €34.4 million which was €29.4 million greater than the allowable
loss of €5 million. UEFA allowed the increase of the allowable loss to €30m if the deficit was reduced to the €5 million acceptable
deviation by equity contributions from equity participants and/or related parties. However, as the club’s loss was in excess of
€30 million, this option was not available. The club had a number of mitigating factors for the loss, having consistently reported
surplus profits under UEFA’s regulations prior to the COVID-19 pandemic. The primary mitigating factors were the losses suffered in
2021/22 as a result of the COVID-19 pandemic, totalling €46.8 million, which were not taken into account under the regulations.
Furthermore, the regulations stipulated that COVID-19 losses for 2019/20 and 2020/21 were allowable but only to the extent that they
reset the UEFA test position to nil and in doing so the club only utilised €15.6 million out of a total of €246.6 million COVID-19
losses. Had either elements of these unutilised losses have been allowable for the 2022/23 test, the club would have comfortably
passed the regulations.
Additionally, the club suffered non-cash foreign exchange movements on unhedged USD borrowings across the year-ended 30 June
2022, resulting in a £58.7 million loss in fiscal 2022, impacting the break-even test result. This foreign exchange movement is an
unrealised amount and is a function of the club’s debt being denominated in USD whilst financial statements balances are reported in
GBP. As a result of the technical breach, the club entered into discussions with the CFCB, with the CFCB acknowledging the
extenuating circumstances. As a result, the CFCB issued the club with a €0.3 million fine with no go-forward restrictions and so this
breach will have no bearing on the future performance of the club.
European clubs reported operating losses in excess of €1 billion in both 2019/20 and 2020/21 as a result of the COVID-19 pandemic
after seven years of operating profits. European clubs had generated more than €5.7 billion in operating profits from fiscal year 2013
to 2019, compared with operating losses of €0.7 billion during the period from fiscal year 2009 to fiscal year 2013. The losses suffered
during COVID-19 have partially contributed to UEFA’s drive to ensure clubs are stable and keep costs under control.
We support the financial sustainability regulations, and do not believe it will adversely impact our ability to continue to attract some of
the best players in the coming years as a result of having one of the largest revenues in European football.
Premier League Profitability and Sustainability Rules
The Premier League Profitability and Sustainability Rules were introduced during the 2015/16 season, implementing a break-even rule
similar to the break-even test of the UEFA Club Licensing and Financial Fair Play Regulations and aimed at encouraging Premier
League clubs to operate within their means. Potential sanctions for non-compliance with the profitability and sustainability regulations
include significant fines, player transfer restrictions and Premier League points deduction.
Our most recent break-even assessment under the Premier League Profitability and Sustainability Rules was submitted in March 2023,
based on our fiscal year 2022 and the average of fiscal year 2021 and 2020 audited financial statements. The break-even test is based
on a club’s audited pre-tax earnings. If the break-even test results are positive, no further action is required until the next break-even
test. If the initial test is negative, a club is re-tested, using the UEFA definition of “adjusted earnings before tax,” which allows credit
for depreciation of tangible fixed assets and expenditure on youth development and community programs. If these second test results
are negative by £15 million or less, the Premier League board will determine whether the club will be able to pay its liabilities due to
other football clubs and in respect of employees. If a club’s losses exceed £15 million but are not more than £105 million, the club’s
ownership must provide evidence of sufficient funding to meet its liabilities as they fall due. If these results are negative by more
than £105 million, regardless of secured funding, Premier League sanctions will apply. Our break-even test result submitted in March
2023 was positive.
We support and operate within the Premier League Profitability and Sustainability Rules, and do not believe it will adversely impact
our ability to continue to attract some of the best players in the coming years.
Social Responsibility
Manchester United Foundation
We are committed to a wide-ranging corporate social responsibility program through Manchester United Foundation (the
“Foundation”). The associated charity of Manchester United, the Foundation’s vision focuses on a future where all young people are
empowered to achieve their goals. The ongoing commitment to young people is to help ensure that, despite uncertainty in the world
46
around them, those with whom the Foundation works on a daily basis continue to feel supported, inspired, and positive about their
future.
The Foundation’s objectives are to ensure young people have access to community and educational outreach programs to help them
make positive choices in their lives and develop in the following areas:
-
-
-
Physical and mental wellbeing (living a happier, healthier life)
Social wellbeing (bringing a sense of belonging to people and their communities)
Employability (improving educational and employment outcomes)
The Foundation operates in the areas of highest social deprivation across Greater Manchester, with the aim of ensuring the benefits of
these programs are felt by children and young people who need it most. With more than 23,000 sessions delivered in 2022/23 –
encompassing more than 30,000 hours of delivery – the charity’s presence remains strong and visible across local communities.
The Foundation has partnerships with 66 primary, secondary, and special educational needs schools, as well as working alongside the
Salford City College Group on a further education program in sport. Working predominantly across all ten boroughs of Greater
Manchester, but recently expanding to Carlisle, Derbyshire, London and Derry/Londonderry, a coach is based in the high schools full-
time to work with pupils, feeder primary schools and within the local community to build lasting relationships. Other initiatives, such
as Street Reds evening football sessions, girls’ development provision, and a disability and inclusion program, provide free football,
alternative activities, qualifications and work experience opportunities for young people across Greater Manchester.
The Foundation fulfils all charitable activity for Manchester United, including supporting the Sir Bobby Charlton Foundation (finding
innovative solutions to create a landmine-free world), and managing the club’s long-term partnership with global children’s
organization Unicef. The Foundation also supports external charities by providing signed items for their own fundraising purposes.
Equality, Diversity and Inclusion
The Club is dedicated to promoting equality, diversity, and inclusion, and this is reflected in its All Red All Equal initiative, which
covers a broad range of activities. The Club is also dedicated to achieving gender balance in its leadership teams, with 33% female
representation in the Executive Leadership and a 40% female-to-male ratio in senior leaders and managers. The Club is also focused
on promoting diversity in senior roles by creating an inclusive representation of leaders from various ethnicities, backgrounds, gender
identities, sexual orientations, disabilities, social mobility, and economic backgrounds.
The Club is committed to promoting diversity and inclusion within our workforce. We have established partnerships with leading
organizations such as 10,000 Black Interns, the Adidas MerkyFC Project, The FA Leadership Code, the Premier League Coach
Diversity Index, Stonewall, and a number of Inclusive Executive Search Agencies. These highly productive collaborations enable us
to attract talented individuals from underrepresented groups and backgrounds, to create a more inclusive and welcoming environment.
We offer diverse opportunities for aspiring leaders through internships, work placements, and work experience programmes for early
talent. We take pride in our efforts to create a truly diverse and inclusive workplace, and we will continue to work tirelessly to make
this a reality.
Throughout the past season, significant progress has been made by the Club towards re-accrediting its Advance Level award through
the Premier League’s Equality, Diversity, and Inclusion Standard. Furthermore, the Club has recently introduced a new Equality,
Diversity and Inclusion Strategy that aligns its efforts with EU Sustainability Goals.
Furthermore, the Club has signed the Football Leadership Diversity Code, which aims to diversify our leadership and coaching teams.
We are currently in the process of reporting on the progress made in achieving the targets outlined in the code’s third year.
Throughout the year, our Club has witnessed the progression of our significant campaigns, working in unison with our commercial
partners and All Red All Equal initiative. Our primary campaigns, namely HATRED, SEE RED, ONE LOVE, CHANGE THE
GAME, and IGNORED, have supported and impacted supporters worldwide. Generating over 11 million engagements, 8 million
views of our video content, and 234 million impressions. Moving forward, the evolution of our work aims to celebrate and highlight
the successes of significant figures, groups, and communities throughout history and in the future, promoting positivity and
inspiration. We have continued to support football-wide campaigns and initiatives within the lens of All Red All Equal–- such as the
Premier League’s ‘’No Room for Racism’’ initiative.
47
A range of active Employee Resource Groups and Affinity groups, as well as an Equality Committee, are in place to promote equality,
diversity and inclusion at Manchester United. Employee Resource Groups align with our equality, diversity and inclusion strategy and
strategic aims, and affinity groups allow for a breadth of intersectionality to grow with groups such as Menopause, bringing together
colleagues from the business to share and support one another.
The Club’s commitment to equality, diversity and inclusion is deeply ingrained in its strategy and values and is supported by the
Executive Leadership's dedication to these principles. A new strategy has been developed to align with the People Strategy and the
overall Club strategy, outlining how all areas of the business are responsible for creating a diverse, welcoming, accessible and
inclusive environment for everyone, ensuring the Club and its workforce embody these values.
Sustainability
We recognize the need to move towards a more sustainable economy. We have taken steps to reduce the amount of waste we produce
and divert all operational waste away from landfills. We also aim to minimize the use of non-renewable materials, improve our
recycling rates and use more recycled materials. We have achieved the Carbon Trust Standard, which recognizes organizations that
take a best practice approach to measuring and managing their environmental impacts, and through our Reds Go Green initiative we
intend to continue to build on our carbon and renewable energy strategy to improve our performance further. We have also achieved
the Gold Standard in Green Tourism Business Certification, which recognizes the commitment of tourism businesses that are actively
working to become more sustainable. We also offset carbon emissions generated from air travel from our 2023/24 pre-season tour to
the United States through investment in renewable wind energy.
Intellectual Property
We consider intellectual property to be important to the operation of our business and critical to driving growth in our Commercial
revenue, particularly with respect to sponsorship revenue. Certain of our commercial partners have rights to use our intellectual
property. In order to protect our brand we generally have contractual rights to approve uses of our intellectual property by our
commercial partners.
We consider our brand to be a key business asset and therefore have a portfolio of Manchester United related registered trademarks
and trademark applications. The historic emphasis has been on seeking and maintaining trademark registrations for the words
“Manchester United” and the club crest but that emphasis was then extended to cover the devil device and the words “MUTV” and
“Man Utd”. We also actively procure copyright protection and copyright ownership of materials such as literary works, logos,
photographic images and audio visual footage.
Enforcement of our trademark rights is important in maintaining the value of the Manchester United brand. There are numerous
instances of third parties infringing our trademarks, for example, through the manufacture and sale of counterfeit products. While it
would be cost-prohibitive to take action in all instances, our aim is to consistently reduce the number of Manchester United related
trademark infringements by carrying out coordinated, cost-effective enforcement action on a global basis following investigation of
suspected trademark infringements. Enforcement action takes a variety of forms. In the United Kingdom, we work with enforcement
authorities such as trading standards and customs authorities to seize counterfeit goods and to stop the activities of unauthorized
sellers. Overseas enforcement action is taken by approved lawyers and investigators. Those lawyers and investigators are instructed to
work with, where feasible, representatives of other football clubs and brands that are experiencing similar issues within the relevant
country in order that our enforcement action costs can be minimized as far as possible. We also work with the Premier League in
respect of infringements that affect multiple Premier League clubs, in particular in Asia. We also take direct legal action against
infringers, for example, by issuing cease and desist letters or seeking compensation when we consider that it is appropriate to do so.
In relation to materials for which copyright protection is available (such as literary works, logos, photographic images and audio
visual footage), our current practice is generally to secure copyright ownership where possible and appropriate. For example, where
we are working with third parties and copyright protected materials are being created, we generally try to secure an assignment of the
relevant copyright as part of the commercial contract. However, it is not always possible to secure copyright ownership. For example,
in the case of audio visual footage relating to football competitions, copyright will generally vest in the competition organizer and any
exploitation by Manchester United Football Club of such footage will be the subject of a license from the competition organizer.
As part of our ongoing investment in intellectual property, we have implemented a program to detect intellectual property
infringement in a digital environment and which facilitates taking action against infringers.
48
Competition
From a business perspective, we compete across a wide variety of industries and within many different markets. We believe our
primary sources of competition include, but are not limited to:
• Football clubs: We compete against other football clubs in the Premier League for match attendance and Matchday revenue.
We compete against football clubs around Europe and the rest of the world to attract the best players and coaches in the
global transfer and football staff markets.
• Television media: We receive media income primarily from the Premier League and UEFA media contracts, each of which is
collectively negotiated. Further details of such arrangements are set out in the section headed “ — Revenue Sectors —
Broadcasting.” On a collective level, and in respect of those media rights we retain, we compete against other types of
television programming for broadcaster attention and advertiser income both domestically and in other markets around the
world.
• Digital media: We compete against other digital content providers for consumer attention and leisure time, advertiser income
and consumer e-commerce activity.
• Merchandise and apparel: We compete against other providers of sports apparel and equipment.
• Sponsorship: As a result of the international recognition and quality of our brand, we compete against many different outlets
for corporate sponsorship and advertising income, including other sports and other sports teams, other entertainment and
events, television and other traditional and digital media outlets.
• Live entertainment: We compete against alternative forms of live entertainment for the sale of Matchday tickets, including
other live sports, concerts, festivals, theatre and similar events.
As a result, we do not believe there is any single market for which we have a well-defined group of competitors.
Real Property
We own or lease property dedicated to our football and other operations. The most significant of our real properties is Old Trafford.
The following table sets out our key owned and leased properties. In connection with our revolving facilities, our secured term loan
facility and the senior secured notes, several of our owned properties, including Old Trafford are encumbered with land charges as
security for all obligations under those agreements, although the Manchester International Freight Terminal and the Carrington
training ground are not encumbered.
Key properties and locations
Primary function
Owned/leased
Old Trafford Football Stadium, Manchester . . . . . . . . . . . . . . . .
Carrington training ground, Carrington, Trafford . . . . . . . . . . .
Littleton Road Training Ground, Salford . . . . . . . . . . . . . . . . . .
The Cliff, Lower Broughton Road, Salford . . . . . . . . . . . . . . . .
Manchester International Freight Terminal, Westinghouse
Road Trafford Park, Manchester . . . . . . . . . . . . . . . . . . . . . . .
Land and buildings at Wharfside, Trafford Park, Manchester. .
Land and buildings on the southwest side of Trafford Wharf
Football stadium
Owned (freehold)
Football training facility Owned (freehold)
Football training facility Owned (freehold)
Football training facility Owned (freehold)
Area
(approx. m2)
205,000
440,000
84,000
28,000
Investment properties
Investment properties
Leased (through March 2071)
Owned (freehold)
107,000
27,100
Road, Manchester . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Offices and Car Parking Owned (freehold)
Owned (freehold)
Investment properties
Land and buildings at Canalside, Trafford Park, Manchester . .
Land and buildings at Castlemore Retail Park, Trafford Park,
Manchester . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Office space, London . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Offices
Office space, Maryland, United States . . . . . . . . . . . . . . . . . . . . Offices
Investment properties
Owned (freehold)
Leased (through April 2033)
Leased (through May 2024)
23,000
10,800
3,969
8,500
653
The above properties are owned or leased by Manchester United Football Club Limited, apart from Castlemore Retail Park and
Manchester International Freight Terminal which are owned or leased by Alderley Urban Investments Limited.
49
Legal Proceedings
We are involved in various routine legal proceedings incident to the ordinary course of our business. We believe that the outcome of
all pending legal proceedings, in the aggregate, will not have a material adverse effect on our business, financial condition or
operating results. Further, we believe that the probability of any material losses arising from these legal proceedings is remote.
Subsidiaries
Our directly or indirectly wholly-owned principal subsidiaries are: Red Football Finance Limited, Red Football Holdings Limited, Red
Football Shareholder Limited, Red Football Joint Venture Limited, Red Football Limited, Red Football Junior Limited, Manchester
United Limited, Alderley Urban Investments Limited, Manchester United Football Club Limited, Manchester United Women’s
Football Club Limited, Manchester United Interactive Limited, MU Commercial Holdings Limited, MU Commercial Holdings Junior
Limited, MU Finance Limited, MU RAML Limited, MUTV Limited and RAML USA LLC. All of the above are incorporated and
operate in England and Wales, with the exception of Red Football Finance Limited which is incorporated in the Cayman Islands and
RAML USA LLC which is incorporated in the state of Delaware in the United States.
Customers
See “Item 3.D. Risk Factors — Risks Related to Our Business — We are exposed to credit related losses in the event of non-
performance by counterparties to Premier League and UEFA media contracts as well as our key commercial and transfer contracts.”
Our top customer was the Premier League, who represented 27.5%, 25.1% and 35.9% of our total revenue in each of the years ended
30 June 2023, 2022 and 2021, respectively. Our second largest customer was adidas, who represented 11.7%, 13.1% and 15.7% of our
total revenue in each of the years ended 30 June 2023, 2022 and 2021.
ITEM 4A. UNRESOLVED STAFF COMMENTS
None.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion should be read in conjunction with our consolidated financial statements and notes included elsewhere in
this Annual Report.
Overview
We are one of the most popular and successful sports teams in the world, playing one of the most popular spectator sports on Earth.
Through our 145-year heritage we have won 67 trophies, including a record 20 English league titles, enabling us to develop what we
believe is one of the world’s leading sports brands and a global community of 1.1 billion fans and followers. Our large, passionate
community provides Manchester United with a worldwide platform to generate significant revenue from multiple sources, including
sponsorship, merchandising, product licensing, broadcasting and Matchday. We attract leading global companies such as adidas,
TeamViewer and Tezos that want access and exposure to our community of followers and association with our brand.
How We Generate Revenue
We operate and manage our business as a single reporting segment — the operation of professional sports teams. We review our
revenue through three principal sectors — Commercial, Broadcasting and Matchday — and within the Commercial revenue sector, we
have two revenue streams which monetize our global brand: sponsorship revenue; and retail, merchandising, apparel & product
licensing revenue.
Revenue Drivers
Commercial
Commercial revenue is derived from sponsors and commercial partners. We generate our Commercial revenue with low fixed costs
and small incremental costs for each additional sponsor, making our commercial operations a relatively high margin and scalable part
of our business and a driver of growth for our overall profitability. Total Commercial revenue for the year ended 30 June 2023 was
£302.9 million.
50
Sponsorship
We monetize the value of our global brand and community of followers through sponsorship relationships with leading international
and regional companies around the globe. To better capitalize on the strength of our brand, we have developed a segmentation
sponsorship strategy. See “Item 4. Information on the Company — Revenue Sectors — Commercial – Sponsorship – Our Sponsors”
for some of our global and regional sponsors as at 1 July 2023.
A partnership with Manchester United provides corporations with the ability to associate themselves with the highly popular
Manchester United brand and a global marketing platform to quickly and effectively amplify their brand and message to their potential
customers.
For the 2022/23 season, our shirt sponsor was TeamViewer and our training kit partner was Tezos. Total sponsorship revenue for the
year ended 30 June 2023 was £189.5 million.
Retail, Merchandising, Apparel & Product Licensing
Our retail, merchandising, apparel & product licensing business includes the sale of sports apparel, training and leisure wear and other
clothing featuring the Manchester United brand as well as other licensed products from coffee mugs to bedspreads. These products are
distributed on a global basis through Manchester United branded retail stores and e-commerce platform, as well as through our
partners’ wholesale distribution channels.
Subsequent to the balance sheet date, on 21 July 2023, the Group signed a 10-year extension to its agreement with adidas in respect of
global technical sponsorship and dual-branded licensing rights, which began on 1 August 2015 and now terminates on 30 June 2035.
See “Item 4. Information on the Company — Revenue Sectors — Commercial – Retail, Merchandising, Apparel & Product
Licensing” for additional information regarding our agreement with adidas.
Total retail, merchandising, apparel & product licensing revenue for the year ended 30 June 2023 was £113.4 million.
Broadcasting
We benefit from the distribution of live football content directly from the revenue we receive and indirectly through increased global
exposure for our commercial partners. Broadcasting revenue is derived from our share of the global broadcasting rights relating to the
Premier League, Champions League and other competitions. The growing popularity of the Premier League and Champions League in
international markets and the associated increases in media rights values have been major drivers of the increase in our overall
Broadcasting revenue in recent years.
Season 2023/24 will be the second of a three-year (2022/23 – 2024/25) Premier League broadcasting rights cycle. All seven live UK
packages were sold to the incumbent broadcasters – five to Sky Sports, one to BT Sport and the final one to Amazon Prime Video
who was a new entrant in the previous cycle. The value generated from the sale was consistent with the prior cycle and the terms were
agreed during the COVID-19 pandemic. The international broadcasting rights for the new cycle represent a 28% uplift on the previous
cycle, with international rights equaling domestic rights for the first time driven primarily by increases in North America and Europe.
Overall growth for the new cycle is 16%. The ratio between the maximum and minimum broadcasting revenue that a club can receive
from the Premier League in a season is capped at 1.8: 1. The international revenue growth will be allocated to merit payments, as this
cap has not yet been reached, and will therefore benefit the higher placed teams.
Our participation in the Premier League and Champions League, Europa League or Europa Conference League (and consequently, our
receipt of the revenue generated by these broadcasting contracts) is predicated on the success of our men’s first team, and if our men’s
first team fails to qualify for these UEFA club competitions or is relegated from the Premier League in any given season, our
Broadcasting revenue for that and subsequent fiscal years will be adversely impacted, partially offset by lower operating expenses. As
a result of our men’s first team performance during the 2022/23 season, our men’s first team will participate in the 2023/24
Champions League.
In addition, MUTV delivers Manchester United programming and other content to territories around the world. MUTV generated total
revenue of £6.1 million, £6.8 million and £6.3 million for each of the years ended 30 June 2023, 2022 and 2021, respectively. Total
Broadcasting revenue for the year ended 30 June 2023 was £209.1 million.
51
Matchday
Matchday revenue is a function of the number of games played in front of a crowd at Old Trafford, the size and seating composition of
Old Trafford, attendance at our matches and the prices of tickets and hospitality sales. A significant driver of Matchday revenue is the
number of home games we play at Old Trafford in front of a crowd, which is ordinarily based on 19 Premier League matches and any
additional matches resulting from the success of our men’s first team in the FA Cup, EFL Cup and UEFA club competitions. Our
participation in the Premier League and UEFA club competitions (and consequently, our receipt of the revenue generated by these
matches) is predicated on the success of our men’s first team, and if our men’s first team fails to qualify for UEFA club competitions
or is relegated from the Premier League in any given season, our Matchday revenue for that and subsequent fiscal years will be
adversely impacted, partially offset by lower resulting expenses. Average attendance for our home Premier League matches played in
front of a crowd has been over 99% for each season since the 1997/98 season, with strong attendance for UEFA club competitions, FA
Cup and EFL Cup matches. Total Matchday revenue for the year ended 30 June 2023 was £136.4 million.
Other Factors That Affect Our Financial Performance
Employee benefit expenses
Player and staff compensation comprise the majority of our operating costs. Of our total operating costs, player costs, which consist of
salaries, bonuses, benefits and national insurance contributions are the primary component. Compensation to non-player staff, which
includes our manager and coaching staff, also accounts for a significant portion. Competition from top clubs in the Premier League
and Europe has resulted in increases in player and manager salaries, forcing clubs to spend an increasing amount on player and staff
compensation, and we expect this trend to continue. In addition, as our commercial operations grow, we expect our headcount and
related expenses to increase as well.
Other operating expenses
Our other operating expenses generally include certain variable costs such as Matchday catering, policing, security stewarding and
cleaning at Old Trafford, visitor gateshare for domestic cups, and costs related to the delivery on media and commercial sponsorship
contracts. Other operating expenses also include certain fixed costs, such as property costs, maintenance, human resources, training
and developments costs, and professional fees. Our other operating expenses are subject to inflationary pressures and as such, can
increase over time.
Amortization, depreciation and impairment
We amortize the capitalized costs associated with the acquisition of players’ and key football management staff registrations. These
costs are amortized over the period of the employment contract agreed with a player/key football management staff. If a player or key
football management staff extends his contract prior to the end of the pre-existing period of employment, the remaining unamortized
portion of the acquisition cost is amortized over the period of the new contract. Changes in amortization of the costs of players’ and
key football management staff registrations from year to year and period to period reflect additional fees paid for the acquisition of
players and key football management staff, the impact of contract extensions and the disposal of registrations. As such, increased
players’ and key football management staff registration costs in any period could cause higher amortization in that period and in future
periods and have a negative impact on our results of operations. Moreover, to the extent that the player and key football management
staff registration costs vary from period to period, this may drive variability in our results of operations. We also amortize the
capitalized costs associated with the acquisition of other intangible assets over their estimated useful lives, which is typically between
3 and 10 years.
Depreciation primarily reflects a straight-line depreciation on investments made in property, plant and equipment. Depreciation over
the periods under review results primarily from the depreciation of Old Trafford, including incremental improvements made to Old
Trafford each season.
Impairment charges arise when an asset’s carrying amount exceeds its recoverable amount. Assets are tested for impairment whenever
events or changes in circumstance indicate that the carrying amount may not be recoverable.
Exceptional items
Exceptional operating costs are those costs that in management’s judgment need to be separately disclosed by virtue of their size,
nature or incidence in order to provide a proper understanding of our results of operations and financial condition.
52
Profit on disposal of intangible assets
We recognize profits or losses on the disposal of intangible assets (primarily players’ registrations) in our statement of profit or loss.
Acquisitions and disposals of players are discretionary and we make transfer decisions based upon the requirements of our first teams
and the overall availability of players. These requirements and the availability of players, and resulting profits or losses on disposals,
may vary from period to period, contributing to variability in our results of operations between periods.
Finance (costs)/income
A key component of our expenses during each of the past three fiscal years has been interest costs and revaluations of our USD
borrowings. We expect interest expense to continue to be a significant component of our expenses. See “Item 5.B. Liquidity and
Capital Resources — Indebtedness.” Finance costs also include the unwind of the discount recognized on amounts payable or
receivable under transfer agreements as appropriate which can vary, depending on transfer activity and interest rates, amongst other
factors.
Taxes
During each of the three years ended 30 June 2023, 2022 and 2021, our principal operating subsidiaries were tax residents in the
United Kingdom. We were subject to a weighted UK statutory tax rate of 20.5% in the year ended 30 June 2023 and 19.0% in the
years ended 30 June 2022 and 30 June 2021.
Although we are organized as a Cayman Islands exempted company, we report as a US domestic corporation for US federal income
tax purposes. As a result, our worldwide income is also subject to US taxes at the US statutory rate (currently 21)%.
In April 2023, a statutory tax rate of 25% took effect in the UK. We expect to utilize a credit in the United States for UK taxes paid
and therefore we do not expect to be double taxed on our income. We expect our future cash tax rate to align more closely to the UK
statutory tax rate of 25% now that this rate has taken effect.
We may also be subject to US state and local income (franchise) taxes based generally upon where we are doing business. These tax
rates vary by jurisdiction and the tax base. Generally, state and local taxes are deductible for US federal income tax purposes.
Furthermore, because most of our subsidiaries are disregarded from their owner for US federal income tax purposes, we are not able to
control the timing of much of our US federal income tax exposure. In calculating our liability for US federal income tax, however,
certain of our deductible expenses are higher than the amount of those same expenses under UK corporation tax rules, owing to
differences in the relevant rules of the two jurisdictions and the related difference in the opening book versus tax basis of our assets
and liabilities. Finally, our UK tax liability can be credited against our US federal income tax liabilities, subject to US rules and
limitations.
Seasonality
We experience seasonality in our revenue and cash flow, limiting the overall comparability and predictability of interim financial
periods. In any given interim period, our total revenue can vary based on the number of games played in that period, which affects the
amount of Matchday and Broadcasting revenue recognized. Similarly, certain of our costs derive from hosting games at Old Trafford,
and these costs will also vary based on the number of games played in the period. We historically recognize the most revenue in our
second and third fiscal quarters due to the scheduling of matches. However, a strong performance by our men’s first team in UEFA
club competitions and domestic cups could result in significant additional Broadcasting and Matchday revenue, and consequently we
may also recognize the most revenue in our fourth fiscal quarter in those years. Our cash flow may also vary among interim periods
due to the timing of significant payments from major commercial agreements. As such, though we report interim results of operations
for our first, second and third fiscal quarters, in managing our business, setting goals and assessing performance we focus primarily on
our full-year results of operations rather than our interim results of operations.
53
A. OPERATING RESULTS
The following table shows selected audited consolidated statement of profit or loss data for the years ended 30 June 2023 and 2022.
For a discussion of our results of operations for the year ended 30 June 2021, including a year-to-year comparison between the years
ended 30 June 2022 and 2021, refer to Part I, Item 5, “Operating and Financial Review and Prospects” in our Annual Report Form
20- F for the year ended 30 June 2022.
Year ended 30 June
2023
2022
Statement of profit or loss data
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(£’000)
648,401
583,201
Analyzed as:
Commercial revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Broadcasting revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matchday revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Analyzed as:
Employee benefit expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss before profit on disposal of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on disposal of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
302,886
209,095
136,420
(681,117)
(331,374)
(163,211)
(13,848)
(172,684)
—
1,112
(36,104)
20,424
(11,180)
(44,917)
23,523
(21,394)
(32,574)
3,896
(28,678)
257,820
214,847
110,534
(692,520)
(384,141)
(117,911)
(14,314)
(151,462)
(24,692)
—
(109,319)
21,935
(87,384)
(85,915)
23,676
(62,239)
(149,623)
34,113
(115,510)
Year Ended 30 June 2023 as Compared to the Year Ended 30 June 2022
Year ended
30 June
2023
2022
(in £ millions)
% Change
2023 over 2022
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Broadcasting revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matchday revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee benefit expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exceptional items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on disposal of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
648.4
302.9
209.1
136.4
(681.1)
(331.4)
(163.2)
(13.8)
(172.7)
—
1.1
20.4
(21.4)
3.9
583.2
257.8
214.9
110.5
(692.6)
(384.1)
(117.9)
(14.3)
(151.5)
(24.7)
—
22.0
(62.2)
34.1
11.2 %
17.5 %
(2.7)%
23.4 %
(1.7)%
(13.7)%
38.4 %
(3.5)%
14.0 %
—
—
(7.3)%
(65.6)%
(88.6)%
54
Revenue
Total revenue for the year ended 30 June 2023 was £648.4 million, an increase of £65.2 million, or 11.2%, compared to the year ended
30 June 2022, as a result of an increase in revenue in our commercial and Matchday sectors, partially offset by a decrease in revenue
in our broadcasting sector, as described below.
Commercial revenue
Commercial revenue for the year ended 30 June 2023 was £302.9 million, an increase of £45.1 million, or 17.5%, over the year ended
30 June 2022.
• Sponsorship revenue for the year ended 30 June 2023 was £89.5 million, an increase of £41.6 million, or 28.1%, over the
year ended 30 June 2022, due to the impact of new sponsorship agreements and the men’s first team’s 2022 pre-season tour;
and
• Retail, merchandising, apparel & product licensing revenue for the year ended 30 June 2023 was £113.4 million, an increase
of £3.5 million, or 3.2%, over the year ended 30 June 2022, due to the increased number of home matchdays in the current
year.
Broadcasting revenue
Broadcasting revenue for the year ended 30 June 2023 was £209.1 million, a decrease of £5.8 million, or 2.7%, over the year ended
30 June 2022, primarily due to the men’s first team participating in the UEFA Europa League compared to the UEFA Champions
League in the current year, partially offset by improved performance in both domestic and continental competition.
Matchday revenue
Matchday revenue for the year ended 30 June 2023 was £136.4 million, an increase of £25.9 million, or 23.4%, over the year ended
30 June 2022, due to playing seven more home games across all competitions in the current year, together with strong demand for
match by match hospitality offers.
Total operating expenses
Total operating expenses (defined as employee benefit expenses, other operating expenses, depreciation and impairment, amortization
and exceptional items) for the year ended 30 June 2023 were £681.1 million, a decrease of £11.5 million, or 1.7%, over the year ended
30 June 2022.
Employee benefit expenses
Employee benefit expenses for the year ended 30 June 2023 were £331.4 million, a decrease of £52.8 million, or 13.7%, over the year
ended 30 June 2022, as a result of squad turnover and the men’s first team not participating in the UEFA Champions League in the
current year.
Other operating expenses
Other operating expenses for the year ended 30 June 2023 were £163.2 million, an increase of £45.3 million, or 38.4%, over the year
ended 30 June 2022. This is primarily due to costs associated with the men’s first team pre-season tour and increased matchday costs
associated with progression in domestic cup competitions.
Depreciation and impairment
Depreciation and impairment for the year ended 30 June 2023 amounted to £13.8 million, a decrease of £0.5 million, or 3.5%, over the
year ended 30 June 2022.
55
Amortization
Amortization, primarily of registrations, for the year ended 30 June 2023 was £172.7 million, an increase of £21.2 million, or 14.0%,
over the year ended 30 June 2022, due to investment in the first team playing squad. The unamortized balance of registrations as of
30 June 2023 was £384.9 million, of which £157.9 million is expected to be amortized in the year ending 30 June 2024. The
remaining balance is expected to be amortized over the four years ending 30 June 2028. This does not take into account player
acquisitions after 30 June 2023, which would have the effect of increasing the amortization expense in future periods, nor does it
consider player departures subsequent to 30 June 2023, which would have the effect of decreasing future amortization charges.
Furthermore, any contract renegotiations would also impact future charges.
Exceptional items
Exceptional items for the year ended 30 June 2023 were £nil compared to a cost of £24.7 million for the year ended 30 June 2022. The
prior year amount includes compensation due to former men’s first team managers, certain members of the playing, coaching and
scouting staff, and certain non-playing staff. The cost incurred for the year ended 30 June 2023 also includes additional contributions
we expect to pay towards the Football League pension scheme deficit based upon the latest actuarial valuation.
Other operating income
Other operating income for the year ended 30 June 2023 was £1.1 million compared to £nil in the year ended 30 June 2022.
Profit on disposal of intangible assets
Profit on disposal of intangible assets for the year ended 30 June 2023 was £20.4 million, compared to a profit of £22.0 million for the
year ended 30 June 2022. The profit on disposal of intangible assets for the year ended 30 June 2023 primarily related to the disposal
of Pereira (Fulham) and Garner (Everton). The profit on disposal of intangible assets for the year ended 30 June 2022 primarily related
to the disposal of James (Leeds) plus contingent fees and sell-on fees relating to former players.
Net finance costs
Net finance costs for the year ended 30 June 2023 were £21.4 million, compared to net finance costs of £62.2 million for the year
ended 30 June 2022, primarily due to a favorable swing in foreign exchange rates resulting in unrealized foreign exchange gains on
unhedged USD borrowings in the current year compared to unrealized foreign exchange losses in the prior year.
Income tax
The income tax credit for the year ended 30 June 2023 was £3.9 million, compared to £34.1 million for the year ended 30 June 2022.
In both years the credit arose primarily as a result of deferred tax assets recognized in respect of losses arising in the respective year.
Safe Harbor
See the Section entitled “Forward-Looking Statements” at the beginning of this Annual Report.
B. LIQUIDITY AND CAPITAL RESOURCES
Our primary cash requirements stem from the payment of transfer fees for the acquisition of players’ registrations, capital expenditure
for the improvement of facilities at Old Trafford and Carrington, payment of interest on our borrowings, employee benefit expenses,
other operating expenses and, for certain periods, dividends on our Class A ordinary shares and Class B ordinary shares. Historically,
we have met these cash requirements through a combination of operating cash flow and proceeds from transfer fees from the sale of
players’ registrations. Our existing borrowings primarily consist of our secured term loan facility, our senior secured notes and
outstanding drawdowns under our revolving facilities. We manage our cash flow interest rate risk where considered appropriate using
interest rate swaps. Such interest rate swaps have the economic effect of converting a portion of variable rate borrowings from floating
to fixed rates. We have US dollar revenues that we use to hedge our US dollar borrowing exposure. We continue to evaluate our
financing options and may, from time to time, take advantage of opportunities to repurchase or refinance all or a portion of our
existing indebtedness to the extent such opportunities arise.
56
Our business ordinarily generates a significant amount of cash from our Matchday revenues and commercial contractual arrangements
at or near the beginning of our fiscal year, with a steady flow of other cash received throughout the fiscal year. In addition, we
ordinarily generate a significant amount of our cash through advance receipts, including season tickets (which include general
admission season tickets and seasonal hospitality tickets), most of which are received prior to the end of June for the following season.
Our Broadcasting revenue from the Premier League and UEFA are paid periodically throughout the season, with primary payments
made in late summer, December, January and the end of the football season. Our sponsorship and other commercial revenue tends to
be paid either quarterly or annually in advance. However, while we typically have a high cash balance at the beginning of each fiscal
year, this is largely attributable to deferred revenue, the majority of which falls under current liabilities in the consolidated balance
sheet, and this deferred revenue is unwound through the statement of profit or loss over the course of the fiscal year. Over the course
of a year, we use our cash on hand to pay employee benefit expenses, other operating expenses, interest payments and other liabilities
as they become due. This typically results in negative working capital movement at certain times during the year. In the event it ever
became necessary to access additional operating cash, we also have access to cash through our revolving facilities. As of 30 June
2023, we had £100 million of outstanding loans under our revolving facilities.
Pursuant to our contract with adidas, which began on 1 August 2015 and was extended subsequent to the balance sheet date, on
21 July 2023, the minimum guarantee payable by adidas over the life of the extended agreement to 30 June 2035 is £1,650 million,
being £750 million per the original term, plus £900 million per the extension, subject to certain adjustments. See “Item 4. Information
on the Company — Revenue Sectors — Commercial – Retail, Merchandising, Apparel & Product Licensing” for additional
information regarding our agreement with adidas.
We also maintain a mixture of long-term debt and capacity under our revolving facilities in order to ensure that we have sufficient
funds available for short-term working capital requirements and for investment in the playing squad and other capital projects.
Our cost base is more evenly spread throughout the fiscal year than our cash inflows. Employee benefit expenses and fixed costs
constitute the majority of our cash outflows and are generally paid evenly throughout the 12 months of the fiscal year.
In addition, transfer windows for acquiring and disposing of registrations occur in January and the summer. During these periods, we
may require additional cash to meet our acquisition needs for new players and we may generate additional cash through the sale of
existing registrations. Depending on the terms of the agreement, transfer fees may be paid or received by us in multiple installments,
resulting in deferred cash paid or received. Although we have not historically drawn on our revolving facilities during the summer
transfer window, if we seek to acquire players with values substantially in excess of the values of players we seek to sell, we may be
required to utilize cash available from our revolving facilities to meet our cash needs.
Acquisition and disposal of registrations also affects our trade receivables and payables, which affects our overall working capital. Our
trade receivables include accrued revenue from sponsors as well as transfer fees receivable from other football clubs, whereas our
trade payables include transfer fees and other associated costs in relation to the acquisition of registrations.
Capital expenditures at Old Trafford
Our stadium, Old Trafford, remains one of our key assets and a significant part of the overall experience we provide to our followers.
Old Trafford has been our home stadium since 1910 and has undergone significant changes over the years. To maintain the quality of
service, enhance the fan experience and increase Matchday revenue, we continually invest in the refurbishment and regeneration of
Old Trafford. Following a substantial development prior to the 2006/07 season, we expanded seating capacity at Old Trafford from
approximately 68,000 to 74,240. In addition, we have continued to invest in improving hospitality suites and office and catering
facilities through refurbishment programs.
We record these investments as capital expenditures. Capital expenditure at Old Trafford was £13.4 million, £4.1 million and
£3.7 million for the years ended 30 June 2023, 2022 and 2021, respectively. This related to carrying out major improvements at Old
Trafford relating to the offices and hospitality suites, as well as the deployment of a new stadium Wi-Fi network.
In addition, we spent approximately £8.2 million, £0.7 million and £1.0 million for the years ended 30 June 2023, 2022 and 2021
respectively at Carrington, our training facility. This includes carrying out major improvements to training pitches, upgrading the
floodlighting system, and the expansion of our Women’s and Academy facilities.
Digital Media capital expenditure
We intend to continue investing in our digital media assets, including our website, mobile application and digital media capabilities.
57
Net intangible asset – registrations capital expenditure
Our average net intangible asset – registrations capital expenditure over the last 5 years has been a cash outflow of £124.0 million per
fiscal year. However, net intangible asset – registrations capital expenditure has varied significantly from period to period, as shown in
the table below, and while we expect that trend to continue, competition for talented players may force clubs to spend increasing
amounts on player registration fees. We may explore new player acquisitions in connection with future transfer periods that may
materially increase the amount of our net intangible asset – registrations capital expenditure. Actual cash used or generated from net
intangible asset – registrations capital expenditure is recorded on our statement of cash flow under net cash outflow or inflow from
investing activities.
Last 5 Years Net Intangible Asset – Registrations Capital Expenditure(1)
(1) The net intangible asset – registrations capital expenditure data presented is the sum of all cash used for purchases of intangible
assets – registrations and all cash generated from sales of intangible assets – registrations.
Working Capital
Our directors confirmed that, as of the date of this Annual Report, after taking into account our current cash and cash equivalents and
our anticipated cash flow from operating and financing activities, we believe that we have sufficient working capital for our present
requirements for at least the next 12 months.
Commitments
As of 30 June 2023, the Group had contracted capital expenditure relating to property, plant and equipment amounting to £5,152,000
and to other intangible assets amounting to £nil. These amounts are not recognized as liabilities.
58
Cash Flow
The following table summarizes our cash flows for the years ended 30 June 2023, 2022 and 2021:
Cash flow from operating activities
Cash generated from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash inflow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flow from investing activities
Payments for property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash outflow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flow from financing activities
Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal elements of lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (outflow)/inflow from financing activities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net (decrease)/increase in cash and cash equivalents(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Excludes the effects of exchange rate changes on cash and cash equivalents.
Net cash inflow from operating activities
2023
Year ended 30 June
2022
(in £ millions)
2021
128.9
(32.0)
0.5
(1.6)
95.8
(15.6)
(156.2)
31.6
—
(140.2)
100.0
(100.0)
(1.9)
—
(1.9)
(46.3)
121.7
(20.6)
0.1
(4.8)
96.4
(8.3)
(115.4)
30.3
—
(93.4)
40.0
—
(1.4)
(33.6)
5.0
8.0
137.8
(20.5)
—
(4.2)
113.1
(6.2)
(138.2)
46.0
(0.9)
(99.3)
60.0
—
(1.7)
(10.7)
47.6
61.4
Cash generated from operations represents our operating results and net movements in our working capital. Our working capital is
generally impacted by the timing of cash received from the sale of tickets and hospitality and other matchday revenues, broadcasting
revenue from the Premier League and UEFA and commercial revenue. Cash generated from operations for the year ended 30 June
2023 was £128.9 million, an increase of £7.2 million from £121.7 million for the year ended 30 June 2022. This is primarily due to
increased Commercial and Matchday revenues partially offset by lower Broadcasting revenues due to the men’s first team
participating in the UEFA Europa League rather than the UEFA Champions League. Cash generated from operations for the year
ended 30 June 2021 was £137.8 million.
Additional changes in net cash inflow/(outflow) from operating activities generally reflect our finance costs. We currently pay fixed
rates of interest on our senior secured notes and variable rates of interest on our secured term loan facility and revolving facilities. We
use interest rate swaps to manage the cash flow interest rate risk on our secured term loan facility. Such swaps have the economic
effect of converting a portion of interest from variable rates to a fixed rate.
Interest paid was £32.0 million for the year ended 30 June 2023, an increase of £9.4 million on the year ended 30 June 2022 due to an
increase in our drawdown under our revolving facilities during the year, which was repaid before 30 June 2023 and the impact of
higher interest rates. Interest on our senior secured notes is normally paid semi-annually, at the beginning of August and at the
beginning of February. Interest paid for the year ended 30 June 2021 was £20.5 million.
Net cash inflow from operating activities was £95.8 million for the year ended 30 June 2023, a decrease of £0.6 million compared to a
net cash inflow of £96.4 million for the year ended 30 June 2022. Net cash outflow from operating activities for the year ended
30 June 2021 was £113.1 million.
Net cash outflow from investing activities
Capital expenditure for the acquisition of intangible assets as well as for improvements to property, principally at Old Trafford and
Carrington, are funded through cash flow generated from operations, proceeds from the sale of intangible assets and, if necessary, from
59
our revolving facilities. Capital expenditure on the acquisition, disposal and trading of intangible assets tends to vary significantly
from year to year depending on the requirements of our men’s first team, overall availability of players, our assessment of their
relative value and competitive demand for players from other clubs. By contrast, capital expenditure on the purchase of property, plant
and equipment tends to remain relatively stable as we continue to make improvements at Old Trafford and Carrington.
Net cash outflow from investing activities for the year ended 30 June 2023 was £140.2 million, an increase of £46.8 million from
£93.4 million for the year ended 30 June 2022. Net cash outflow from investing activities for the year ended 30 June 2021 was
£99.3 million.
For the year ended 30 June 2023, net capital expenditure on property, plant and equipment was £15.6 million, an increase of
£7.3 million from net expenditure of £8.3 million for the year ended 30 June 2022. Net capital expenditure on property, plant and
equipment for the year ended 30 June 2021 was £6.2 million.
For the year ended 30 June 2023, net capital expenditure on intangible assets was £124.6 million, an increase of £39.5 million from
net expenditure of £85.1 million for the year ended 30 June 2022. Net capital expenditure for the year ended 30 June 2023 was mainly
comprised of payments made for the acquisitions of Antony, Casemiro, Martinez and Sancho less payments received relating
primarily to the disposal of James, Lukaku and Pereira.
Net capital expenditure for the year ended 30 June 2022 was mainly comprised of payments made for the acquisitions of Sancho,
Varane and Van de Beek and the extension of Fernandes, less payments received relating to the disposal of Lukaku.
Net capital expenditure for the year ended 30 June 2021 was mainly comprised of payments made for the acquisitions of Sancho,
Varane and Van de Beek and the extension of Fernandes, less payments received relating to the disposal of Lukaku.
For the years ended 30 June 2023 and 30 June 2022, net expenditure on derivative financial assets was £nil. Net expenditure on
derivative financial assets for the year ended 30 June 2021 was £0.9 million.
Net cash (outflow)/inflow from financing activities
Net cash outflow from financing activities for the year ended 30 June 2023 was £1.9 million compared to net cash inflow of
£5.0 million for the year ended 30 June 2022. During the year ended 30 June 2023, a drawdown of £100.0 million was made on our
revolving facilities which was subsequently repaid before 30 June 2023.
During the year ended 30 June 2022, we made a drawdown of £40.0 million on our revolving facilities and paid three dividends
amounting to £33.6 million.
Net cash inflow from financing activities for the year ended 30 June 2021 was £47.6 million. During the year ended 30 June 2021, we
made a drawdown of £60.0 million on our revolving facilities and paid one dividend amounting to £10.7 million.
Indebtedness
Our primary sources of indebtedness consist of our senior secured notes, our secured term loan facility and our revolving facilities. As
part of the security for our senior secured notes, our secured term loan facility and our revolving facilities, substantially all of our
assets are subject to liens and mortgages.
Description of principal indebtedness
Senior secured notes
Our wholly-owned subsidiary, Manchester United Football Club Limited, issued $425 million in aggregate principal amount of 3.79%
senior secured notes (which we refer to throughout this Annual Report as the “senior secured notes”). As of 30 June 2023 the sterling
equivalent of £332.1 million (net of unamortized issue costs of £2.1 million) was outstanding. The outstanding principal amount was
$425.0 million. The senior secured notes mature on 25 June 2027.
60
The senior secured notes are guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited and MU
Finance Limited and secured against substantially all of the assets of those entities and Manchester United Football Club Limited.
These entities are wholly-owned subsidiaries of Manchester United plc.
The note purchase agreement governing the senior secured notes contains a financial maintenance covenant requiring us to maintain
consolidated profit for the period before depreciation, amortization of, and profit/(loss) on disposal of, intangible assets, exceptional
items, net finance costs, and tax (“EBITDA”) of not less than £65 million for each 12 month testing period. We are able to claim
certain dispensations from complying with the consolidated EBITDA floor including up to twice (in non-consecutive financial years)
during the life of the senior secured notes if we fail to qualify for the first round group stages (or its equivalent from time to time) of
the Champions League. The impact of IFRS 16 is excluded for the purpose of covenant compliance testing. The covenant is tested on
a quarterly basis and we were in compliance with the covenant for each quarter throughout the financial year.
The note purchase agreement governing the senior secured notes contains events of default typical for securities of this type, as well as
customary covenants and restrictions on the activities of Red Football Limited and each of Red Football Limited’s subsidiaries,
including, but not limited to, the incurrence of additional indebtedness; dividends or distributions in respect of capital stock or certain
other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or
disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers,
consolidations or the sale of substantially all of Red Football Limited’s assets. The covenants in the note purchase agreement
governing the senior secured notes are subject to certain thresholds and exceptions described in the note purchase agreement
governing the senior secured notes.
The senior secured notes may be redeemed in part, in an amount not less than 5% of the aggregate principal amount of the senior
secured notes then outstanding, or in full, at any time at 100% of the principal amount plus a “make-whole” premium of an amount
equal to the discounted value (based on the US Treasury rate) of the remaining interest payments due on the senior secured notes up to
25 June 2027.
Secured term loan facility
Our wholly-owned subsidiary, Manchester United Football Club Limited, has a secured term loan facility with Bank of America
Europe Designated Activity Company as lender. As of 30 June 2023, the sterling equivalent of £175.2 million (net of unamortized
issue costs of £1.7 million) was outstanding. The outstanding principal amount was $225.0 million. The remaining balance of the
secured term loan facility is repayable on 6 August 2029, although the Group has the option to repay the secured term loan facility at
any time before then.
Loans under the secured term loan facility bear interest at a rate per annum equal to US dollar SOFR plus a credit adjustment spread
(provided that if the rate is less than zero, SOFR shall be deemed to be zero) plus the applicable margin. The applicable margin, if no
event of default has occurred and is continuing, means the following:
Total net leverage ratio (as defined in the secured term loan facility agreement)
Greater than 3.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greater than 2.0 but less than or equal to 3.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less than or equal to 2.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margin %
(per annum)
1.75
1.50
1.25
While any event of default is continuing, the applicable margin shall be the highest level set forth above.
Our secured term loan facility is guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited, MU
Finance Limited and Manchester United Football Club Limited and secured against substantially all of the assets of those entities.
These entities are wholly-owned subsidiaries of Manchester United plc.
The secured term loan facility contains a financial maintenance covenant requiring us to maintain consolidated profit for the period
before depreciation, amortization of, and profit/(loss) on disposal of, intangible assets, exceptional items, net finance costs, and tax
(“EBITDA”) of not less than £65 million for each 12 month testing period. We are able to claim certain dispensations from complying
with the consolidated EBITDA floor including up to twice (in non-consecutive financial years) during the life of the secured term loan
facility if we fail to qualify for the first round group stages (or its equivalent from time to time) of the Champions League. The impact
of IFRS 16 is excluded for the purpose of covenant compliance testing. The covenant is tested on a quarterly basis and we were in
compliance with the covenant for each quarter throughout the financial year.
61
Our secured term loan facility contains events of default typical in facilities of this type, as well as typical covenants including
restrictions on incurring additional indebtedness, paying dividends or making other distributions or repurchasing or redeeming our
stock, selling assets, including capital stock of restricted subsidiaries, entering into agreements restricting our subsidiaries’ ability to
pay dividends, consolidating, merging, selling or otherwise disposing of all or substantially all of our assets, entering into sale and
leaseback transactions, entering into transactions with our affiliates and incurring liens. Certain events of default and covenants in the
secured term loan facility are subject to certain thresholds and exceptions described in the agreement governing the secured term loan
facility.
Revolving facilities
Our revolving facilities agreement originally dated 22 May 2015 (as amended on 7 October 2015, amended and restated on 4 April
2019, 4 March 2021 and 10 December 2021 and amended on 4 November 2022) (the “initial revolving facility”) allows Manchester
United Football Club Limited (or any direct or indirect subsidiary of Red Football Limited that becomes a borrower thereunder) to
borrow up to £150 million from a syndicate of lenders with Bank of America Europe Designated Activity Company as agent and
security trustee. As of 30 June 2023, we had £25 million in outstanding loans and £125 million in borrowing capacity under our initial
revolving facility.
The initial revolving facility is scheduled to expire on 4 April 2025. Any amount still outstanding at that time will be due in full
immediately on the applicable expiry date.
Subject to certain conditions, we may voluntarily prepay and/or permanently cancel all or part of the available commitments under the
initial revolving facility by giving not less than three business days’ prior notice to the agent under the facility. Any loan drawn under
the initial revolving facility is required to be repaid on the last day of each of its interest periods. Amounts repaid may (subject to the
terms of the revolving facilities agreement) be re-borrowed.
Loans under the initial revolving facility bear interest at a rate per annum equal to SONIA plus a credit adjustment spread (or in
relation to a loan in euros, EURIBOR or in relation to a loan in USD, SOFR plus a credit adjustment spread) (provided that if that rate
is less than zero, SONIA or, as the case may be, EURIBOR or SOFR (as applicable), shall be deemed to be zero) plus the applicable
margin.
The applicable margin, if no event of default has occurred and is continuing, means the following:
Total net leverage ratio (as defined in the revolving facilities agreement)
Greater than 3.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Greater than 2.0 but less than or equal to 3.5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less than or equal to 2.0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Margin %
(per annum)
1.75
1.50
1.25
While any default is continuing, the applicable margin shall be the highest level set forth above.
A commitment fee is payable on the available but undrawn amount of the initial revolving facility, at a rate equal to 40% per annum of
the applicable margin.
Our initial revolving facility is guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited, MU
Finance Limited and Manchester United Football Club Limited and secured against substantially all of the assets of those entities.
These entities are wholly-owned subsidiaries of Manchester United plc.
In addition to the general covenants described below, the initial revolving facility contains a financial maintenance covenant requiring
us to maintain consolidated EBITDA of not less than £65 million for each 12 month testing period. We are able to claim certain
dispensations from complying with the consolidated EBITDA floor including up to twice (in non-consecutive financial years) during
the life of the initial revolving facility if we fail to qualify for the first round group stages (or its equivalent from time to time) of the
Champions League. In addition, in the event that the financial covenant is not complied with, such non-compliance may also be cured
with the cash proceeds of additional shareholder funding or subordinated shareholder funding no later than the end of the period 20
business days following the earlier of the date on which the compliance certificate setting out the calculations in respect of the relevant
covenant determination is required to be delivered and the date on which it is delivered under the terms of the revolving facilities
agreement, and no equity cures may be made in consecutive financial quarters or on more than four occasions over the life of the
initial revolving facility. The impact of IFRS 16 is excluded for the purpose of covenant compliance testing.
62
Our initial revolving facility contains events of default typical in facilities of this type, as well as typical covenants including
restrictions on incurring additional indebtedness, paying dividends or making other distributions or repurchasing or redeeming our
stock, making investments, selling assets, including capital stock of restricted subsidiaries, entering into agreements restricting our
subsidiaries’ ability to pay dividends, consolidating, merging, selling or otherwise disposing of all or substantially all of our assets,
entering into sale and leaseback transactions, entering into transactions with our affiliates and incurring liens. Certain events of default
and covenants in the initial revolving facility are subject to certain thresholds and exceptions described in the agreement governing the
initial revolving facility.
Our revolving facility agreement originally dated 14 October 2020 (as amended and restated on 4 March 2021, 13 December 2021 and
26 April 2022 and amended on 4 November 2022) (the “new revolving facility”) allows Manchester United Football Club Limited (or
any direct or indirect subsidiary of Red Football Limited that becomes a borrower thereunder) to borrow up to £75 million from
Santander UK plc as original lender and with Santander UK plc as agent and with Bank of America Europe Designated Activity
Company as security trustee. The general covenants under the new revolving facility agreement are consistent with the initial
revolving facilities agreement. As of 30 June 2023, we had £25 million in outstanding loans and £50 million in borrowing capacity
under our new revolving facility.
The new revolving facility has a maturity date of 25 June 2027.
Subject to certain conditions, we may voluntarily prepay and/or permanently cancel all or part of the available commitments under the
new revolving facility by giving not less than three business days’ prior notice to the agent under the facility. Any loan drawn under
the new revolving facility is required to be repaid on the last day of each of its interest periods. Amounts repaid may (subject to the
terms of the revolving facility agreement) be re-borrowed.
Loans under the new revolving facility bear interest at a rate per annum equal to SONIA, plus a credit adjustment spread (provided
that if that rate is less than zero, SONIA shall be deemed to be zero) plus a margin of 2.5% per annum.
A commitment fee is payable on the available but undrawn amount of the new revolving facility, at a rate equal to 50% per annum of
the above margin.
Our new revolving facility is guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited, MU
Finance Limited and Manchester United Football Club Limited and secured against substantially all of the assets of those entities.
These entities are wholly-owned subsidiaries of Manchester United plc.
In addition to the general covenants described below, the new revolving facility contains a financial maintenance covenant requiring
us to maintain consolidated EBITDA of not less than £65 million for each 12 month testing. We are able to claim certain dispensations
from complying with the consolidated EBITDA floor including up to twice (in non-consecutive financial years) during the life of the
new revolving facility if we fail to qualify for the first round group stages (or its equivalent from time to time) of the Champions
League. In addition, in the event that the financial covenant is not complied with, such non-compliance may also be cured with the
cash proceeds of additional shareholder funding or subordinated shareholder funding no later than the end of the period 20 business
days following the earlier of the date on which the compliance certificate setting out the calculations in respect of the relevant
covenant determination is required to be delivered and the date on which it is delivered under the terms of the revolving facilities
agreement, and no equity cures may be made in consecutive financial quarters or on more than four occasions over the life of the new
revolving facility. The impact of IFRS 16 is excluded for the purpose of covenant compliance testing.
Our new revolving facility contains events of default typical in facilities of this type, as well as typical covenants including restrictions
on incurring additional indebtedness, paying dividends or making other distributions or repurchasing or redeeming our stock, making
investments, selling assets, including capital stock of restricted subsidiaries, entering into agreements restricting our subsidiaries’
ability to pay dividends, consolidating, merging, selling or otherwise disposing of all or substantially all of our assets, entering into
sale and leaseback transactions, entering into transactions with our affiliates and incurring liens. Certain events of default and
covenants in the new revolving facility are subject to certain thresholds and exceptions described in the agreement governing the new
revolving facility.
On 26 April 2022 we entered into a new bilateral revolving facility agreement which was amended on 4 November 2022 (the
“bilateral revolving facility”) which allows Manchester United Football Club Limited (or any direct or indirect subsidiary of Red
Football Limited that becomes a borrower thereunder) to borrow up to £75 million from Bank of America, N.A., London Branch as
original lender and with Bank of America Europe Designated Activity Company as agent and security trustee. The general covenants
63
under the bilateral revolving facility agreement are consistent with the initial revolving facilities agreement. As of 30 June 2023, we
had £50 million in outstanding loans and £25 million in borrowing capacity under our bilateral revolving facility.
The bilateral revolving facility has a maturity date of 25 June 2027.
Subject to certain conditions, we may voluntarily prepay and/or permanently cancel all or part of the available commitments under the
bilateral revolving facility by giving not less than three business days’ prior notice to the agent under the facility. Any loan drawn
under the bilateral revolving facility is required to be repaid on the last day of each of its interest periods. Amounts repaid may
(subject to the terms of the revolving facility agreement) be re-borrowed.
Loans under the bilateral revolving facility bear interest at a rate per annum equal to SONIA plus a credit adjustment spread (or in
relation to a loan in euros, EURIBOR or in relation to a loan in USD, SOFR plus a credit adjustment spread) (provided that if that rate
is less than zero, SONIA or, as the case may be, EURIBOR or SOFR (as applicable), shall be deemed to be zero) plus a margin of
2.5% per annum.
A commitment fee is payable on the available but undrawn amount of the bilateral revolving facility, at a rate equal to 40% per annum
of the above margin.
Our bilateral revolving facility is guaranteed by Red Football Limited, Manchester United Limited, MU Finance Limited and
Manchester United Football Club Limited and secured against substantially all of the assets of those entities. These entities are
wholly-owned subsidiaries of Manchester United plc.
In addition to the general covenants described below, the bilateral revolving facility contains a financial maintenance covenant
requiring us to maintain consolidated EBITDA of not less than £65 million for each 12 month testing period. We are able to claim
certain dispensations from complying with the consolidated EBITDA floor including up to twice (in non-consecutive financial years)
during the life of the initial revolving facility if we fail to qualify for the first round group stages (or its equivalent from time to time)
of the Champions League. In addition, in the event that the financial covenant is not complied with, such non-compliance may also be
cured with the cash proceeds of additional shareholder funding or subordinated shareholder funding no later than the end of the period
20 business days following the earlier of the date on which the compliance certificate setting out the calculations in respect of the
relevant covenant determination is required to be delivered and the date on which it is delivered under the terms of the revolving
facilities agreement, and no equity cures may be made in consecutive financial quarters or on more than four occasions over the life of
the bilateral revolving facility. The impact of IFRS 16 is excluded for the purpose of covenant compliance testing.
Our bilateral revolving facility contains events of default typical in facilities of this type, as well as typical covenants including
restrictions on incurring additional indebtedness, paying dividends or making other distributions or repurchasing or redeeming our
stock, making investments, selling assets, including capital stock of restricted subsidiaries, entering into agreements restricting our
subsidiaries’ ability to pay dividends, consolidating, merging, selling or otherwise disposing of all or substantially all of our assets,
entering into sale and leaseback transactions, entering into transactions with our affiliates and incurring liens. Certain events of default
and covenants in the bilateral revolving facility are subject to certain thresholds and exceptions described in the agreement governing
the bilateral revolving facility.
As of 30 June 2023, we were in compliance with all covenants under our debt facilities.
Off balance sheet arrangements
Transfer fees payable
Under the terms of certain contracts with other football clubs in respect of player transfers, additional amounts would be payable by us
if certain specific performance conditions are met. As noted above, we estimate the value of any contingent consideration at the date
of acquisition based on the probability of conditions being met and monitor this on an ongoing basis. The maximum additional amount
that could be payable as of 30 June 2023 is £133.1 million.
Transfer fees receivable
Similarly, under the terms of contracts with other football clubs for player transfers, additional amounts would be payable to us if
certain specific performance conditions are met. In accordance with the recognition criteria for contingent assets, such amounts are
64
only disclosed by the Company when probable and recognized when virtually certain. As of 30 June 2023, we believe receipt of £nil
to be probable.
Other commitments
In the ordinary course of business, we enter into capital commitments. These transactions are recognized in the consolidated financial
statements in accordance with IFRS, as issued by the IASB, and are more fully disclosed therein.
As of 30 June 2023, we had not entered into any other off-balance sheet transactions.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
We do not currently have, and have not had during the past three years, any research and development policies in place. See “Item 4.
Information on the Company – Intellectual Property” and note 4 to our audited consolidated financial statements included elsewhere in
this Annual Report for information about our intellectual property and licenses, respectively.
D. TREND INFORMATION
Other than as disclosed elsewhere in this Annual Report, we are not aware of any trends, uncertainties, demands, commitments or
events since 30 June 2023 that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity
or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results
or financial conditions.
E. CRITICAL ACCOUNTING ESTIMATES
The preparation of our financial information requires management to make estimates, judgments and assumptions concerning the
future. Estimates, judgments and assumptions are continually evaluated and are based on historical experience and other factors,
including expectations of future events that are believed to be reasonable under the circumstances. The resulting accounting estimates
will, by definition, seldom equal the related actual results.
For a summary of all of our significant accounting policies, see Note 2 to our audited consolidated financial statements as of 30 June
2023 and 30 June 2022 and for the years ended 30 June 2023, 2022 and 2021 included elsewhere in this Annual Report.
We believe that the following accounting policies reflect the most critical estimates and assumptions and are significant to the
consolidated financial statements.
We do not consider there to be any significant judgments in the preparation of the consolidated financial statements.
Recognition of revenue
Commercial
Commercial revenue (whether settled in cash or value in kind) comprises revenue receivable from the exploitation of the Manchester
United brand through sponsorship and other commercial agreements, including minimum guaranteed revenue, revenue receivable
from retailing Manchester United branded merchandise in the United Kingdom and licensing the manufacture, distribution and sale of
such goods globally, and fees for the Manchester United men’s first team undertaking tours.
A number of our sponsorship contracts contain significant estimates in relation to our allocation and recognition of revenue in line
with performance obligations. Minimum guaranteed revenue is recognized over the term of the sponsorship agreement in line with the
performance obligations included within the contract and based on the sponsorship benefits enjoyed by the individual sponsor. In
instances where the sponsorship rights remain the same over the duration of the contract, revenue is recognized as performance
obligations are satisfied evenly over time (i.e. on a straight-line basis).
65
Subsequent to the balance sheet date, on 21 July 2023, the Group signed a 10-year extension to its agreement with adidas which began
on 1 August 2015 and now terminates on 30 June 2035. The minimum guarantee payable over the term of this extended agreement is
£750 million per the original term and an additional £900 million due under the extension, resulting in a total of £1,650 million,
subject to certain adjustments. Payments due in a particular year may increase if the club’s men’s or women’s first teams win the
Premier League or Women’s Super League, respectively, FA Cup or continental competitions with the maximum possible increase
being £4.4 million per annum. Payments may decrease if the men’s first team fails to participate in the UEFA Champions League.
Under the original term, if the men’s first team did not participate in the UEFA Champions League for two or more consecutive
seasons, a deduction of 30% was made in the second or other consecutive year of non-participation. As a result of the men’s first team
qualifying for the 2023/24 Champions League, no deductions are due under the original term. Under the extended term, this clause has
been amended to state that a £10 million deduction will be applied for each year of non-participation in the UEFA Champions League,
commencing from the 2025/26 season. Participation in the UEFA Champions League is typically secured via a top 4 finish in the
Premier League or winning the UEFA Europa League, and revenue is recognized based on management’s estimate of how many non-
participation events will occur over the life of the contract. In line with IFRS 15, this estimate is considered at each reporting date.
Broadcasting and Matchday
For our accounting policies relating to Broadcasting revenue and Matchday revenue, which management does not consider to involve
critical estimates and judgments, see Notes 4.3(ii) and (iii) to our audited consolidated financial statements as of 30 June 2023 and
2022 and for the years ended 30 June 2023, 2022 and 2021 included elsewhere in this Annual Report.
Value of intangible assets — registrations
The costs associated with the acquisition of players’ and key football management staff registrations are capitalized as intangible
assets at the value of the consideration payable, including an estimate of the value of any contingent consideration based on
probability of payment being made at the balance sheet date. Subsequent reassessments of the amount of contingent consideration
payable are also included in the cost of the individual’s registration. The estimate of the value of the contingent consideration payable
requires management to assess the likelihood of specific performance conditions being met which would trigger the payment of the
contingent consideration such as the number of player appearances. This assessment is carried out on an individual basis. Costs
associated with the acquisition of players’ and key football management staff registrations include transfer fees, Premier League levy
fees, agents’ fees and other directly attributable costs. These costs are amortized over the period covered by the individual’s contract.
To the extent that an individual’s contract is extended, the remaining book value is amortized over the remaining revised contract life.
See “B. Liquidity and Capital Resources – Off Balance Sheet Arrangements”.
Recognition of deferred tax assets
We recognize deferred tax effects of temporary differences between the financial statement carrying amounts and the tax basis of our
assets and liabilities.
Deferred tax assets are recognized only to the extent that it is probable that the associated deductions will be available for use against
future profits and that there will be sufficient future taxable profit available against which the temporary differences can be utilized,
provided the asset can be reliably quantified. In estimating future taxable profit, management use “base case” approved forecasts
which incorporate a number of assumptions, including a prudent level of future uncontracted revenue in the forecast period. In
arriving at a judgment in relation to the recognition of deferred tax assets, management considers the regulations applicable to tax and
advice on their interpretation. Future taxable income may be higher or lower than estimates made when determining whether it is
appropriate to record a tax asset and the amount to be recorded. Furthermore, changes in the legislative framework or applicable tax
case law may result in management reassessing the recognition of deferred tax assets in future periods.
Recognition of tax related provisions
The Group is subject to a number of ongoing player related tax enquiries with HMRC, and management regularly estimates the
expected amounts payable as a result of these enquiries. Provisions are recognized based on management’s best estimate at the end of
the reporting period of the probable future cash flows required to settle future liabilities which by their nature are uncertain.
Management considers both the facts and evidence of each case on an individual basis, combined with our knowledge and experience
in similar matters in estimating the value of these provisions. These provisions may change over time as a result of developments in
the enquiries, additional evidence, or changes in precedent from other similar cases in the industry. The timing of these expected
outflows is also by its nature uncertain and are therefore recognized based on management’s best estimate.
66
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT
The following table lists each of our current executive officers and directors and their respective ages and positions as of the date of
this Annual Report.
Name
Avram Glazer . . . . . . . . . . . . . . . .
Joel Glazer . . . . . . . . . . . . . . . . . . .
Richard Arnold . . . . . . . . . . . . . . .
Cliff Baty . . . . . . . . . . . . . . . . . . . .
Patrick Stewart . . . . . . . . . . . . . . .
Kevin Glazer . . . . . . . . . . . . . . . . .
Bryan Glazer . . . . . . . . . . . . . . . . .
Darcie Glazer Kassewitz . . . . . . .
Edward Glazer . . . . . . . . . . . . . . .
Robert Leitão . . . . . . . . . . . . . . . .
Manu Sawhney . . . . . . . . . . . . . . .
John Hooks . . . . . . . . . . . . . . . . . .
Age
62
56
52
53
51
61
58
55
53
60
56
67
Position
Executive Co-Chairman and Director
Executive Co-Chairman and Director
Chief Executive Officer and Director
Chief Financial Officer and Director
Chief Legal Officer, General Counsel and Director
Director
Director
Director
Director
Director
Director
Director
Director Position Held Since
May 2012
May 2012
August 2012
December 2017
December 2022
August 2012
August 2012
September 2012
November 2012
August 2012
September 2012
November 2012
The following is a brief biography of each of our executive officers and directors:
Avram Glazer, aged 62, is Executive Co-Chairman and a Director of the Company. He is currently a director of Red Football Limited
and Co-Chairman of Manchester United Limited. Mr. Glazer served as President and Chief Executive Officer of Zapata Corporation, a
US public company from March 1995 to July 2009 and Chairman of the board of Zapata Corporation from March 2002 to July 2009.
Mr. Glazer received a business degree from Washington University in St. Louis in 1982. He received a law degree from American
University, Washington College of Law in 1985.
Joel Glazer, aged 56, is Executive Co-Chairman and a Director of the Company. He is currently a director of Red Football Limited
and Co-Chairman of Manchester United Limited. Mr. Glazer is Co-Chairman of the Tampa Bay Buccaneers. Mr. Glazer is a member
of the NFL Finance, International, Media, and Legalized Sports Betting Committees. Mr. Glazer graduated from American University
in Washington, D.C., in 1989 with a bachelor’s degree.
Richard Arnold, aged 52, is the Company’s Chief Executive Officer and a Director of the Company. In his capacity as Chief
Executive Officer, Mr. Arnold oversees all commercial and operational aspects of the Company. Mr. Arnold also serves as Chairman
of the Manchester United Foundation. In a previous role as Commercial Director (until June 2013) he was responsible for the
management and growth of the Company’s sponsorship business, retail, merchandising, apparel & product licensing business, and
digital media business. In this capacity he was nominated for SportBusiness International’s Sports innovator of the year list in 2011. In
each of 2017, 2018, 2019 and 2020, Mr. Arnold has been named as an LGBT+ Executive Ally by the charity OUTstanding, in
recognition of the work he has done to progress LGBT+ inclusion at Manchester United for employees and supporters. In addition to
this, Mr. Arnold was named as Diversity Ally of the Year at the European Diversity Awards in 2019. Mr. Arnold was previously
Deputy Managing Director of InterVoice Ltd responsible for the international channel sales and marketing division of InterVoice Inc.,
a NASDAQ listed technology company, between 2002 and 2007. He was nominated as a finalist for Young Director of the Year by
the United Kingdom Institute of Directors in 2004 and 2005. Prior to InterVoice, he worked at Global Crossing Europe Ltd, a
company in the technology sector, on its restructure between 1999 and 2002. Prior to this he was a senior manager in the
telecommunications and media practice at PricewaterhouseCoopers LLP from 1993 to 1999, including working on the privatization of
the Saudi Telecommunications Corporation and the Initial Public Offering of Orange in the United Kingdom. He received an honors
Bachelor of Science degree in biology from Bristol University in 1993 and received his Chartered Accountancy qualification in 1996.
67
Cliff Baty, aged 53, is the Company’s Chief Financial Officer and a Director of the Company. He was appointed to our board of
directors in December 2017. He is responsible for managing all aspects of financial reporting and financial control of the Company
and is also responsible for the club’s Strategy and Planning function. Mr. Baty joined Manchester United in 2016. Prior to joining the
Company, Mr. Baty served as Chief Financial Officer and member of the board of directors of Sportech plc, a leading pool betting
operator and technology supplier, from 2013 to 2016. Prior to Sportech, he worked at Ladbrokes plc from 2006 to 2013 in a number of
senior finance roles including Finance Director of its eGaming and International businesses, as well as Ladbrokes businesses in Spain,
Italy and South Africa. Before that he was Group Financial Controller of Hilton Group plc from 2004 to 2006. He qualified as a
Chartered Accountant with Ernst & Young, where he worked for 10 years. He received a Bachelor of Arts degree in Chemistry from
Oriel College, Oxford University in 1992.
Patrick Stewart, aged 51, is the Company’s Chief Legal Officer and General Counsel, and a Director of the Company. He has been
with Manchester United since 2006. He is responsible for managing the Company’s legal and regulatory affairs as well as its
relationships with football stakeholders. Having been nominated by the European Club Association, Patrick was appointed as an
arbitrator at the Court of Arbitration for Sport in Switzerland in 2018. Prior to joining the Company, he worked for two leading UK
commercial law firms and TEAM Marketing AG, the Swiss sports marketing agency responsible for selling the commercial rights to
the UEFA Champions League. Patrick studied at the University of Glasgow and the Johannes Gutenberg-Universität Mainz
(Germany) and received a Bachelor of Laws (Honours) Degree in 1994, before qualifying as a solicitor in 1997.
Kevin Glazer, aged 61, is a Director of the Company. He is currently a director of Red Football Limited and a director of Manchester
United Limited. He is the CEO and owner of Glazer Properties. Mr. Glazer graduated from Ithaca College in 1984 with a Bachelor of
Arts degree in Economics.
Bryan Glazer, aged 58, is a Director of the Company. He is currently a director of Red Football Limited and Manchester United
Limited. He is the Co-Chairman of the Tampa Bay Buccaneers and also serves on the NFL’s Media Owned and Operated Committee.
Mr. Glazer serves on the board of directors of the Glazer Children’s Museum. He received a bachelor’s degree from the American
University in Washington, D.C., in 1986 and received his law degree from Whittier College School of Law in 1989.
Darcie Glazer Kassewitz, aged 55, is a Director of the Company. She is currently a director of Red Football Limited. Ms. Glazer
Kassewitz is the President of the Glazer Vision Foundation. She graduated cum laude from the American University in 1990 and
received a law degree in 1993 from Suffolk Law School.
Edward Glazer, aged 53, is a Director of the Company. He is currently a non-executive director of Red Football Limited. He is Co-
Chairman of the Tampa Bay Buccaneers, and Chairman of US Property Trust and US Auto Trust. Mr. Glazer received a bachelor’s
degree from Ithaca College.
Robert Leitão, aged 60, is a Director of the Company. He is Managing Partner of Rothschild & Co Gestion, the top holding company
of the Rothschild & Co Group. Rothschild & Co Gestion is responsible for all aspects of the Rothschild & Co Group strategy, team
and operations across its global network of 50+ offices. Robert is also Co-Chairman of the Rothschild & Co Group Executive
Committee and Head of Global Advisory, the leading advisory firm in the world. He also serves as Chief Executive of NM Rothschild
& Sons, Rothschild & Co’s subsidiary in the United Kingdom. Prior to joining Rothschild & Co in 1998, Robert was a Director and
Head of UK M&A at Morgan Grenfell & Co. Limited. He graduated with a degree in Engineering from Imperial College, London,
and qualified as a Chartered Accountant with Peat Marwick Mitchell & Co (KPMG). Robert serves as a Member of the Advisory
Board of Lowy Family Partners, the private investment business and family office of the Lowy family; Chairman of the not-for-profit
digital charity box, Pennies Foundation; and a Member of the Advisory Board of the charity, Centre for Entrepreneurs.
68
Manu Sawhney, aged 56, is a Director of the Company. With over 29 years of rich experience in the sports, media, entertainment and
consumer industry, Mr. Sawhney until recently served as the Chief Executive Officer of the International Cricket Council (ICC). ICC
is the global governing body for the sport of cricket representing 105 members, the ICC governs and administrates the game and is
responsible for the staging of major international tournaments including the ICC Men’s World Cup and Women’s World Cup and the
ICC Men’s and Women’s T20 World Cups as well as all associated qualifying events. Mr. Sawhney prior to this role served as the
Chief Executive Officer of the Singapore Sports Hub, one of the largest sporting Public-Private Partnerships in the world, and the city-
state’s premier sporting, lifestyle and entertainment destination. Mr. Sawhney previously served as the Managing Director of ESPN
STAR Sports (ESS), a 50:50 joint venture for Asia between ESPN and News Corp, and reported directly to the board of directors. He
was responsible for the overall business leadership and P&L of the company across 24 countries in Asia. Prior to heading ESS’s Asia
operations, Mr. Sawhney served as the Executive Vice President of Programming/Event Management/Marketing/ Network
Presentation, wherein he negotiated and secured various multi-year renewals of key global and regional rights & affiliate deals. Mr.
Sawhney also previously served as the Managing Director of ESS’s South Asia business based out of India. Mr. Sawhney holds a
Bachelor’s degree in Mechanical Engineering from the Birla Institute of Technology & Science, Pilani, India, and received his
Masters in International Business from the Indian Institute of Foreign Trade, New Delhi, India. Mr. Sawhney also served on the
Steering Committee of the 28th South East Asian Games and is a member of the Young Presidents Organisation.
John Hooks, aged 67, is a Director of the Company. He has been in the luxury fashion industry for over 40 years and has held
positions in some of the sector’s most influential companies. After graduating from Oxford University, he entered the fashion industry
through Gruppo Finanziario Tessile (GFT) in Turin, Italy. For three years he was the commercial director for the prêt-à-porter
collection of Valentino. From 1988 to 1994, based in Hong Kong, he was responsible for the establishment of GFT’s regional
subsidiaries in Japan, South Korea, Taiwan, Hong Kong, Australia as well as in mainland China (in 1988, the first major foreign
fashion company to establish a direct presence in that country). From 1995 to 2000 he was Commercial and Marketing Director of Jil
Sander in Hamburg, Germany. In 2000, Mr. Hooks joined Giorgio Armani as Group Commercial and Marketing Director,
considerably expanding the company’s global wholesale and retail network. He was subsequently appointed Deputy Chairman of the
Giorgio Armani Group. From 2011 to 2014, he was Group President of Ralph Lauren Europe and Middle East. Mr. Hooks currently
works as an independent consultant. From 2016 to 2021 he was a senior adviser to McKinsey & Company.
Family Relationships
Our Executive Co-Chairmen and directors Avram Glazer and Joel Glazer, and directors Bryan Glazer, Kevin Glazer, Darcie Glazer
Kassewitz and Edward Glazer are siblings.
Arrangements or Understandings
None of our executive officers or directors have any arrangement or understanding with our principal shareholders, customers,
suppliers or other persons pursuant to which such executive officer or director was selected as an executive officer or director.
B. COMPENSATION
We set out below the amount of compensation paid and benefits in kind provided by us or our subsidiaries to our directors and
members of the executive management for services in all capacities to our Company or our subsidiaries for the 2023 fiscal year, as
well as the amount contributed by our Company or our subsidiaries to retirement benefit plans for our directors and members of the
executive management board.
Directors and Executive Management Compensation
The compensation for each member of our executive management is comprised of the following elements: base salary, bonus,
contractual benefits and pension contributions. The total amount of compensation (including share-based payments) paid or payable
and benefits in kind provided to the members of our board of directors and our executive management employees for the fiscal year
2023 was £7,195,000. We do not currently maintain any bonus or profit-sharing plan for the benefit of the members of our executive
management; however, certain members of our executive management are eligible to receive annual bonuses (including share-based
awards) pursuant to the terms of their service agreements. The total amount set aside or accrued by us to provide pension, retirement
or similar benefits to our directors and our executive management employees with respect to the fiscal year 2023 was £8,000.
69
Employment or Service Agreements
We have entered into written employment or service agreements with each of the members of our executive management, which
agreements provide, among other things, for benefits upon a termination of employment. In order to align the interests of our
executive management with our shareholders, members of our executive management are eligible to receive annual share-based
awards (or cash and share-based awards) pursuant to our 2012 Equity Incentive Award Plan (the “Equity Plan”). The amount of the
awards will generally be subject to the discretion of our board of directors and our remuneration committee. In order to encourage
retention, the awards are eligible to become vested over a multi-year period following the date of grant. In connection with their
receipt of the awards, each member of our executive management will agree to hold a minimum of that number of Class A ordinary
shares with a value equal to such member’s annual salary for so long as such member is employed by us.
We have not entered into written employment or service agreements with our outside directors, including any member of the Glazer
family. However, we may in the future enter into employment or services agreements with such individuals, the terms of which may
provide for, among other things, cash or equity based compensation and benefits.
Share-Based Compensation Awards
We currently have one share-based compensation award plan, namely the 2012 Equity Incentive Award Plan, established in 2012 (the
“Equity Plan”).
The Equity Plan
The principal purpose of the Equity Plan is to attract, retain and motivate selected employees, consultants and non-employee directors
through the granting of share-based and cash-based compensation awards. The principal features of the Equity Plan are summarized
below.
During the year ended 30 June 2023, certain directors and members of executive management were awarded Class A ordinary shares,
pursuant to the Equity Plan. These shares are subject to varying vesting schedules over a multi-year period. The fair value of these
shares was the quoted market price on the date of award. Details of the share awards outstanding and therefore potentially issuable as
new shares are as follows:
Outstanding at beginning of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Awarded during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Outstanding at the end of the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Number of Class A
ordinary shares
192,051
108,298
(96,871)
203,478
The fair value of shares awarded during the year was $23.85 (£18.75) per share. Awards made in the year ended 30 June 2023 were
approved by the Remuneration Committee subsequent to the year-end date.
Share reserve
Under the Equity Plan, 16,000,000 Class A ordinary shares are reserved for issuance pursuant to a variety of share-based
compensation awards, including share options, share appreciation rights, or SARs, restricted share awards, restricted share unit
awards, deferred share awards, deferred share unit awards, dividend equivalent awards, share payment awards and other share-based
awards. Of these reserved shares, assuming the above outstanding share awards fully vest, 14,679,924 shares remain available for
issuance as of 2 September 2023.
Administration
The remuneration committee of our board of directors (or other committee as our board of directors may appoint) administers the
Equity Plan unless our board of directors assumes authority for administration. Subject to the terms and conditions of the Equity Plan,
the administrator has the authority to select the persons to whom awards are to be made, determines the types of awards to be granted,
the number of shares to be subject to awards and the terms and conditions of awards, and makes all other determinations and can take
all other actions necessary or advisable for the administration of the Equity Plan. The administrator is also authorized to adopt, amend
or rescind rules relating to the administration of the Equity Plan. Our board of directors has the authority at all times to remove the
70
remuneration committee (or other applicable committee) as the administrator and reinstate itself as the authority to administer the
Equity Plan.
Eligibility
The Equity Plan provides that share options, share appreciation rights (“SARs”), restricted shares and all other awards may be granted
to individuals who will then be our non-employee directors, officers, employees or consultants or the non-employee directors, officers,
employees or consultants of certain of our subsidiaries.
Awards
The Equity Plan provides that the administrator may grant or issue share options, SARs, restricted shares, restricted share units,
deferred shares, deferred share units, dividend equivalents, share payments and other share-based awards, or any combination thereof.
Each award will be set forth in a separate agreement with the person receiving the award and will indicate the type, terms and
conditions of the award.
•
Share Options provide for the right to purchase Class A ordinary shares at a specified price, and usually will become
exercisable (at the discretion of the administrator) in one or more installments after the grant date, subject to the participant’s
continued employment or service with us and/or subject to the satisfaction of corporate performance targets and/or individual
performance targets established by the administrator.
• Restricted Shares may be granted to any eligible individual selected by the administrator and are made subject to such
restrictions as may be determined by the administrator. Restricted shares, typically, are forfeited for no consideration or
repurchased by us at the original purchase price (if applicable) if the conditions or restrictions on vesting are not met. The
Equity Plan provides that restricted shares generally may not be sold or otherwise transferred until the applicable restrictions
are removed or expire. Recipients of restricted shares, unlike recipients of share options, have voting rights and have the right
to receive dividends, if any, prior to the time when the restrictions lapse; however, extraordinary dividends will generally be
placed in escrow, and will not be released until the restrictions are removed or expire.
• Restricted Share Units may be awarded to any eligible individual selected by the administrator, typically without payment of
consideration, but subject to vesting conditions based on continued employment or service or on performance criteria
established by the administrator. The Equity Plan provides that, like restricted shares, restricted share units may not be sold,
or otherwise transferred or hypothecated, until vesting conditions are removed or expire. Unlike restricted shares, Class A
ordinary shares underlying restricted share units are not issued until the restricted share units have vested, and recipients of
restricted share units generally have no voting or dividend rights prior to the time when vesting conditions are satisfied and
the Class A ordinary shares are issued.
• Deferred Share Awards represent the right to receive Class A ordinary shares on a future date. The Equity Plan provides that
deferred shares may not be sold or otherwise hypothecated or transferred until issued. Deferred shares are not issued until the
deferred share award has vested, and recipients of deferred shares generally have no voting or dividend rights prior to the
time when the vesting conditions are satisfied and the Class A ordinary shares are issued. Deferred share awards generally
will be forfeited, and the underlying Class A ordinary shares of deferred shares will not be issued, if the applicable vesting
conditions and other restrictions are not met.
• Deferred Share Unit Awards may be awarded to any eligible individual selected by the administrator, typically without
payment of consideration, but subject to vesting conditions based on continued employment or service or on performance
criteria established by the administrator. Each deferred share unit award entitles the holder thereof to receive one share of our
Class A ordinary shares on the date the deferred share unit becomes vested or upon a specified settlement date thereafter. The
Equity Plan provides that, like deferred shares, deferred share units may not be sold or otherwise hypothecated or transferred
until vesting conditions are removed or expire. Unlike deferred shares, deferred share units may provide that Class A
ordinary shares in respect of underlying deferred share units will not be issued until a specified date or event following the
vesting date. Recipients of deferred share units generally have no voting or dividend rights prior to the time when the vesting
conditions are satisfied and the Class A ordinary shares underlying the award have been issued to the holder.
71
•
Share Appreciation Rights, or SARs, may be granted in the administrator’s discretion separately or in connection with share
options or other awards. SARs granted in connection with share options or other awards typically provide for payments to the
holder based upon increases in the price of our Class A ordinary shares over a set exercise price. There are no restrictions
specified in the Equity Plan on the exercise of SARs or the amount of gain realizable therefrom, although the Equity Plan
provides that restrictions may be imposed by the administrator in the SAR agreements. SARs under the Equity Plan may be
settled in cash or Class A ordinary shares, or in a combination of both, at the election of the administrator.
• Dividend Equivalents represent the value of the dividends, if any, per Class A ordinary share paid by us, calculated with
reference to the number of Class A ordinary shares covered by the award. The Equity Plan provides that dividend equivalents
may be settled in cash or Class A ordinary shares and at such times as determined by the administrator.
•
Share Payments are payments made to employees, consultants or non-employee directors in the form of Class A ordinary
shares or an option or other right to purchase Class A ordinary shares. Share payments may be made as part of a bonus,
deferred compensation or other arrangement and may be subject to a vesting schedule, including vesting upon the attainment
of performance criteria, in which case the share payment will not be made until the vesting criteria have been satisfied. Share
payments may be made in lieu of cash compensation that would otherwise be payable to the employee, consultant or non-
employee director or share payments may be made as a bonus payment in addition to compensation otherwise payable to
such individuals.
Change in control
The Equity Plan provides that the administrator may, in its discretion, provide that awards issued under the Equity Plan are subject to
acceleration, cash-out, termination, assumption, substitution or conversion of such awards in the event of a change in control or certain
other unusual or nonrecurring events or transactions. In addition, the administrator also has complete discretion to structure one or
more awards under the Equity Plan to provide that such awards become vested and exercisable or payable on an accelerated basis in
the event such awards are assumed or replaced with equivalent awards but the individual’s service with us or the acquiring entity is
subsequently terminated within a designated period following the change in control event. A change in control event under the Equity
Plan is generally defined as a merger, consolidation, reorganization or business combination in which we are involved, directly or
indirectly (other than a merger, consolidation, reorganization or business combination which results in our outstanding voting
securities immediately before the transaction continuing to represent a majority of the voting power of the acquiring company’s
outstanding voting securities) after which a person or group (other than our existing equity-holders) beneficially owns more than 50%
of the outstanding voting securities of the surviving entity immediately after the transaction, or the sale, exchange or transfer of all or
substantially all of our assets.
Adjustments of awards
In the event of any stock dividend, stock split, combination or exchange of shares, merger, consolidation, spin-off, recapitalization,
distribution of our assets to shareholders (other than normal cash dividends) or any other corporate event affecting the number of
outstanding Class A ordinary shares in our capital or the share price of our Class A ordinary shares that would require adjustments to
the Equity Plan or any awards under the Equity Plan in order to prevent the dilution or enlargement of the potential benefits intended
to be made available thereunder, the Equity Plan provides that the administrator may make equitable adjustments, as determined in its
discretion, to the aggregate number and type of shares subject to the Equity Plan, the number and kind of shares subject to outstanding
awards and the terms and conditions of outstanding awards (including, without limitation, any applicable performance targets or
criteria with respect to such awards), and the grant or exercise price per share of any outstanding awards under the Equity Plan.
Amendment and termination
The Equity Plan provides that our board of directors or the remuneration committee (with the approval of the board of directors) may
terminate, amend or modify the Equity Plan at any time and from time to time. However, the Equity Plan generally requires us to
obtain shareholder approval to the extent required by applicable law, rule or regulation (including any applicable stock exchange law),
including in connection with any amendments to increase the number of shares available under the Equity Plan (other than in
connection with certain corporate events, as described above).
Securities laws
The Equity Plan is designed to comply with all applicable provisions of the Securities Act and the Exchange Act and, to the extent
applicable, any and all regulations and rules promulgated by the SEC thereunder. The Equity Plan is administered, and stock options
72
will be granted and may be exercised, only in such a manner as to conform to such laws, rules and regulations. On 13 August 2012,
we filed with the SEC a registration statement on Form S-8 covering Class A ordinary shares issuable under the Equity Plan.
UK Subplan
Our board of directors approved the 2012 UK Company Share Option UK Sub-Plan on 10 September 2013. This is a sub-plan to the
Equity Plan which allows for the grant of stock options in a tax efficient manner to employees who are UK residents. It derives its
powers and authority from the Equity Plan and does not create any enhanced or additional rights. This sub-plan does not increase the
share reserve under the Equity Plan.
C. BOARD PRACTICES
Board of directors
We currently have 12 directors on our board of directors, two of whom, Messrs. John Hooks and Manu Sawhney, have been
determined by the board of directors to qualify as an “independent director” pursuant to rules of the New York Stock Exchange. Any
director on our board may be removed by way of an ordinary resolution of shareholders or by our shareholders holding a majority of
the voting power of our outstanding ordinary shares by notice in writing to the Company. Our amended and restated memorandum and
articles of association provide that each director elected at a general meeting shall be elected to hold office for a one-year term and
until the election of their respective successors in office or their earlier death, resignation or removal. Any vacancies on our board of
directors or additions to the existing board of directors can be filled by the board of directors or by our shareholders holding a majority
of the voting power of our outstanding ordinary shares by notice in writing to the Company. For more information on the length of
time each director has served, see “Item 6.A. Directors and Senior Management.”
We have entered into written employment or service agreements with certain of the members of our board of directors, which
agreements provide, amongst other things, for benefits upon termination of employment. We have not entered into written
employment or service agreements with our outside directors, including any member of the Glazer family.
Committees of the Board of directors and Corporate Governance
Our board of directors has established an audit committee and a remuneration committee. The composition and responsibilities of each
committee are described below. Members serve on these committees until their resignation or until otherwise determined by our board
of directors. In the future, our board of directors may establish other committees, as it deems appropriate, to assist with its
responsibilities.
Audit committee
Our audit committee consists of Messrs. John Hooks and Manu Sawhney. Our board of directors determined that each of Messrs. John
Hooks and Manu Sawhney is financially literate and satisfies the “independence” requirements set forth in Rule 10A-3 under the
Exchange Act. Mr. Manu Sawhney acts as chairman of our audit committee and has been determined by the board of directors to
qualify as an audit committee financial expert as set forth under the applicable rules of the Exchange Act. A copy of our audit
committee charter is available on our website at https://ir.manutd.com/. The information contained on or through our website, or any
other website referred to herein, is not incorporated by reference in this Annual Report. The audit committee oversees our accounting
and financial reporting processes and the audits of our financial statements. The audit committee is responsible for, among other
things:
•
•
•
•
selecting our independent registered public accounting firm and pre-approving all auditing and non-auditing services
permitted to be performed by our independent registered public accounting firm;
reviewing with our independent registered public accounting firm any audit issues or difficulties and management’s response;
discussing the annual audited financial statements with management and our independent registered public accounting firm;
reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of significant
control deficiencies;
•
annually reviewing and reassessing the adequacy of our audit committee charter;
•
such other matters that are specifically delegated to our audit committee by our board of directors from time to time; and
• meeting separately and periodically with management, our internal auditors and our independent registered public accounting
firm.
73
Remuneration committee
Our remuneration committee consists of Messrs. Joel Glazer, Avram Glazer and Robert Leitão. Mr. Joel Glazer is the chairman of our
remuneration committee. A copy of our remuneration committee charter is available on our website at https://ir.manutd.com/. The
information contained on or through our website, or any other website referred to herein, is not incorporated by reference in this
Annual Report. The remuneration committee is responsible for, among other things:
•
•
•
•
•
determining the levels of remuneration for each of our executive officers and directors; however, no member of the
remuneration committee will participate in decisions relating to his or her remuneration;
establishing and reviewing the objectives of our management compensation programs and compensation policies;
reviewing and approving corporate goals and objectives relevant to the remuneration of senior management, including annual
and long-term performance goals and objectives;
evaluating the performance of members of senior management and recommending and monitoring the remuneration of
members of senior management; and
reviewing, approving and recommending the adoption of any equity-based or non-equity based compensation plan for our
employees or consultants and administering such plan.
We have availed ourselves of certain exemptions afforded to foreign private issuers under New York Stock Exchange rules, which
exempt us from the requirement that we have a remuneration committee composed entirely of independent directors.
D. EMPLOYEES
Employees
The average monthly number of employees during the years ended 30 June 2023, 2022 and 2021, respectively, including directors,
was as follows:
Average number of employees:
Football – men’s and women’s players . . . . . . . . . . . . . . . . . . . . . . . . . .
Football - technical and coaching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average monthly number of employees. . . . . . . . . . . . . . . . . . . . . . . . . .
2023
2022
2021
Number Number Number
131
192
167
104
518
1,112
124
189
151
94
477
1,035
118
176
131
90
468
983
The table below sets out the average monthly number of employees during the years ended 30 June 2023, 2022 and 2021, respectively,
including directors, by geography:
2023
2022
2021
Number Number Number
United Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hong Kong . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of World . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average monthly number of employees. . . . . . . . . . . . . . . . . . . . . . . . . .
1,068
7
2
35
1,112
983
7
2
43
1,035
926
11
3
43
983
We are not a signatory to any labor union collective bargaining agreement. We also engaged approximately 2,517 temporary
employees on average in fiscal year 2023, on a regular basis to perform, among other things, catering, security, ticketing, hospitality
and marketing services during Matchdays at Old Trafford.
74
E. SHARE OWNERSHIP
The following table shows the number of shares owned by our directors and members of our executive management as of 6 September
2023:
Avram Glazer(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Joel Glazer(3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Richard Arnold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cliff Baty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Patrick Stewart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kevin Glazer(4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bryan Glazer(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Darcie Glazer Kassewitz(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Edward Glazer(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Robert Leitão . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manu Sawhney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
John Hooks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class A
Ordinary
Shares
—
1,707,614
(*)
(*)
(*)
—
—
603,806
—
—
—
—
%
%
—
(*)
(*)
(*)
—
—
Class B
Ordinary
Shares
16,606,979
3.23 % 21,899,366
—
—
—
15,899,366
19,899,365
1.14 % 20,899,365
15,003,172
—
—
—
—
—
—
—
% of Total
Voting
Power(1)
15.07 % 14.38 %
19.87 % 19.11 %
—
—
—
(*)
(*)
(*)
14.43 % 13.77 %
18.06 % 17.23 %
18.96 % 18.15 %
13.61 % 12.99 %
—
—
—
—
—
—
(1) Percentage of total voting power represents voting power with respect to all of our Class A and Class B ordinary shares, as a
single class. The holders of our Class B ordinary shares are entitled to 10 votes per share, and holders of our Class A ordinary
shares are entitled to one vote per share.
(2) Shares owned by Avram Glazer Irrevocable Exempt Trust, of which Avram Glazer is the sole trustee, and Hamilton TFC LLC, of
which Avram Glazer Irrevocable Exempt Trust is the sole member.
(3) Shares owned by Joel M. Glazer Irrevocable Exempt Trust, of which Joel Glazer is the sole trustee, and RECO Holdings LLC, of
which Joel M. Glazer Irrevocable Exempt Trust is the sole member.
(4) Shares owned by Kevin Glazer Irrevocable Exempt Family Trust, of which Kevin Glazer is the sole trustee, and KEGT Holdings
LLC, of which Kevin Glazer Irrevocable Exempt Family Trust is the sole member.
(5) Shares owned by Bryan G. Glazer Irrevocable Exempt Trust, of which Bryan Glazer is the sole trustee, BGGT Holdings LLC, of
which Bryan G. Glazer Irrevocable Exempt Trust is the sole member, and SCG Global Investment Holdings LLC, of which Bryan
G. Glazer Irrevocable Exempt Trust is the sole member.
(6) Shares owned by Darcie S. Glazer Irrevocable Exempt Trust, of which Darcie Glazer Kassewitz is the sole trustee.
(7) Shares owned by Edward S. Glazer Irrevocable Exempt Trust, of which Edward Glazer is the sole trustee, and ESGT Holdings
LLC, of which Edward S. Glazer Irrevocable Exempt Trust is the sole member.
(*) These directors and members of our executive management individually own less than 1% of our Class A ordinary shares.
75
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS
The following table shows our major shareholders (shareholders that are beneficial owners of 5% or more of each class of the
Company’s voting shares) as of 6 September 2023, based on notifications made to the Company or public filings:
Lindsell Train Limited(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Ariel Investments, LLC (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Massachusetts Financial Services Company (4) . . . . . . . . . . . . . . . . . .
Avram Glazer(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Joel M. Glazer(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kevin Glazer(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bryan G. Glazer(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Darcie S. Glazer(9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Edward S. Glazer (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class A
Ordinary
Shares
11,018,676
8,454,466
3,428,274
—
1,707,614
—
—
603,806
—
%
Class B
Ordinary
Shares
%
20.81 %
15.97 %
6.47 %
—
—
—
—
16,606,979
3.22 % 21,899,366
15,899,366
19,899,365
1.14 % 20,899,365
15,003,172
—
—
—
% of Total
Voting
—
—
—
Power(1)
0.95 %
0.73 %
0.30 %
15.07 % 14.38 %
19.87 % 19.11 %
14.43 % 13.77 %
18.06 % 17.23 %
18.96 % 18.15 %
13.61 % 12.99 %
(1) Percentage of total voting power represents voting power with respect to all of our Class A and Class B ordinary shares, as a
single class. The holders of our Class B ordinary shares are entitled to 10 votes per share, and holders of our Class A ordinary
shares are entitled to one vote per share.
(2) Based on information reported on a Schedule 13G/A filed on 8 February 2023, each of Lindsell Train Limited (“LTL”), Michael
James Lindsell and Nicholas John Train have shared and dispositive power over 11,018,676 shares of our Class A ordinary
shares. Each of Messrs. Lindsell and Train own a significant membership interest in LTL and may be deemed to control shares
held by LTL by virtue of their respective interests therein. The business address of LTL, Mr. Lindsell and Mr. Train is 66
Buckingham Gate, London SWIE 6AU, United Kingdom.
(3) Based on information reported on a Schedule 13G/A filed on 10 January 2023, Ariel Investments, LLC (“AIL”) has sole voting
power over 7,617,381 of our Class A ordinary shares and sole dispositive power over 8,454,466 of our Class A ordinary shares.
The business address of Ariel Investments, LLC is 200 E. Randolph Street, Suite 2900, Chicago, IL 60601.
(4) Based on information reported on a Schedule 13G/A filed on 8 February 2023, Massachusetts Financial Services Company
(“MFS”) has sole voting and dispositive power over 3,428,274 of our Class A ordinary shares. The business address of MFS is
111 Huntington Avenue, Boston, MA 02199.
(5) Shares owned by Avram Glazer Irrevocable Exempt Trust, of which Avram Glazer is the sole trustee, and Hamilton TFC LLC, of
which Avram Glazer Irrevocable Exempt Trust is the sole member.
(6) Shares owned by Joel M. Glazer Irrevocable Exempt Trust, of which Joel Glazer is the sole trustee, and RECO Holdings LLC, of
which Joel M. Glazer Irrevocable Exempt Trust is the sole member.
(7) Shares owned by Kevin Glazer Irrevocable Exempt Family Trust, of which Kevin Glazer is the sole trustee, and KEGT Holdings
LLC, of which Kevin Glazer Irrevocable Exempt Family Trust is the sole member.
(8) Shares owned by Bryan G. Glazer Irrevocable Exempt Trust, of which Bryan Glazer is the sole trustee, BGGT Holdings LLC, of
which Bryan G. Glazer Irrevocable Exempt Trust is the sole member, and SCG Global Investment Holdings LLC, of which Bryan
G. Glazer Irrevocable Exempt Trust is the sole member.
(9) Shares owned by Darcie S. Glazer Irrevocable Exempt Trust, of which Darcie Glazer Kassewitz is the sole trustee.
(10) Shares owned by Edward S. Glazer Irrevocable Exempt Trust, of which Edward Glazer is the sole trustee.
Since 1 September 2020 until 1 September 2023, the only significant changes of which we have been notified in the percentage
ownership of our shares by our major shareholders described above were that:
•
•
•
•
on 10 September 2021, Ariel Investments LLC made a public filing that it beneficially owned 5,971,625 of our Class A
ordinary shares, representing 0.52% of total voting power;
on 13 September 2021, Bryan G. Glazer Irrevocable Exempt Trust made a public filing that it beneficially owned 19,899,365
of our Class B ordinary shares, representing 17.23% of total voting power;
on 18 October 2021, Kevin Glazer Irrevocable Exempt Trust made a public filing that it beneficially owned 15,899,366 of
our Class B ordinary shares, representing 13.77% of total voting power;
on 18 October 2021, Edward S. Glazer Irrevocable Exempt Trust made a public filing that it beneficially owned 15,003,172
of our Class B ordinary shares, representing 12.99% of total voting power;
76
•
•
•
•
•
•
•
•
•
•
•
•
on 1 December 2021, Lindsell Train Limited made a public filing that it beneficially owned 11,108,340 of our Class A
ordinary shares, representing 0.96% of total voting power;
on 10 December 2021, Ariel Investments LLC made a public filing that it beneficially owned 10,596,721 of our Class A
ordinary shares, representing 0.92% of total voting power;
on 2 February 2022, Massachusetts Financial Services Company made a public filing that it held 3,166,867 of our Class A
ordinary shares, representing 0.27% of total voting power;
on 11 February 2022, Lindsell Train Limited made a public filing that it beneficially owned 10,847,340 of our Class A
ordinary shares, representing 0.94% of total voting power;
on 14 February 2022, Ariel Investments LLC made a public filing that it beneficially owned 10,934,059 of our Class A
ordinary shares, representing 0.95% of total voting power;
on 14 February 2022, Baron Capital Group, Inc. made a public filing that it held 9,764,453 of our Class A ordinary shares,
representing 0.84% of total voting power;
on 21 March 2022, Joel M. Glazer Irrevocable Exempt Trust made a public filing that it beneficially owned 1,707,614 of our
Class A ordinary shares and 21,899,366 of our Class B ordinary shares, representing 19.11% of total voting power;
on 7 April 2022, Baron Capital Group, Inc. made a public filing that it held 5,583,670 of our Class A ordinary shares,
representing 0.48% of total voting power;
on 5 July 2022, Baron Capital Group, Inc. made a public filing that it held 1,553,888 of our Class A ordinary shares,
representing 0.13% of total voting power;
on 10 January 2023, Ariel Investments LLC made a public filing that it beneficially owned 8,454,466 of our Class A ordinary
shares, representing 0.73% of total voting power;
on 8 February 2023, Massachusetts Financial Services Company made a public filing that it held 3,428,274 of our Class A
ordinary shares, representing 0.30% of total voting power; and
on 8 February 2023, Lindsell Train Limited made a public filing that it beneficially owned 11,018,676 of our Class A
ordinary shares, representing 0.94% of total voting power.
US Resident Shareholders of Record
As a number of our shares are held in book-entry form, we are not aware of the identity of all our shareholders. As of 6 September
2023, we had 52,295,829 Class A ordinary shares held by 3,819 US resident shareholders of record, representing approximately
4.53% of total voting power and 110,207,613 Class B ordinary shares held by 12 US resident shareholders of record, representing
approximately 95.62% of total voting power.
Shareholders’ Arrangements
As of 6 September 2023, the Company was not aware of any shareholders’ arrangements which may result in a change of control of
the Company.
B. RELATED PARTY TRANSACTIONS
We have entered into employment or service agreements with members of executive management. Information regarding these
agreements may be found in this Annual Report under Item 6. “Directors, Senior Management and Employees—B. Compensation”
and is incorporated herein by reference. In addition, members of management have received equity compensation. See also Note 7.2 to
our audited consolidated financial statements included elsewhere in this Annual Report for information about compensation paid or
payable to key management for services, which is incorporated herein by reference.
There have been no other related party transactions since the beginning of our last full fiscal year that began on 1 July 2022 through
the date of this Annual Report.
ITEM 8. FINANCIAL INFORMATION
A. CONSOLIDATED FINANCIAL STATEMENTS AND OTHER FINANCIAL INFORMATION
Consolidated Financial Statements
See “Item 18. Financial Statements.”
77
Legal and Arbitration Proceedings
There have been no governmental, judicial or arbitration proceedings, including those relating to bankruptcy, receivership or similar
proceedings and those involving any third party, (including any such proceedings which are pending or threatened of which we are
aware) during the period between 1 July 2022 and the date of this Annual Report which may have, or have had in the recent past,
significant effects on our financial position and profitability.
Dividend Policy
No dividends were paid for fiscal year 2023. The declaration and payment of any future dividends will be at the sole discretion of our
board of directors or a committee thereof based on its consideration of numerous factors, including our operating results, financial
condition and anticipated capital requirements, in addition to the various other considerations discussed below.
If we do pay a cash dividend on our Class A ordinary shares and Class B ordinary shares in the future, we will pay such dividend out
of our profits or share premium (subject to solvency requirements) as permitted under Cayman Islands law. Our board of directors has
complete discretion regarding the declaration and payment of dividends, and the holders of our Class B ordinary shares will be able to
influence our dividend policy.
The decision by our board of directors (or a committee thereof) to declare and pay dividends in the future and the amount of any future
dividend payments we may make will depend on, among other factors, our strategy, future earnings, financial condition, cash flow,
working capital requirements, capital expenditures and applicable provisions of our amended and restated memorandum and articles
of association. Any profits or share premium we declare as dividends will not be available to be reinvested in our operations.
Moreover, we are a holding company that does not conduct any business operations of our own. As a result, we are dependent upon
cash dividends, distributions and other transfers from our subsidiaries to make dividend payments, and the terms of our subsidiaries’
debt and other agreements restrict the ability of our subsidiaries to make dividends or other distributions to us. Specifically, pursuant
to our revolving facilities, our secured term loan facility and the note purchase agreement governing our senior secured notes, there are
restrictions on our subsidiaries’ ability to distribute dividends to us, and dividend distributions by our subsidiaries are the principal
means by which we would have the necessary funds to pay dividends on our Class A ordinary shares and Class B ordinary shares for
the foreseeable future. See “Item 5. Operating and Financial Review and Prospects - B. Liquidity and Capital Resources —
Indebtedness.” As a consequence of these limitations and restrictions, we may not be able to make, or may have to reduce or
eliminate, the payment of dividends on our Class A ordinary shares and Class B ordinary shares.
Any dividends we declare in the future on our ordinary shares will be in respect of both our Class A ordinary shares and Class B
ordinary shares, and will be distributed such that a holder of one of our Class B ordinary shares will receive the same amount of the
dividends that are received by a holder of one of our Class A ordinary shares. We will not declare any dividend with respect to the
Class A ordinary shares without declaring a dividend on the Class B ordinary shares, and vice versa.
B. SIGNIFICANT CHANGES
Registrations
The playing registrations of certain footballers have been disposed of on a permanent or temporary basis, subsequent to 30 June 2023,
for total proceeds, net of associated costs, of £39,751,000. The associated net book value was £9,951,000. Also subsequent to 30 June
2023, solidarity contributions, training compensation, sell-on fees and contingent consideration totalling £140,000, became receivable
in respect of previous playing registration disposals.
Subsequent to 30 June 2023, the registrations of certain players were acquired or extended for a total consideration, including
associated costs, of £207,967,000. Payments are due within the next 5 years. Also, subsequent to 30 June 2023, sell-on fees and
contingent consideration totalling £1,363,000 became payable in respect of previous playing registration acquisitions.
Adidas contract extension
On 21 July 2023, the Group signed a 10-year extension to its agreement with adidas which began on 1 August 2015 and now
terminates on 30 June 2035. Further information on this is provided in Note 4.3(i) to the financial statements of this report.
78
Revolving facilities
On 3 July 2023, a drawdown on the Group’s revolving facilities of £50.0 million was made. This was comprised of £30.0 million
under our initial revolving facility with Bank of America and £20.0 million under our revolving facility with Santander.
On 3 August 2023, a further drawdown on the Group’s revolving facilities was made. This was comprised of a £45.0 million
drawdown under our initial revolving facility with Bank of America and £5.0 million under our revolving facility with Santander. This
took the total drawdown as of 3 August 2023 to £200.0 million from available facilities of £300.0 million.
On 10 October 2023, a further drawdown on the Group’s revolving facilities was made. This comprised of a £35.0 million drawdown
under our initial revolving facility with Bank of America, a £12.5 million drawdown under our bilateral facility with Bank of America
and a £12.5 million drawdown under our revolving facility with Santander. This took the total drawdown as of 10 October 2023 to
£260.0 million from available facilities of £300.0 million.
Qualcomm front of shirt partnership agreement
On 12 September 2023, the Group signed an expanded agreement with Qualcomm Technologies, Inc. that will see the Snapdragon®
brand displayed on the front of the playing shirts of both our Men’s and Women’s teams, commencing from the start of the 2024/25
season. Amounts realised in relation to the signing of this agreement, which include charges relating to the changes to the existing
TeamViewer shirt sponsorship, will be recognized in the first quarter of the year ended 30 June 2024.
ITEM 9. THE OFFER AND LISTING
Markets
We are incorporated under the Companies Law (as amended) of the Cayman Islands, and our Class A ordinary shares are listed on the
New York Stock Exchange under the symbol “MANU.” Our Class B ordinary shares are not listed to trade on any securities market.
As of 6 September 2023 we had 52,951,335 Class A ordinary shares listed.
ITEM 10. ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not applicable.
B. MEMORANDUM AND ARTICLES OF ASSOCIATION
A copy of our amended and restated memorandum and articles of association is attached as Exhibit 1.1 to this Annual Report. The
information called for by this Item is set forth in Exhibit 2.2 to our Annual Report on Form 20-F (File No. 001-35627), filed with the
SEC on 24 September 2019 and is incorporated by reference into this Annual Report.
C. MATERIAL CONTRACTS
The following is a summary of each material contract, other than material contracts entered into in the ordinary course of business, to
which we are or have been a party, for the two years immediately preceding the date of this Annual Report:
•
Sixth Amendment and Restatement Agreement relating to the Secured Term Facility Agreement, dated 1 June 2023, among
Red Football Limited, Manchester United Football Club Limited and Bank of America Europe Designated Activity
Company, as Agent and Lender. A copy of the agreement is included as Exhibit 4.2 to this Annual Report.
• Amendment letter relating to the Secured Term Facility Agreement, dated 4 November 2022, from Bank of America Europe
Designated Activity Company as Agent to Red Football Limited as Company. A copy of the agreement is included as Exhibit
4.3 to this Annual Report.
• Third Amendment and Restatement Agreement relating to the Revolving Facilities Agreement, dated 10 December 2021,
among Red Football Limited, Manchester United Football Club Limited, and Bank of America Europe Designated Activity
Company, as Agent. A copy of the agreement is included as Exhibit 4.5 to this Annual Report.
• Amendment letter relating to the Revolving Facilities Agreement, dated 4 November 2022, from Bank of America Europe
Designated Activity Company as Agent to Red Football Limited as Company. A copy of the agreement is included as Exhibit
4.6 to this Annual Report.
79
• Revolving Facilities Agreement, dated 26 April 2022, among Red Football Limited, Manchester United Football Club
Limited, Bank of America, N.A., London Branch as Lender and Bank of America Europe Designated Activity Company, as
Agent. A copy of the agreement is included as Exhibit 4.7 to this Annual Report.
• Amendment letter relating to the Revolving Facilities Agreement, dated 4 November 2022, from Bank of America Europe
Designated Activity Company as Agent to Red Football Limited as Company. A copy of the agreement is included as Exhibit
4.8 to this Annual Report.
• Note Purchase Agreement, dated 27 May 2015, among MU Finance plc (now known as MU Finance Limited), the guarantors
party thereto, the purchasers listed therein and the Bank of New York Mellon, as Paying Agent. A copy of the agreement is
included as Exhibit 4.9 to this Annual Report.
• Amendment No. 1 to Note Purchase Agreement, and Consent No. 1, dated 14 June 2018, among MU Finance plc (now known
as MU Finance Limited), the guarantors party thereto, the noteholders listed on the signature pages thereto and the Bank of
New York Mellon, as Paying Agent. A copy of the agreement is included as Exhibit 4.10 to this Annual Report.
• Amendment No. 2 to Note Purchase Agreement, dated 4 March 2021, among Manchester United Football Club Limited, the
guarantors party thereto, the noteholders listed on the signature pages thereto and the Bank of New York Mellon, as Paying
Agent. A copy of the agreement is included as Exhibit 4.11 to this Annual Report.
• Consent No. 2 to Note Purchase Agreement, dated 26 April 2022, among Manchester United Football Club Limited, the
•
guarantors party thereto, the noteholders listed on the signature pages thereto and the Bank of New York Mellon, as Paying
Agent. A copy of the agreement is included as Exhibit 4.12 to this Annual Report.
Second Amendment and Restatement Agreement relating to the Revolving Facilities Agreement, dated 13 December 2021,
among Red Football Limited, Manchester United Football Club Limited and Santander UK plc, as Agent. A copy of the
agreement is included as Exhibit 4.14 to this Annual Report.
• Third Amendment and Restatement Agreement relating to the Revolving Facilities Agreement, dated 26 April 2022, among
Red Football Limited, Manchester United Football Club Limited and Santander UK plc, as Agent. A copy of the agreement is
included as Exhibit 4.15 to this Annual Report.
• Amendment letter relating to the Revolving Facilities Agreement, dated 4 November 2022, from Santander UK plc as Agent
to Red Football Limited as Company. A copy of the agreement is included as Exhibit 4.16 to this Annual Report.
2012 Equity Incentive Award Plan. A copy of the Plan is included as Exhibit 4.17 to this Annual Report.
•
• Premier League Handbook, Season 2022/23. As a member of the Football Association Premier League, we are subject to the
terms of the Premier League Handbook, Season 2022/23. A copy of the Handbook is included as Exhibit 4.18 to this Annual
Report.
• Premier League Handbook, Season 2023/24. As a member of the Football Association Premier League, we are subject to the
terms of the Premier League Handbook, Season 2023/24. A copy of the Handbook is included as Exhibit 4.19 to this Annual
Report.
D. EXCHANGE CONTROLS
There are no Cayman Islands exchange control regulations that would affect the import or export of capital or the remittance of
dividends, interest or other payments to non-resident holders of our shares.
E. TAXATION
The following is a summary of material US federal income tax consequences relevant to US Holders and Non-US Holders (each as
defined below) acquiring, holding and disposing of the Company’s Class A ordinary shares. This summary is based on the Code, final,
temporary and proposed US Treasury Regulations and administrative and judicial interpretations in effect as of the date hereof, all of
which are subject to change, possibly with retroactive effect. Furthermore, we can provide no assurance that the tax consequences
contained in this summary will not be challenged by the Internal Revenue Service (the “IRS”) or will be sustained by a court if
challenged.
This summary does not discuss all aspects of US federal income taxation that may be relevant to investors in light of their particular
circumstances, such as investors subject to special tax rules, including without limitation the following, all of whom may be subject to
tax rules that differ significantly from those summarized below:
•
•
•
•
financial institutions;
insurance companies;
dealers in stocks, securities, or currencies or notional principal contracts;
regulated investment companies;
80
•
•
•
•
real estate investment trusts;
tax-exempt organizations;
partnerships and other pass-through entities, or persons that hold Class A ordinary shares through pass-through entities;
investors that hold Class A ordinary shares as part of a straddle, conversion, constructive sale or other integrated transaction
for US federal income tax purposes;
• US holders that have a functional currency other than the US dollar;
• US expatriates and former long-term residents of the United States;
•
“qualified foreign pension funds” as defined in Section 897(l)(2) of the Code and entities all of the interests of which are held
by qualified foreign pension funds; and
persons subject to special tax accounting rules as a result of any item of income relating to our Class A ordinary shares being
taken into account in an applicable financial statement.
•
This summary does not address alternative minimum tax consequences or non-income tax consequences, such as estate or gift tax
consequences, and does not address state, local or non-US tax consequences. This summary only addresses investors that hold our
Class A ordinary shares and not Class B ordinary shares, and it assumes that investors hold their Class A ordinary shares as capital
assets (generally, property held for investment).
For purposes of this summary, a “US Holder” is a beneficial owner of the Company’s Class A ordinary shares that is, for US federal
income tax purposes:
•
•
•
•
an individual who is a citizen or resident of the United States,
a corporation created in, or organized under the laws of, the United States, any state thereof or the District of Columbia,
an estate the income of which is includible in gross income for US federal income tax purposes regardless of its source, or
a trust that (i) is subject to the primary supervision of a US court and the control of one or more US persons or (ii) has a valid
election in effect under applicable Treasury Regulations to be treated as a US person.
A “Non-US Holder” is a beneficial owner of the Company’s Class A ordinary shares that is not a US Holder.
If an entity or other arrangement treated as a partnership for US federal income tax purposes holds the Company’s Class A ordinary
shares, the tax treatment of a partner in the partnership generally will depend upon the status of the partner and the activities of the
partnership. Partners of partnerships considering an investment in the Class A ordinary shares are encouraged to consult their tax
advisors regarding the tax consequences of the ownership and disposition of Class A ordinary shares.
Treatment of the Company as a Domestic Corporation for US Federal Income Tax Purposes
Even though the Company is organized as a Cayman Islands exempted company, due to the circumstances of its formation and the
application of Section 7874 of the Code, the Company reports as a domestic corporation for US federal income tax purposes. This has
implications for all shareholders; the Company is subject to US federal income tax as if it were a US corporation, and distributions
made by the Company are generally treated as US-source dividends as described below and generally subject to US dividend
withholding tax.
US Holders
Distributions
Distributions made by the Company in respect of its Class A ordinary shares will be treated as US-source dividends includible in the
gross income of a US Holder as ordinary income to the extent of the Company’s current and accumulated earnings and profits, as
determined under US federal income tax principles. To the extent the amount of a distribution exceeds the Company’s current and
accumulated earnings and profits, the distribution will be treated first as a non-taxable return of capital to the extent of a US Holder’s
adjusted tax basis in the Class A ordinary shares and thereafter as gain from the sale of such shares. Subject to applicable limitations
and requirements, dividends received on the Class A ordinary shares generally should be eligible for the “dividends received
deduction” available to corporate shareholders. A dividend paid by the Company to a non-corporate US Holder generally will be
eligible for preferential rates if certain holding period requirements are met.
81
The US dollar value of any distribution made by the Company in foreign currency will be calculated by reference to the exchange rate
in effect on the date of the US Holder’s actual or constructive receipt of such distribution, regardless of whether the foreign currency
is in fact converted into US dollars. If the foreign currency is converted into US dollars on such date of receipt, the US Holder
generally will not recognize foreign currency gain or loss on such conversion. If the foreign currency is not converted into US dollars
on the date of receipt, such US Holder will have a basis in the foreign currency equal to its US dollar value on the date of receipt. Any
gain or loss on a subsequent conversion or other taxable disposition of the foreign currency generally will be US-source ordinary
income or loss to such US Holder.
Sale or other disposition
A US Holder will recognize gain or loss for US federal income tax purposes upon a sale or other taxable disposition of its Class A
ordinary shares in an amount equal to the difference between the amount realized from such sale or disposition and the US Holder’s
adjusted tax basis in the Class A ordinary shares. A US Holder’s adjusted tax basis in the Class A ordinary shares generally will be the
US Holder’s cost for the shares. Any such gain or loss generally will be US-source capital gain or loss and will be long-term capital
gain or loss if, on the date of sale or disposition, such US Holder held the Class A ordinary shares for more than one year. Long-term
capital gains derived by non-corporate US Holders are eligible for taxation at reduced rates. The deductibility of capital losses is
subject to significant limitations.
Information reporting and backup withholding
Payments of distributions on or proceeds arising from the sale or other taxable disposition of Class A ordinary shares generally will be
subject to information reporting, and they may be subject to backup withholding if a US Holder (i) fails to furnish such US Holder’s
correct US taxpayer identification number (generally on IRS Form W-9), (ii) furnishes an incorrect US taxpayer identification
number, (iii) is notified by the IRS that such US Holder has previously failed to properly report items subject to backup withholding,
or (iv) fails to certify under penalty of perjury that such US Holder has furnished its correct US taxpayer identification number and
that the IRS has not notified such US Holder that it is subject to backup withholding.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules generally will be allowed as a
credit against a US Holder’s US federal income tax liability or will be refunded, if the US Holder furnishes the required information to
the IRS in a timely manner.
Non-US Holders
Distributions
Subject to the discussion under “ — Foreign Account Tax Compliance Act” below, distributions treated as dividends (see “ — US
Holders — Distributions”) by the Company to Non-US Holders will be subject to US federal withholding tax at a 30% rate, except as
may be provided by an applicable income tax treaty. To obtain a reduced rate of US federal withholding under an applicable income
tax treaty, a Non-US Holder will be required to certify its entitlement to benefits under the treaty, including eligibility under the
Limitation on Benefits provision in a given treaty (for non-individuals), generally on a properly completed IRS Form W-8BEN or W-
8BEN-E, as applicable.
However, dividends that are effectively connected with a Non-US Holder’s conduct of a trade or business within the United States
and, where required by an income tax treaty, are attributable to a permanent establishment or fixed base of the Non-US Holder, are not
subject to the withholding tax described in the previous paragraph, but instead are subject to US federal net income tax at graduated
rates, provided the Non-US Holder complies with applicable certification and disclosure requirements, generally by providing a
properly completed IRS Form W-8ECI. Non-US Holders that are corporations may also be subject to an additional branch profits tax
at a 30% rate, except as may be provided by an applicable income tax treaty.
Sale or other disposition
Subject to the discussion under “ — Foreign Account Tax Compliance Act” below, a Non-US Holder will not be subject to US federal
income tax in respect of any gain on a sale or other disposition of the Class A ordinary shares unless:
•
the gain is effectively connected with the Non-US Holder’s conduct of a trade or business within the United States and,
where required by an income tax treaty, is attributable to a permanent establishment or fixed base of the Non-US Holder;
82
•
•
the Non-US Holder is an individual who is present in the United States for 183 days or more in the taxable year of the sale or
other disposition and certain other conditions are met; or
the Company is or has been a “US real property holding corporation” during the shorter of the five-year period preceding the
disposition and the Non-US Holder’s holding period for the Class A ordinary shares.
Non-US Holders described in the first bullet point above will be subject to tax on the net gain derived from the sale under regular
graduated US federal income tax rates and, if they are foreign corporations, may be subject to an additional “branch profits tax” at a
30% rate or such lower rate as may be specified by an applicable income tax treaty. Non-US Holders described in the second bullet
point above will be subject to a flat 30% tax on any gain derived on the sale or other taxable disposition, which gain may be offset by
certain US-source capital losses. The Company believes it is not, and does not currently anticipate becoming, a “US real property
holding corporation” for US federal income tax purposes.
Information reporting and backup withholding
Generally, the Company must report annually to the IRS and to Non-US Holders the amount of distributions made to Non-US Holders
and the amount of any tax withheld with respect to those payments, regardless of whether such distributions constitute dividends or
whether any tax was actually withheld. Copies of the information returns reporting such distributions and withholding may also be
made available to the tax authorities in the country in which a Non-US Holder resides under the provisions of an applicable income
tax treaty or tax information exchange agreement.
A Non-US Holder will generally not be subject to backup withholding with respect to payments of dividends, provided the Company
receives a properly completed statement to the effect that the Non-US Holder is not a US person and the Company does not have
actual knowledge or reason to know that the holder is a US person. The requirements for the statement will be met if the Non-US
Holder provides its name and address and certifies, under penalties of perjury, that it is not a US person (which certification may
generally be made on IRS Form W-8BEN or W-8BEN-E) or if a financial institution holding the Class A ordinary shares on behalf of
the Non-US Holder certifies, under penalties of perjury, that such statement has been received by it and furnishes the Company or its
paying agent with a copy of the statement.
Except as described below under “ — Foreign Account Tax Compliance Act”, the payment of proceeds from a disposition of Class A
ordinary shares to or through a non-US office of a non-US broker will not be subject to information reporting or backup withholding
unless the non-US broker has certain types of relationships with the United States. In the case of a payment of proceeds from the
disposition of Class A ordinary shares to or through a non-US office of a broker that is either a US person or such a US-related person,
US Treasury Regulations require information reporting (but not backup withholding) on the payment unless the broker has
documentary evidence in its files that the Non-US Holder is not a US person and the broker has no knowledge to the contrary.
Backup withholding is not an additional tax. Any amounts withheld under the backup withholding rules may be allowed as a refund or
a credit against a Non-US Holder’s US federal income tax liability, provided the required information is timely furnished to the IRS.
Foreign Account Tax Compliance Act
Pursuant to the Foreign Account Tax Compliance Act (“FATCA”), withholding taxes may apply to certain types of payments made to
“foreign financial institutions” (as defined under those rules) and certain other non-US entities. The failure to comply with additional
certification, information reporting and other specified requirements could result in a withholding tax being imposed on payments of
dividends and (subject to the proposed Treasury Regulations discussed below) sales proceeds to foreign intermediaries and certain
Non-US Holders. A 30% withholding tax may be imposed on dividends on, or (subject to the proposed Treasury Regulations
discussed below) gross proceeds from the sale or other disposition of, our Class A ordinary shares paid to a foreign financial
institution or to a non-financial foreign entity, unless (i) the foreign financial institution undertakes certain diligence and reporting
obligations, (ii) the non-financial foreign entity that is a passive non-financial entity either certifies it does not have any substantial US
owners or furnishes identifying information regarding each substantial US owner, or (iii) the foreign financial institution or non-
financial foreign entity otherwise qualifies for an exemption from these rules. If the payee is a foreign financial institution and is
subject to the diligence and reporting requirements in clause (i) above, it generally must enter into an agreement with the US Treasury
requiring, among other things, that it undertake to identify accounts held by certain US persons or US-owned foreign entities, annually
report certain information about such accounts and withhold 30% on payments to non-compliant foreign financial institutions and
certain other account holders. Foreign financial institutions located in jurisdictions that have an intergovernmental agreement with the
United States concerning FATCA may be subject to different rules.
Under the applicable Treasury Regulations and administrative guidance, withholding under FATCA generally applies to payments of
dividends on our Class A ordinary shares. While withholding under FATCA would have applied also to payments of gross proceeds
83
from the sale or other disposition of stock on or after 1 January 2019, proposed Treasury Regulations eliminate FATCA withholding
on payments of gross proceeds entirely. Taxpayers generally may rely on these proposed Treasury Regulations until final Treasury
Regulations are issued.
Prospective investors are encouraged to consult their tax advisors regarding the potential application of withholding under FATCA to
an investment in our Class A ordinary shares.
Material Cayman Islands Tax Considerations
There is, at present, no direct taxation in the Cayman Islands and interest, dividends and gains payable to the Company will be
received free of all Cayman Islands taxes. The Company has received an undertaking from the Governor in Cabinet of the Cayman
Islands to the effect that, for a period of twenty years from the date of such undertaking, no law that thereafter is enacted in the
Cayman Islands imposing any tax or duty to be levied on profits, income or on gains or appreciation, or any tax in the nature of estate
duty or inheritance tax, will apply to any property comprised in or any income arising under the Company, or to the shareholders
thereof, in respect of any such property or income.
The Cayman Islands has enacted the International Tax Cooperation (Economic Substance) Law, 2018 (the “Economic Substance
Law”) in response to the work of the Organization for Economic Co-operation and Development (“OECD”) and the EU on fair
taxation, and generally requires geographically mobile activities to have substance regardless of whether the activities are conducted
in a no or nominal tax jurisdiction. The legislation requires relevant entities to notify the Cayman Islands tax authorities and meet an
economic substance test. Under the law, as amended by the International Tax Co-Operation (Economic Substance) (Amendment of
Schedule) Regulations 2019, the term “relevant entity” in principle includes a company incorporated in the Cayman Islands but does
not include “an entity that is tax resident outside the Islands.” On the basis that the Company is treated as a domestic corporation for
US federal income tax purposes and treated as if it were a US tax resident, the Company is not expected to be a relevant entity and
therefore would not be subject to the abovementioned requirements in the Cayman Islands.
F. DIVIDENDS AND PAYING AGENTS
Not applicable.
G. STATEMENTS BY EXPERTS
Not applicable.
H. DOCUMENTS ON DISPLAY
The SEC maintains an Internet website that contains reports, proxy statements and other information about issuers, like us, that file
electronically with the SEC. The address of that site is www.sec.gov.
We also make available on our website, free of charge, our annual reports on Form 20-F and the text of our reports on Form 6-K,
including any amendments to these reports, as well as certain other SEC filings, as soon as reasonably practicable after they are
electronically filed with or furnished to the SEC. Our website address is https://ir.manutd.com/. The information contained on or
through our website, or any website referred to herein, is not incorporated by reference in this Annual Report.
I. SUBSIDIARY INFORMATION
Not applicable.
J. ANNUAL REPORT TO SECURITY HOLDERS
Not applicable.
84
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market Risk
Our operations are exposed to a variety of financial risks that include foreign exchange risk, and cash flow and fair value interest rate
risk. We review and agree policies for managing these risks, which are then implemented by our finance department. Please refer to
Note 30 to our audited consolidated financial statements as of 30 June 2023 and 2022 and for the years ended 30 June 2023, 2022 and
2021 included elsewhere in this Annual Report for a fuller quantitative and qualitative discussion on the market risks to which we are
subject and our policies with respect to managing those risks. The policies are summarized below:
Foreign exchange risk
We are exposed to both translational and transactional risk of fluctuations in foreign exchange rates. A significant foreign exchange
risk we face relates to the revenue received in Euros as a result of participation in UEFA club competitions. We ordinarily seek to
hedge economically the majority of the foreign exchange risk of this revenue either by using contracted future foreign exchange
expenses (including player transfer fee commitments) or by placing forward contracts at the point at which it becomes reasonably
certain that we will receive the revenue.
We also receive a significant amount of sponsorship revenue denominated in US dollars. We seek to hedge the foreign exchange risk
on future US dollar revenues whenever possible using our US dollar net borrowings as the hedging instrument. The foreign exchange
gains or losses arising on retranslation of our US dollar net borrowings used in the hedge are initially recognized in other
comprehensive income, rather than being recognized in the statement of profit or loss immediately. Amounts previously recognized in
other comprehensive income and accumulated in a hedging reserve are subsequently reclassified into the statement of profit or loss in
the same accounting period, and within the same statement of profit or loss line (i.e. commercial revenue), as the underlying future
US dollar revenues. The foreign exchange gains or losses arising on re-translation of our unhedged US dollar borrowings are
recognized in the statement of profit or loss immediately.
As of 30 June 2023, the amount accumulated in the hedging reserve relating to the above hedge was a credit of £0.1 million (this
amount is stated gross before deducting related tax).
Based on exchange rates existing as of 30 June 2023, a 10% appreciation of pounds sterling compared to the US dollar would have
resulted in a credit to the hedging reserve in respect of the above hedge of approximately £3.7 million for the year ended 30 June
2023. Conversely, a 10% depreciation of pounds sterling compared to the US dollar would have resulted in a debit to the hedging
reserve in respect of the above hedge of approximately £4.5 million for the year ended 30 June 2023.
Payment and receipts of transfer fees may also give rise to foreign exchange exposures. Due to the nature of player transfers we may
not always be able to predict such cash flow until the transfer has taken place. Where possible and depending on the payment profile
of transfer fees payable and receivable we will seek to economically hedge future payments and receipts at the point it becomes
reasonably certain that the payments will be made or the revenue will be received. When hedging revenue to be received, we also take
account of the credit risk of the counterparty.
Further, we are exposed to cash flow risk on fluctuations in foreign exchange rates. Foreign exchange gains or losses arising on re-
translation of our unhedged US dollar borrowings are recognized in the statement of profit or loss immediately and are subject to UK
Corporation tax. From time to time, we may use foreign currency options to manage the unfavourable impact foreign exchange
volatility may have on our cash flows.
Cash flow and fair value interest rate risk
Our cash flow and fair value interest rate risk relates to changes in interest rates for borrowings. Borrowings issued at variable interest
rates expose us to cash flow interest rate risk. Borrowings issued at fixed rates expose us to fair value interest rate risk. Our
borrowings under our revolving facilities and our secured term loan facility bear interest at variable rates. As of 30 June 2023, we had
£175.2 million of variable rate indebtedness outstanding under our secured term loan facility and £100 million of variable rate
indebtedness outstanding under our revolving facilities. We manage our cash flow interest rate risk, where considered appropriate,
using interest rate swaps. Such interest rate swaps have the economic effect of converting a portion of variable rate borrowings from
floating rates to fixed rates. A hypothetical one percentage point increase in interest rates on our variable rate indebtedness would not
have a material impact on our annual interest expense.
Other than as disclosed herein, we have no additional hedging policies.
85
Derivative Financial Instruments
Interest rate swaps
We have interest rate swaps in place in respect of our secured term loan facility. As of 30 June 2023, the fair value of outstanding
interest rate swaps was an asset of £4.2 million.
Foreign exchange forward contracts
We typically enter into foreign exchange forward contracts, as considered appropriate, to purchase and sell foreign currency in order
to minimize the impact of foreign exchange movements on our financial performance primarily for our exposure to Broadcasting
revenue received in Euros for our participation in UEFA club competitions, for transfer fees payable and receivable in foreign
currency, and for operating expenses payable in foreign currency. As of 30 June 2023, the fair value of outstanding foreign exchange
forward contracts was a net liability of £1.2 million.
Embedded foreign exchange derivatives
We have a number of foreign exchange based embedded derivatives in host Commercial revenue contracts. These are separately
recognized in the financial statements at fair value since they are not closely related to the host contract. As of 30 June 2023, the fair
value of such derivatives was an asset of £11.3 million and a liability of £0.1 million.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. DEBT SECURITIES
Not applicable.
B. WARRANTS AND RIGHTS
Not applicable.
C. OTHER SECURITIES
Not applicable.
D. AMERICAN DEPOSITARY SHARES
Not applicable.
86
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
PART II
None.
ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
None.
ITEM 15. CONTROLS AND PROCEDURES
We have carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as such
term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) under the supervision and the participation of the executive
board of management, which is responsible for the management of the internal controls, and which includes the Principal Executive
Officer and the Principal Financial Officer. There are inherent limitations to the effectiveness of any system of disclosure controls and
procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly,
even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives. Based
upon our evaluation as of 30 June 2023, the Principal Executive Officer and Principal Financial Officer have concluded that the
disclosure controls and procedures (i) were effective at a reasonable level of assurance as of the end of the period covered by this
Annual Report on Form 20-F in ensuring that information required to be recorded, processed, summarized and reported in the reports
that are filed or submitted under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and (ii) were effective at a reasonable level of assurance as of the end of the period covered by this
Annual Report on Form 20-F in ensuring that information to be disclosed in the reports that are filed or submitted under the Exchange
Act is accumulated and communicated to the management of the Company, including the Principal Executive Officer and the
Principal Financial Officer, to allow timely decisions regarding required disclosure.
Management’s Annual Report on Internal Control over Financial Reporting
Our executive board of management is responsible for establishing and maintaining adequate internal control over financial reporting
(as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is a
process designed, under the supervision of the Principal Executive Officer and the Principal Financial Officer, to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of our financial statements for external reporting purposes
in accordance with generally accepted accounting principles.
Our internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in
reasonable detail, accurately and fairly, reflect transactions and dispositions of assets, provide reasonable assurance that transactions
are recorded in the manner necessary to permit the preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures are only carried out in accordance with the authorization of our executive
board of management and directors, and provide reasonable assurance regarding the prevention or timely detection of any
unauthorized acquisition, use or disposition of our assets and that could have a material effect on our financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Moreover,
projections of any evaluation of the effectiveness of internal control to future periods are subject to a risk that controls may become
inadequate because of changes in conditions and that the degree of compliance with the policies or procedures may deteriorate.
Our executive board of management has assessed the effectiveness of internal control over financial reporting based on the Internal
Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) 2013.
Based on this assessment, our executive board of management has concluded that our internal control over financial reporting as of
30 June 2023 was effective.
Our internal control over financial reporting as of 30 June 2023 has been audited by PricewaterhouseCoopers LLP, an independent
registered public accounting firm, as stated in their report on pages F-3 to F-5 of this Annual Report.
87
Changes in Internal Control over Financial Reporting
During the period covered by this Annual Report, we have not made any change to our internal control over financial reporting that
have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that Mr. Manu Sawhney satisfies the “independence” requirements set forth in Rule 10A-3
under the Exchange Act. Our board of directors has also determined that Mr. Manu Sawhney qualifies as an “audit committee
financial expert” as defined in Item 16A of Form 20-F under the Exchange Act.
ITEM 16B. CODE OF ETHICS
We have adopted a Code of Business Conduct and Ethics that applies to all our employees, officers and directors, including our
principal executive, principal financial and principal accounting officers. Our code of Business Conduct and Ethics addresses, among
other things, competition and fair dealing, conflicts of interest, financial matters and external reporting, company funds and assets,
confidentiality and corporate opportunity requirements and the process for reporting violations of the Code of Business Conduct and
Ethics, employee misconduct, conflicts of interest or other violations. Our Code of Business Conduct and Ethics is intended to meet
the definition of “code of ethics” under Item 16B of 20-F under the Exchange Act.
We intend to disclose on our website any amendment to, or waiver from, a provision of our Code of Conduct that applies to our
directors or executive officers to the extent required under the rules of the SEC or the NYSE. Our Code of Business Conduct and
Ethics is available on our website at https://ir.manutd.com/. The information contained on or through our website, or any other website
referred to herein, is not incorporated by reference in this Annual Report.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PricewaterhouseCoopers LLP (“PwC”) acted as our independent auditor for the fiscal years ended 30 June 2023 and 2022. The table
below sets out the total amount billed to us by PwC, for services performed in the years ended 30 June 2023 and 2022, and breaks
down these amounts by category of service:
Audit Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Audit-Related Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
753
17
10
780
620
94
13
727
2023
£’000
2022
£’000
Audit Fees
Audit fees for the years ended 30 June 2023 and 2022 were related to the audit of our consolidated and subsidiary financial statements
and other audit or interim review services provided in connection with statutory and regulatory filings or engagements, including
comfort letter work.
Audit-Related Fees
Audit-related fees for the years ended 30 June 2023 and 2022 were related to the audit of the Group pension scheme financial
statements.
Tax Fees
Tax fees for the years ended 30 June 2023 and 2022 were related to tax compliance and tax advice services.
Pre-Approval Policies and Procedures
The advance approval of the Audit Committee or members thereof, to whom approval authority has been delegated, is required for all
audit and non-audit services provided by our auditors.
88
All services provided by our auditors are approved in advance by either the Audit Committee or members thereof, to whom authority
has been delegated, in accordance with the Audit Committee’s pre-approval policy.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
No repurchases of our Class A ordinary shares were made during the fiscal year ended 30 June 2023.
On 12 March 2020, we announced that our board of directors authorized a share repurchase program for up to $35 million
(approximately £27.7 million based on the exchange rate reported by NatWest Markets on such date) of our Class A ordinary shares,
effective immediately. Pursuant to this share repurchase program, we may purchase our Class A ordinary shares from time to time in
the open market, in privately negotiated transactions or otherwise, including under applicable U.S. federal securities laws such as Rule
10b5-1 trading plans and under Rule 10b-18 of the Exchange Act. The timing and the actual number of shares repurchased will
depend on a variety of factors, including, among others, legal requirements, price and economic and market conditions. In May 2020,
we suspended our repurchase program due to the impact of the COVID-19 pandemic. We are currently unable to estimate when, or if,
the program will be restarted. Our board of directors may modify, extend or terminate the share repurchase program at any time, and
the share repurchase program has no expiration date. We will not purchase any shares from members of the Glazer family as part of
this program.
As of 30 June 2023, a total of 1,682,896 shares have been repurchased. The average price paid per share was £12.66 and the
approximate value of shares that may yet be purchased under the program is £6.0 million. Share repurchases made on the New York
Stock Exchange have been translated into pounds sterling from U.S. dollars at the opening exchange rate reported by NatWest
Markets for the week in which the respective transaction date occurred.
All of the shares reported above were repurchased under this share repurchase program.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
None.
ITEM 16G. CORPORATE GOVERNANCE
We are a “foreign private issuer” (as such term is defined in Rule 3b–4 under the Exchange Act), and our Class A ordinary shares are
listed on the New York Stock Exchange. We believe the following to be the significant differences between our corporate governance
practices and those applicable to US companies under the New York Stock Exchange listing standards.
In general, under the rules of the New York Stock Exchange, foreign private issuers, as defined under the Exchange Act, are permitted
to follow home country corporate governance practices instead of the corporate governance practices of the New York Stock
Exchange. Accordingly, we follow certain corporate governance practices of our home country, the Cayman Islands, in lieu of certain
of the corporate governance requirements of the New York Stock Exchange. Specifically, we do not have a board of directors
composed of a majority of directors who qualify as an “independent director” (as defined under rules of the New York Stock
Exchange), a remuneration committee or nominating and corporate governance committee each composed entirely of “independent
directors,” or an audit committee composed of at least three directors. The rules of the New York Stock Exchange also require that a
listed company obtain, in specified circumstances, (1) shareholder approval to adopt and materially revise equity compensation plans,
as well as (2) shareholder approval prior to an issuance (a) of more than 1% of its common stock (including derivative securities
thereof) in either number or voting power to related parties, (b) of more than 20% of its outstanding common stock (including
derivative securities thereof) in either number or voting power or (c) that would result in a change of control, none of which require
shareholder approval under the Cayman Islands law. We also follow our home country laws in determining whether shareholder
approval is required.
The foreign private issuer exemption does not modify the independence requirements for members of the audit committee as provided
under the Exchange Act. We comply with these independence requirements, and each member of our audit committee qualifies as
independent under Rule 10A-3 of the Exchange Act. In addition, each member of our audit committee qualifies as an “independent
director” under the rules of the New York Stock Exchange.
89
If at any time we cease to be a “foreign private issuer” under the rules of the New York Stock Exchange and the Exchange Act, as
applicable, our board of directors will take all action necessary to comply with applicable New York Stock Exchange corporate
governance rules and shareholder approval requirements.
Due to our status as a foreign private issuer and our intent to follow certain home country corporate governance practices, our
shareholders do not have the same protections afforded to shareholders of companies that are subject to all the New York Stock
Exchange corporate governance standards and shareholder approval requirements.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
ITEM 16I. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
ITEM 16J. INSIDER TRADING POLICIES.
Not applicable.
ITEM 16K. CYBERSECURITY.
Not applicable.
90
PART III
ITEM 17. FINANCIAL STATEMENTS
Not applicable.
ITEM 18. FINANCIAL STATEMENTS
The audited consolidated financial statements as required under Item 18 are attached hereto starting on page F-1 of this Annual
Report. The audit report of PricewaterhouseCoopers LLP, independent registered public accounting firm, is included herein preceding
the audited consolidated financial statements.
ITEM 19. EXHIBITS
The following exhibits are filed as part of this Annual Report, except as otherwise noted:
1.1
Amended and Restated Memorandum and Articles of Association of Manchester United plc dated as of 8 August 2012
(incorporated by reference to Exhibit 3.1 to our Registration Statement on Form F-1/A (File No. 333-182535), filed with
the SEC on 30 July 2012, as amended).
2.1
Specimen Ordinary Share Certificate of Manchester United plc (incorporated by reference to Exhibit 4.1 to our
Registration Statement on Form F-1/A (File No. 333-182535), filed with the SEC on 30 July 2012, as amended).
2.2
Description of Share Capital of Manchester United plc (incorporated by reference to Exhibit 2.2 to our Annual Report
on Form 20-F (File No. 001-35627), filed with the SEC on 24 September 2019).
4.1
4.2
Fifth Amendment and Restatement Agreement relating to the Secured Term Facility Agreement, dated 4 March 2021,
among Red Football Limited, Manchester United Football Club Limited and Bank of America Europe Designated
Activity Company, as Agent and Lender.*
Sixth Amendment and Restatement Agreement, dated 1 June 2023, relating to the Secured Term Facility Agreement
among Red Football Limited, Manchester United Football Club Limited and Bank of America Europe Designated
Activity Company, as Agent and Lender.*
4.3
Amendment letter, dated 4 November 2022, relating to the Secured Term Facility Agreement from Bank of America
Europe Designated Activity Company as Agent to Red Football Limited as Company.*
4.4
4.5
Second Amendment and Restatement Agreement relating to the Revolving Facilities Agreement, dated 4 March 2021,
among Red Football Limited, Manchester United Football Club Limited, and Bank of America Europe Designated
Activity Company, as Agent.*
Third Amendment and Restatement Agreement relating to the Revolving Facilities Agreement, dated 10 December
2021, among Red Football Limited, Manchester United Football Club Limited, and Bank of America Europe Designated
Activity Company, as Agent (incorporated by reference to Exhibit 4.3 to our Annual Report on Form 20-F (File No.
001-35627), filed with the SEC on 23 September 2022).
4.6
Amendment letter, dated 4 November 22, from Bank of America Europe Designated Activity Company as Agent to Red
Football Limited as Company relating to the Revolving Facilities Agreement.*
4.7
Revolving Facility Agreement, dated 26 April 2022, among Red Football Limited, Manchester United Football Club
Limited, Bank of America, N.A., London Branch as Lender and Bank of America Europe Designated Activity
Company, as Agent (incorporated by reference to Exhibit 4.4 to our Annual Report on Form 20-F (File No. 001-
35627), filed with the SEC on 23 September 2022).
4.8
Amendment letter, dated 4 November 2022, from Bank of America Europe Designated Activity Company as Agent to
Red Football Limited as Company relating to the Revolving Facilities Agreement.*
91
4.9
Note Purchase Agreement, dated 27 May 2015, among MU Finance plc (now known as MU Finance Limited), the
guarantors party thereto, the purchasers listed therein and the Bank of New York Mellon, as Paying Agent (incorporated
by reference to Exhibit 4.3 to our Registration Statement on Form F-3 (File No. 333-206985), filed with the SEC on 17
September 2015).
4.10
4.11
4.12
4.13
4.14
4.15
Amendment No. 1 to Note Purchase Agreement, and Consent No. 1, dated June 14, 2018, among MU Finance plc (now
known as MU Finance Limited), the guarantors party thereto, the noteholders listed on the signature pages thereto and
the Bank of New York Mellon, as Paying Agent (incorporated by reference to Exhibit 4.8 to our Annual Report on Form
20-F (File No. 001-35627), filed with the SEC on 28 September 2018).
Amendment No. 2 to Note Purchase Agreement, dated 4 March 2021, among Manchester United Football Club Limited,
the guarantors party thereto, the noteholders listed on the signature pages thereto and the Bank of New York Mellon, as
Paying Agent (incorporated by reference to Exhibit 4.7 to our Annual Report on Form 20-F (File No. 001-35627), filed
with the SEC on 23 September 2022).
Consent No. 2 to Note Purchase Agreement, dated 26 April 2022, among Manchester United Football Club Limited, the
guarantors party thereto, the noteholders listed on the signature pages thereto and the Bank of New York Mellon, as
Paying Agent (incorporated by reference to Exhibit 4.8 to our Annual Report on Form 20-F (File No. 001-35627), filed
with the SEC on 23 September 2022).
Form of 3.79% Senior Secured Note due June 26, 2027 (included as Exhibit 1 to Exhibit 4.3).
Second Amendment and Restatement Agreement relating to the Revolving Facilities Agreement, dated 13 December
2021, among Red Football Limited, Manchester United Football Club Limited and Santander UK plc, as Agent
(incorporated by reference to Exhibit 4.11 to our Annual Report on Form 20-F (File No. 001-35627), filed with the
SEC on 23 September 2022).
Third Amendment and Restatement Agreement relating to the Revolving Facilities Agreement, dated 26 April 2022,
among Red Football Limited, Manchester United Football Club Limited and Santander UK plc, as Agent (incorporated
by reference to Exhibit 4.12 to our Annual Report on Form 20-F (File No. 001-35627), filed with the SEC on 23
September 2022).
4.16
Amendment letter, dated 4 November 2022, from Santander UK plc as Agent to Red Football Limited as Company
relating to the Revolving Facilities Agreement.*
4.17
4.18
4.19
8.1
2012 Equity Incentive Award Plan (incorporated by reference to Exhibit 4.2 to our Registration Statement on Form S-8
(File No. 333-183277), filed with the SEC on 13 August 2012).
Premier League Handbook, Season 2022/23 (incorporated by reference to Exhibit 4.15 to our Annual Report on Form
20-F (File No. 001-35627), filed with the SEC on 23 September 2022).
Premier League Handbook, Season 2023/24*
List of significant subsidiaries (included in Note 35 to our audited consolidated financial statements included elsewhere
in this Annual Report).
12.1
Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.*
12.2
Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.*
13.1
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.**
13.2
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.**
15.1
Consent of PricewaterhouseCoopers LLP, dated 27 October 2023.*
92
101.INS
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data file because its XBRL
tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema Document.
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
* Filed herewith
** Furnished herewith
93
Index to Consolidated financial statements
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated statement of profit or loss for the years ended 30 June 2023, 2022 and 2021. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated statement of comprehensive income for the years ended 30 June 2023, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . .
Consolidated balance sheet as of 30 June 2023 and 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated statement of changes in equity for the years ended 30 June 2023, 2022 and 2021. . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated statement of cash flows for the years ended 30 June 2023, 2022 and 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to the consolidated financial statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
F-3
F-6
F-7
F-8
F-10
F-11
F-12
F-1
Auditor name: PricewaterhouseCoopers LLP
Auditor firm ID: 876
Auditor location: Manchester, United Kingdom
F-2
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Manchester United plc
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Manchester United plc and its subsidiaries (the “Company”) as of
30 June 2023 and 2022, and the related consolidated statements of profit or loss, comprehensive (loss)/income, changes in equity and
cash flows for each of the three years in the period ended 30 June 2023, including the related notes (collectively referred to as the
“consolidated financial statements”). We also have audited the Company’s internal control over financial reporting as of 30 June 2023,
based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of
the Company as of 30 June 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period
ended 30 June 2023 in conformity with International Financial Reporting Standards as issued by the International Accounting
Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial
reporting as of 30 June 2023, based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over
financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the
accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express opinions
on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our
audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB)
and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to
error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well
as evaluating the overall presentation of the consolidated financial statements. Our audit of internal control over financial reporting
included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and
testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included
performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable
basis for our opinions.
F-3
Report of Independent Registered Public Accounting Firm (continued)
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting
principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect
on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections
of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in
conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial
statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or
disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or
complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial
statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the
critical audit matters or on the accounts or disclosures to which they relate.
Commercial revenue
As described in Note 4 to the consolidated financial statements, the Company’s consolidated revenue recognized for the year ended
30 June 2023 was £648,401 thousand, of which £302,886 thousand relates to commercial revenue. A number of sponsorship contracts
contain significant estimates in relation to the allocation and recognition of revenue in line with performance obligations. In instances
where the sponsorship rights remain the same over the duration of the contract, revenue is recognized as performance obligations are
satisfied evenly over time.
The principal considerations for our determination that performing procedures relating to commercial revenue is a critical audit matter
are the significant estimate by management to allocate and recognize revenue of performance obligations. This, in turn led to a high
degree of auditor judgment, subjectivity and effort in performing procedures to evaluate management’s allocation and recognition of
revenue for each performance obligation.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion
on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to commercial
revenue recognition, including controls over the allocation and recognition of revenue for the performance obligations. These
procedures also included, among others, testing management’s process for allocating and recognizing revenue in line with
performance obligations, including evaluating the appropriateness of the methodology and testing the completeness and accuracy of
data used in the estimate. Evaluating the reasonableness of the allocation of revenue to performance obligations involved obtaining the
related contracts and comparing the allocation and recognition of revenue to the contract terms.
F-4
Report of Independent Registered Public Accounting Firm (continued)
Critical Audit Matters (continued)
Value of intangible assets – registrations
As described in Note 16 to the consolidated financial statements, the Company’s consolidated intangible assets relating to player
registrations for the year ended 30 June 2023 was £384,885 thousand. The costs associated with the acquisition of players’ and key
football management staff registrations are capitalized as intangible assets at the value of the consideration payable, including an
estimate of the value of any contingent consideration. As disclosed by management, the estimate of the value of the contingent
consideration payable requires management to assess the likelihood of specific performance conditions being met which would trigger
the payment of the contingent consideration such as the number of player appearances. This assessment is carried out on an individual
basis. Management’s estimate over the probability of contingent consideration payable could impact the net book value of
registrations and amortisation recognized in the statement of profit or loss.
The principal considerations for our determination that performing procedures relating to value of intangible assets - registrations is a
critical audit matter are the significant estimation by management when developing the estimate over the contingent consideration
payable, including assessing the likelihood of specific performance conditions being met. This, in turn, led to a high degree of auditor
judgment, effort and subjectivity in performing procedures to evaluate management’s significant estimates over the likelihood of
specific performance conditions being met which would trigger the payment of the contingent consideration, including the number of
player appearances.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion
on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to intangible assets –
registrations, including controls over the review and approval of management assumptions over the likelihood of specific performance
conditions being met. These procedures also included, among others, testing management’s process for estimating the value of the
contingent considerations, including evaluating the model, testing the completeness and accuracy of data, and evaluating the
reasonableness of the significant assumptions over the expected likelihood of the specific performance obligations being met.
Evaluating the likelihood of the specific performance obligations being met involved assessing the reasonableness of factors
considered including the number of player appearances.
/s/ PricewaterhouseCoopers LLP
Manchester, United Kingdom
27 October 2023
We have served as the Company’s or its predecessors’ auditor since 2001.
F-5
Consolidated statement of profit or loss
Revenue from contracts with customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on disposal of intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net finance (costs)/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax credit/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss per share during the year
Basic loss per share (pence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted loss per share (pence)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note
4
5
8
9
10
11
11
Year ended 30 June
2022
£’000
2023
£’000
648,401 583,201
(681,117) (692,520)
—
1,112
21,935
20,424
(87,384)
(11,180)
(85,915)
(44,917)
23,676
23,523
(21,394)
(62,239)
(32,574) (149,623)
34,113
(28,678) (115,510)
3,896
2021
£’000
494,117
(538,424)
—
7,381
(36,926)
(36,411)
49,310
12,899
(24,027)
(68,189)
(92,216)
(17.59)
(17.59)
(70.86)
(70.86)
(56.60)
(56.60)
(1) For the years ended 30 June 2023, 2022 and 2021, potential ordinary shares are anti-dilutive, as their inclusion in the diluted loss
per share calculation would reduce the loss per share, and hence have been excluded.
The above consolidated statement of profit or loss should be read in conjunction with the accompanying notes.
F-6
Consolidated statement of comprehensive income
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income:
Items that may be subsequently reclassified to profit or loss
Movements on hedges (Note 30.2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense relating to movements on hedges (Note 30.2) . . . . . . . . . . . . . . . . . . . . .
Other comprehensive income for the year, net of income tax . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
Year ended 30 June
2022
£’000
(28,678) (115,510)
2021
£’000
(92,216)
4,070
(1,018)
3,052
(25,626)
5,148
(1,287)
3,861
(111,649)
22,698
(569)
22,129
(70,087)
The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
F-7
Consolidated balance sheet
ASSETS
Non-current assets
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract assets – accrued revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note
13
14
15
16
19
20
18
4.2
19
20
21
As of 30 June
2023
£’000
2022
£’000
253,282
8,760
19,993
812,382
22,303
7,492
1,124,212
3,165
16,487
43,332
31,167
9,928
5,317
8,317
76,019
193,732
1,317,944
242,661
4,072
20,273
743,278
29,757
16,462
1,056,503
2,200
15,534
36,239
49,210
1,569
4,590
6,597
121,223
237,162
1,293,665
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
F-8
Consolidated balance sheet (continued)
EQUITY AND LIABILITIES
Equity
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Merger reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hedging reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities - deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities
Contract liabilities - deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Note
22
23
30.2
17
4.2
24
25
14
20
26
4.2
24
25
14
20
26
As of 30 June
2023
£’000
2022
£’000
53
68,822
(21,305)
249,030
4,002
(196,652)
103,950
3,304
6,659
161,141
507,335
7,844
748
93
687,124
169,624
236,472
105,961
1,036
931
12,846
526,870
1,317,944
53
68,822
(21,305)
249,030
950
(170,042)
127,508
7,402
16,697
102,347
530,365
2,869
49
11,586
671,315
165,847
220,587
105,757
1,561
32
1,058
494,842
1,293,665
The above consolidated balance sheet should be read in conjunction with the accompanying notes.
F-9
Consolidated statement of changes in equity
Balance at 30 June 2020 . . . . . . . . . . . . . . . . . . . . . .
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Movements on hedges . . . . . . . . . . . . . . . . . . . . . . . .
Tax expense relating to movements on hedges . . . .
Total comprehensive loss for the year . . . . . . . . . .
Equity-settled share-based payments (Note 28) . . . .
Dividends paid (Note 12) . . . . . . . . . . . . . . . . . . . . . .
Balance at 30 June 2021 . . . . . . . . . . . . . . . . . . . . . .
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Movements on hedges . . . . . . . . . . . . . . . . . . . . . . . .
Tax expense relating to movements on hedges . . . .
Total comprehensive loss for the year . . . . . . . . . .
Reclassified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity-settled share-based payments (Note 28) . . . .
Dividends paid (Note 12) . . . . . . . . . . . . . . . . . . . . . .
Balance at 30 June 2022 . . . . . . . . . . . . . . . . . . . . . .
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Movements on hedges . . . . . . . . . . . . . . . . . . . . . . . .
Tax expense relating to movements on hedges . . . .
Total comprehensive loss for the year . . . . . . . . . .
Equity-settled share-based payments (Note 28) . . . .
Deferred tax credit relating to share-based
Share
premium
Share
capital
£’000
£’000
68,822
53
—
—
—
—
—
—
—
—
—
—
—
—
53 68,822
—
—
—
—
—
—
—
—
—
—
—
—
—
—
68,822
53
—
—
—
—
—
—
—
—
—
—
Hedging
reserve
£’000
Treasury Merger
reserve
£’000
shares
£’000
(21,305)
—
—
—
—
—
—
249,030 (32,565)
—
—
— 22,698
—
(569)
— 22,129
—
—
—
—
(21,305) 249,030 (10,436)
—
—
— 5,148
— (1,287)
— 3,861
— 7,525
—
—
—
—
950
249,030
—
—
— 4,070
— (1,018)
— 3,052
—
—
—
—
—
—
—
—
—
(21,305)
—
—
—
—
—
Retained
(deficit)/
earnings
£’000
87,197
(92,216)
—
—
(92,216)
2,085
(10,718)
(13,652)
(115,510)
—
—
(115,510)
(7,525)
198
(33,553)
(170,042)
(28,678)
—
—
(28,678)
1,753
Total
equity
£’000
351,232
(92,216)
22,698
(569)
(70,087)
2,085
(10,718)
272,512
(115,510)
5,148
(1,287)
(111,649)
—
198
(33,553)
127,508
(28,678)
4,070
(1,018)
(25,626)
1,753
payments (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at 30 June 2023 . . . . . . . . . . . . . . . . . . . . . .
—
53
—
—
68,822 (21,305)
—
249,030
—
4,002
315
(196,652)
315
103,950
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
F-10
Consolidated statement of cash flows
Cash flows from operating activities
Cash generated from operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash inflow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from investing activities
Payments for property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for intangible assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of intangible assets(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for derivative financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash outflow from investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities
Proceeds from borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal elements of lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash (outflow)/inflow from financing activities. . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . .
Net (decrease)/increase in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended 30 June
2022
£’000
2021
£’000
2023
£’000
Note
27
128,857
(31,952)
496
(1,632)
95,769
121,704
(20,642)
145
(4,836)
96,371
(15,611)
(8,323)
(156,165) (115,415)
30,307
—
(93,431)
31,616
—
(140,160)
100,000
(100,000)
(1,952)
—
(1,952)
1,139
(45,204)
121,223
76,019
40,000
—
(1,407)
(33,553)
5,040
2,585
10,565
110,658
121,223
21
137,778
(20,542)
3
(4,156)
113,083
(6,241)
(138,189)
45,996
(939)
(99,373)
60,000
—
(1,641)
(10,718)
47,641
(2,232)
59,119
51,539
110,658
(1) Payments and proceeds for intangible assets primarily relate to player and key football management staff registrations. When
acquiring or selling players’ and key football management staff registrations it is normal industry practice for payment terms to
spread over more than one year. Details of registrations additions and disposals are provided in Note 16. Trade payables in relation
to the acquisition of registrations at the reporting date are provided in Note 24. Trade receivables in relation to the disposal of
registrations at the reporting date are provided in Note 19.
The above consolidated statement of cash flows should be read in conjunction with the accompanying notes.
F-11
Notes to the consolidated financial statements
1 General information
Manchester United plc (the “Company”) and its subsidiaries (together the “Group”) is a men’s and women’s professional football club
together with related and ancillary activities. The Company incorporated under the Companies Law (as amended) of the Cayman Islands.
The address of its principal executive office is Sir Matt Busby Way, Old Trafford, Manchester M16 0RA, United Kingdom. The
Company’s shares are listed on the New York Stock Exchange.
These financial statements are presented in pounds sterling and all values are rounded to the nearest thousand (£’000) except when
otherwise indicated.
These financial statements were approved by the board of directors on 27 October 2023.
2 Summary of significant accounting policies
This note provides a list of the significant accounting policies adopted in the preparation of these consolidated financial statements to
the extent they have not been disclosed in the other notes below. The policies have been consistently applied to all the years presented,
unless otherwise stated. The financial statements are for the Group consisting of Manchester United plc and its subsidiaries.
2.1 Basis of preparation
(i) Compliance with IFRS
The consolidated financial statements of Manchester United plc have been prepared on a going concern basis and in accordance with
International Financial Reporting Standards (“IFRS”) and interpretations issued by the IFRS Interpretations Committee (“IFRS IC”)
applicable to companies reporting under IFRS. The financial statements comply with IFRS as issued by the International Accounting
Standards Board (“IASB”).
Going concern
The Group has cash resources as of 30 June 2023 of £76.0 million, with all funds held as cash and cash equivalents and therefore
available on demand. As of 30 June 2023, the Group also has access to undrawn revolving facilities of £200 million.
The Group’s debt facilities include the $425 million senior secured notes and the $225 million secured term loan facility, the majority
of which attract fixed interest rates. As of 30 June 2023, the Group also has £100 million of outstanding loans under our revolving
facilities. The Group’s secured notes and term loan mature in 2027 and 2029 respectively. Of the Group’s total available revolving
facilities of £300 million, £150 million expires in 2025 and £150 million expires in 2027. As of 30 June 2023, the Group was in
compliance with all covenants.
As a result of a detailed assessment, including prudent assumptions around the men’s first team’s performance, and with reference to
the Group’s balance sheet, existing committed facilities, but also acknowledging the inherent uncertainty of the current economic
outlook, Management has concluded that the Group is able to meet its obligations when they fall due for a period of at least 12 months
after the date of this report. For this reason, the Group continues to adopt the going concern basis for preparing the annual financial
statements.
F-12
Notes to the consolidated financial statements (continued)
2 Summary of significant accounting policies (continued)
2.1 Basis of preparation (continued)
(ii) Historical cost convention
The consolidated financial statements have been prepared on a historical cost basis, as modified by the revaluation of certain financial
assets and liabilities (including derivative financial instruments) which are recognized at fair value through profit and loss, unless hedge
accounting applies.
(iii) New and amended standards adopted by the Group
The following amendment to standards has been adopted by the Group for the first time for the year ended 30 June 2023:
•
International Tax Reform – Pillar Two Model Rules (Amendments to IAS 12)
The adoption of this amendments had not had a material effect on the Group.
(iv) New and amended standards and interpretations not yet adopted
The following amendments to IFRS that have been issued by the IASB will become effective in a subsequent accounting period include:
• Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 1)
• Classification of Liabilities as Current or Non-current (Amendments to IAS1)
These changes are not expected to have a material effect on the Group.
(v) Effect of IBOR reform
For the year ended 30 June 2021, we adopted the Phase 2 amendments to IFRS 9, “Financial Instruments” for the first time.
On 10 December 2021 and 13 December 2021, the Group amended and restated its revolving facility agreements with Bank of America
and Santander plc respectively, to provide for an alternate method of calculating our interest rates following the cessation of GBP LIBOR
and the 1-week and 2-month USD LIBOR rates. Interest is now calculated based on the Sterling Overnight Index Average (SONIA)
plus a credit adjustment spread. The impact of these amendments was not material in the year ended 30 June 2022.
On 1 June 2023, the Group amended and restated its secured term loan facility of $225.0 million to provide for an alternate method of
calculating our interest rates following the cessation of USD LIBOR rates. Interest is now calculated based on the Secured Overnight
Financing Rate (SOFR) plus a credit adjustment spread and the terms of the Group’s related interest rate swap were also amended. The
impact of this was not material in the year ended 30 June 2023 and is not expected to be material in future years.
2.2 Principles of consolidation
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights
to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities
of the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated
from the date that control ceases.
The acquisition method of accounting is used to account for business combinations by the Group. The consideration transferred for the
acquisition of a subsidiary comprises the:
•
•
•
•
•
fair values of the assets transferred
liabilities incurred to the former owners of the acquired business
equity interests issued by the Group
fair value of any asset or liability resulting from a contingent consideration arrangement, and
fair value of any pre-existing equity interest in the subsidiary.
F-13
Notes to the consolidated financial statements (continued)
2 Summary of significant accounting policies (continued)
2.2 Principles of consolidation (continued)
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are, with limited exceptions,
measured initially at their fair values at the acquisition date. The Group recognizes any non-controlling interest in the acquired entity on
an acquisition-by-acquisition basis either at fair value or at the non-controlling interest’s proportionate share of the acquired entity’s net
identifiable assets.
Acquisition-related costs are expensed as incurred.
The excess of the:
•
•
consideration transferred, and
acquisition date fair value of any previous interest in the acquired entity over the fair value of the net identifiable assets acquired
is recorded as goodwill. If those amounts are less than the fair value of the net identifiable assets of the business acquired, the
difference is recognized directly in profit or loss as a bargain purchase.
Inter-company transactions, balances and unrealized gains on transactions between Group companies are eliminated. Unrealized losses
are also eliminated unless the transaction provides evidence of an impairment of the transferred asset. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the policies adopted by the Group.
2.3 Segment reporting
The Group has one reportable segment, being the operation of a men’s and women’s professional football club. The chief operating
decision maker (being the board of directors and executive officers of Manchester United plc), who is responsible for allocating
resources and assessing performance obtains financial information, being the consolidated statement of profit or loss, consolidated
balance sheet and consolidated statement of cash flows, and the analysis of changes in net debt, about the Group as a whole. The Group
has investment properties, however, this is not considered to be a material business segment and is therefore not reported as such.
2.4 Foreign currency translation
(i) Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic
environment in which the entity operates (the “functional currency”). The consolidated financial statements are presented in pounds
sterling, which is the Group’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the functional currency using the exchange rates at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such transactions and from the translation of monetary assets and liabilities
denominated in foreign currencies at year-end exchange rates are generally recognized in profit or loss. They are deferred in other
comprehensive income if they relate to qualifying cash flow hedges. Foreign exchange gains and losses that relate to unhedged
borrowings are presented in the statement of profit or loss, within finance costs or finance income. Foreign exchange gains and losses
that relate to transfer fees receivable from other football clubs are presented in the statement of profit or loss on a net basis within profit
on disposal of intangible assets. All other foreign exchange gains and losses are presented in the statement of profit or loss on a net basis
within operating expenses.
F-14
Notes to the consolidated financial statements (continued)
2 Summary of significant accounting policies (continued)
2.4 Foreign currency translation (continued)
(iii) Exchange rates
The most important exchange rates per £1.00 that have been used in preparing the financial statements are:
Euro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
US Dollar. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.5 Revenue recognition
2023
1.1652
1.2716
Closing rate
2022
1.1630
1.2151
2021
1.1651
1.3820
2023
1.1524
1.2081
Average rate
2022
1.1787
1.3288
2021
1.1382
1.3461
The Group’s accounting policies for revenue from contracts with customers are disclosed in Note 4.
2.6 Employee benefits
(i) Short-term obligations
Liabilities for wages and salaries, including non-monetary benefits and annual leave that are expected to be settled wholly within 12
months after the end of the period in which the employees render the related service, are recognized in respect of employees’ services
up to the end of the reporting period and are measured at the amounts expected to be paid when the liabilities are settled. The liabilities
are presented as accruals and classified as current liabilities in the balance sheet.
(ii) Football staff remuneration
Remuneration is charged to operating expenses on a straight-line basis over the contract periods based on the amount payable to players
and key football management staff for that period. Any performance bonuses are recognized when the Company considers that it is
probable that the condition related to the payment will be achieved.
Signing-on fees are typically paid to players and key football management staff in equal annual installments over the term of the contract.
Installments are paid at or near the beginning of each financial year and recognized as prepayments. They are subsequently charged to
profit or loss (as employee benefit expenses) on a straight-line basis over the financial year. Signing-on fees paid form part of cash flows
from operating activities.
Loyalty fees are bonuses which are paid to players and key football management staff either at the beginning of a renewed contract or
in installments over the term of their contract in recognition for either past or future performance. Loyalty bonuses for past service are
typically paid in a lump sum amount upon renewal of a contract. These loyalty bonuses require no future service and are not subject to
any claw-back provisions were the individual to subsequently leave the club during their new contract term. They are expensed once
the Company has a present legal or constructive obligation to make the payment. Loyalty bonuses for ongoing service are typically paid
in arrears in equal annual installments over the term of the contract. These bonuses are paid at the beginning of the next financial year
and the related charge is recognized within employee benefit expenses in profit or loss on a straight-line basis over the current financial
year.
F-15
Notes to the consolidated financial statements (continued)
2 Summary of significant accounting policies (continued)
2.6 Employee benefits (continued)
(iii) Post-employment pension obligations
The Group is one of a number of participating employers in The Football League Limited Pension and Life Assurance Scheme (‘the
scheme’ — see Note 29.1). The Group is unable to identify its share of the assets and liabilities of the scheme and therefore accounts
for its contributions as if they were paid to a defined contribution scheme. The Group’s contributions into this scheme are reflected
within the statement of profit or loss when they fall due. Full provision has been made for the additional contributions that the Group
has been requested to pay to help fund the scheme deficit.
The Group also operates a defined contribution scheme. The assets of the scheme are held separately from those of the Group in an
independently administered fund. The Group’s contributions into this scheme are recognized as an employee benefit expenses when
they are due.
(iv) Share-based payments
The Group operates a share-based compensation plan under which the entity receives services from employees as consideration for
equity instruments of the Group.
Equity-settled share-based payments to employees are measured at the fair value of the equity instruments at the grant date. The fair
value excludes the effect of non-market based vesting conditions. The fair value determined at the grant date of the equity-settled share-
based payments is expensed on a straight-line basis over the vesting period, based on the Group’s estimate of equity instruments that
will eventually vest. At each reporting date, the Group revises its estimate of the number of equity instruments expected to vest as a
result of the effect of non-market based vesting conditions. The impact of the revision of the original estimates, if any, is recognized in
profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to equity.
For cash-settled share-based payments to employees, a liability is recognized for the services acquired, measured initially at the fair
value of the liability. At each reporting date until the liability is settled, and at the date of settlement, the fair value of the liability is re-
measured, with any changes in fair value recognized in profit or loss for the year. Details regarding the determination of the fair value
of share-based transactions are set out in Note 28.
2.7 Exceptional items
The Group’s accounting policies for exceptional items are disclosed in Note 6.
F-16
Notes to the consolidated financial statements (continued)
2 Summary of significant accounting policies (continued)
2.8 Income tax
The income tax expense or credit for the period is the tax payable on the current period’s taxable income based on the applicable income
tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused
tax losses.
The current income tax expense or credit is calculated on the basis of the tax laws enacted or substantively enacted at the end of the
reporting period in the countries where the Company and its subsidiaries operate and generate taxable income. Although the Company
is organized as a Cayman Islands corporation, it reports as a US domestic corporation for US federal corporate income tax purposes and
is subject to US federal corporate income tax on the Group’s worldwide income. In addition, the Group is subject to income and other
taxes in various other jurisdictions, including the United Kingdom. Management periodically evaluates positions taken in tax returns
with respect to situations in which applicable tax regulation is subject to interpretation. It establishes provisions where appropriate on
the basis of amounts expected to be paid to (or recovered from) the tax authorities.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantively enacted by the end of the reporting period and are expected to apply when the related
deferred income tax asset is realised or the deferred income tax liability is settled.
Deferred tax assets are recognized only if it is probable that future taxable profit will be available to utilize those temporary differences
and losses.
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when
the deferred tax balances relate to the same taxation authority.
Current and deferred tax is recognized in profit or loss, except to the extent that it relates to items recognized in other comprehensive
income, in which case the tax is also recognized in other comprehensive income.
2.9 Dividend distribution
Dividend distributions to the Company’s shareholders are recognized when they become legally payable. In the case of interim
dividends, this is when they are paid.
2.10 Impairment of assets
Goodwill is not subject to amortization and is tested annually for impairment or more frequently if events or changes in circumstances
indicate it might be impaired. Other assets are tested for impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. An impairment loss is recognized in profit or loss for the amount by which the asset’s carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs of disposal and value in
use, and is calculated with reference to future discounted cash flows that the asset is expected to generate when considered as part of a
cash-generating unit. Assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at the
end of each reporting period. If an impairment subsequently reverses, the carrying amount of the asset is increased to the revised estimate
of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment charge been recognized for the asset in prior years.
Management does not consider that it is possible to determine the value in use of an individual player or key football management staff
in isolation as that individual (unless via a sale or insurance recovery) cannot generate cash flows on their own. While management does
not consider that any individual player can be separated from the single cash generating unit (“CGU”), being the operations of the Group
as a whole, there may be certain circumstances where an individual is taken out of the CGU, when it becomes clear that they will not
participate with the club’s men’s first team again, for example, a player sustaining a career threatening injury or is permanently removed
from the men’s first team playing squad for another reason. If such circumstances were to arise, the carrying value of the individual
would be assessed against the Group’s best estimate of the individual’s fair value less any costs to sell and an impairment charge made
in operating expenses reflecting any loss arising.
F-17
Notes to the consolidated financial statements (continued)
2 Summary of significant accounting policies (continued)
2.11 Property, plant and equipment
Property, plant and equipment is initially measured at cost (comprising the purchase price, after deducting discounts and rebates, and
any directly attributable costs) and is subsequently carried at cost less accumulated depreciation and any provision for impairment.
Subsequent costs, for example, capital improvements and refurbishment, are included in the asset’s carrying amount or recognized as a
separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and
the cost of the item can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognized
when replaced. All other repairs and maintenance are charged to profit or loss during the reporting period in which they are incurred.
The depreciation methods and periods used by the Group are disclosed in Note 13.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in profit or loss.
2.12 Leases
The Group’s accounting policy for leases is disclosed in Note 14.
2.13 Investment properties
The Group’s accounting policy for investment properties is disclosed in Note 15.
2.14 Intangible assets
The cost of and amortization methods and periods used by the Group for goodwill, registrations and other intangible assets are disclosed
in Note 16.
The assets’ useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.
Assets available for sale (principally players’ registrations) are classified as assets held for sale when their carrying value is expected to
be recovered principally through a sale transaction and a sale is considered to be highly probable. Highly probable is defined as being
actively marketed by the club, with unconditional offers having been received prior to the end of a reporting period. These assets would
be stated at the lower of the carrying amount and fair value less costs to sell.
Gains and losses on disposal of players’ and key football management staff registrations are determined by comparing the value of the
consideration receivable, net of any transaction costs, with the carrying amount and are recognized separately in profit or loss within
profit on disposal of intangible assets. Where a part of the consideration receivable is contingent on specified performance conditions,
this amount is recognized in profit or loss when receipt is virtually certain.
Loan income on players temporarily loaned to other football clubs is recognized separately in profit or loss within profit on disposal of
intangible assets.
2.15 Inventories
The Group’s accounting policy for inventories is disclosed in Note 18.
2.16 Trade receivables
The Group’s accounting policy for trade receivables is disclosed in Note 19.
F-18
Notes to the consolidated financial statements (continued)
2 Summary of significant accounting policies (continued)
2.17 Derivatives and hedging activities
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-measured to
their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative
is designated as a hedging instrument, and if so, the nature of the item being hedged. The Group designates certain derivatives as hedges
of a particular risk associated with the cash flows of recognized assets and liabilities and highly probable forecast transactions (cash
flow hedges).
At inception of the hedge relationship, the Group documents the economic relationship between hedging instruments and hedged items,
including whether changes in the cash flows of the hedging instruments are expected to offset changes in the cash flows of hedged items.
The Group documents its risk management objective and strategy for undertaking its hedge transactions.
The fair values of derivative financial instruments are disclosed in Note 20. Movements in the hedging reserve are shown in the statement
of changes in equity. The full fair value of a derivative is classified as a non-current asset or liability when the remaining maturity of
the item is more than 12 months, it is classified as a current asset or liability when the remaining maturity of the item is less than
12 months.
(i) Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in
other comprehensive loss. The gain or loss relating to any ineffective portion is recognized immediately in profit or loss.
The Group hedges the foreign exchange risk on a portion of contracted, and hence highly probable, future US dollar revenues whenever
possible using a portion of the Group’s US dollar net borrowings as the hedging instrument. Foreign exchange gains or losses arising
on re-translation of the Group’s US dollar net borrowings used in the hedge are initially recognized in other comprehensive loss, rather
than being recognized in profit or loss immediately. The foreign exchange gains or losses arising on re-translation of the Group’s
unhedged US dollar borrowings are recognized in profit or loss immediately.
The Group hedges its cash flow interest rate risk where considered appropriate using interest rate swaps. Such interest rate swaps have
the economic effect of converting a portion of variable rate borrowings from floating rates to fixed rates. The effective portion of changes
in the fair value of the interest rate swap is initially recognized in other comprehensive loss, rather than being recognized in profit or
loss immediately. The gain or loss relating to any ineffective portion is recognized in profit or loss immediately.
The Group also hedges the foreign exchange risk on a number of euro denominated transfer payables, when considered appropriate,
through the use of forward contracts. The effective portion of changes in the fair value of these contracts is initially recognized in other
comprehensive loss, rather than being recognized in profit or loss immediately. The gain or loss relating to any ineffective portion is
recognized in profit or loss immediately.
Amounts previously recognized in other comprehensive loss and accumulated in the hedging reserve within equity are reclassified to
profit or loss in the periods when the hedged item affects profit or loss (for example, when the forecast transaction that is hedged takes
place).
When a hedging instrument expires or is sold or terminated, or when a hedge no longer meets the criteria for hedge accounting, any
cumulative deferred gain or loss existing in equity at that time remains in equity and is reclassified when the forecast transaction is
ultimately recognized in profit or loss. When the forecast transaction is no longer expected to occur, the cumulative gain or loss that was
reported in equity is immediately reclassified to profit or loss.
(ii) Derivatives that do not qualify for hedge accounting
Certain derivative instruments are not designated as hedging instruments and consequently do not qualify for hedge accounting. Changes
in the fair value of any derivative instrument that does not qualify for hedge accounting are recognized immediately in profit or loss.
F-19
Notes to the consolidated financial statements (continued)
2 Summary of significant accounting policies (continued)
2.18 Cash and cash equivalents
For the purposes of presentation in the consolidated balance sheet and the consolidated statement of cash flows, cash and cash equivalents
includes cash in hand, deposits held at call with financial institutions, and, if applicable, other short-term highly liquid investments with
original maturities of three months or less.
2.19 Share capital and reserves
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a
deduction from the proceeds of the issue.
Where any Group company purchases the Company’s equity instruments, for example as the result of a share buy-back, the consideration
paid, including any directly attributable incremental costs (net of income taxes), is deducted from equity attributable to the owners of
Manchester United plc as treasury shares until the shares are cancelled or reissued.
The merger reserve arose as a result of reorganization transactions and represents the difference between the equity of the acquired
company (Red Football Shareholder Limited) and the investment by the acquiring company (Manchester United plc).
The hedging reserve is used to reflect the effective portion of changes in the fair value of derivatives that are designated and qualify as
cash flow hedges.
2.20 Trade and other payables
The Group’s accounting policy for trade and other payables is disclosed in Note 24.
2.21 Borrowings
Borrowings are initially recognized at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortized
cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognized in profit or loss over the
period of the borrowings using the effective interest rate method. Fees paid on the establishment of loan facilities are recognized as
transaction costs of the loan to the extent that it is probable that some or all of the facility will be drawn down. In this case the fee is
deferred until draw-down occurs. To the extent there is no evidence that it is probable that some or all of the facility will be drawn down,
the fee is capitalized as a prepayment for liquidity services and amortized over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least
12 months after the end of the reporting period.
2.22 Provisions
Provisions are recognized when the group has a present legal or constructive obligation as a result of past events, it is probable that an
outflow of resources will be required to settle the obligation, and the amount can be reliably estimated. Provisions are not recognized
for future operating losses.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation
at the end of the reporting period. The discount rate used to determine the present value is the pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the liability. The increase in the provision due to the passage of time is
recognized as an interest expense.
F-20
Notes to the consolidated financial statements (continued)
3 Critical estimates and judgments
The preparation of financial statements requires the use of accounting estimates which, by definition, will seldom equal the actual results.
Management also needs to exercise judgment in applying the Group’s accounting policies.
This note provides an overview of the areas that involved a higher degree of judgment or complexity, and of items which are more likely
to be materially adjusted due to estimates and assumptions turning out to be wrong. Detailed information about each of these estimates
and judgments is included in other notes together with information about the basis of calculation for each affected line item in the
financial statements.
3.1 Significant estimates and assumptions
The areas involving significant estimates are:
• Estimate of minimum guarantee revenue recognition — see Note 4.3(i)
• Estimate of value of registrations — see Note 16
• Recognition of deferred tax assets — see Note 17
• Recognition of tax related provisions – see Note 26
Management does not consider there to be any significant judgments in the preparation of the financial statements.
Estimates and judgments are continually evaluated. They are based on historical experience and other factors, including expectations of
future events that may have a financial impact on the Group and that are believed to be reasonable under the circumstances.
4 Revenue from contracts with customers
4.1 Disaggregation of revenue from contracts with customers
The principal activity of the Group is the operation of men’s and women’s professional football clubs. All of the activities of the Group
support the operation of the football clubs and the success of the men’s first team in particular is critical to the ongoing development of
the Group. Consequently the chief operating decision maker regards the Group as operating in one material segment, being the operation
of professional football clubs.
All revenue derives from the Group’s principal activity in the United Kingdom. Revenue can be analysed into its three main components
as follows:
Sponsorship . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retail, merchandising, apparel & products licensing revenue. . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Domestic competitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
European competitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Broadcasting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Matchday . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
189,496
113,390
302,886
174,471
28,504
6,120
209,095
136,420
648,401
2022
£’000
147,881
109,939
257,820
140,629
67,477
6,741
214,847
110,534
583,201
2021
£’000
140,209
91,996
232,205
174,683
73,827
6,305
254,815
7,097
494,117
F-21
Notes to the consolidated financial statements (continued)
4 Revenue from contracts with customers (continued)
4.1 Disaggregation of revenue from contracts with customers (continued)
Revenue derived from entities accounting for more than 10% of revenue in either 2023, 2022 or 2021 were as follows:
Customer A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer B . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
All non-current assets are held within the United Kingdom.
4.2 Assets and liabilities related to contracts with customers
Details of movements on assets related to contracts with customers are as follows:
2023
£’000
178,118
76,169
<10 %
2022
£’000
146,114
76,377
67,477
2021
£’000
177,160
77,426
73,827
At 1 July 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized in revenue during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received/amounts invoiced during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized in revenue during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received/amounts invoiced during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current contract
assets — accrued
revenue
£’000
40,544
34,948
(39,253)
36,239
53,840
(46,747)
43,332
A contract asset (accrued revenue) is recognized if commercial, broadcasting or Matchday revenue performance obligations are satisfied
prior to unconditional consideration being due under the contract.
Details of movements on liabilities related to contracts with customers are as follows:
At 1 July 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized in revenue during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received/amounts invoiced during the year . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassified during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Recognized in revenue during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received/amounts invoiced during the year . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassified during the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current contract
liabilities –
deferred revenue
£’000
(117,984)
108,001
(149,619)
(6,245)
(165,847)
170,593
(164,332)
(10,038)
(169,624)
Non-current
contract liabilities –
deferred revenue
£’000
(22,942)
—
—
6,245
(16,697)
—
—
10,038
(6,659)
Total contract
liabilities –
deferred revenue
£’000
(140,926)
108,001
(149,619)
—
(182,544)
170,593
(164,332)
—
(176,283)
Commercial, broadcasting and Matchday consideration which is received in advance of the performance obligation being satisfied is
treated as a contract liability (deferred revenue). The deferred revenue is then recognized as revenue when the performance obligation
is satisfied. The Group receives substantial amounts of deferred revenue prior to the previous financial year end which is then recognized
as revenue throughout the current and, where applicable, future financial years.
F-22
Notes to the consolidated financial statements (continued)
4 Revenue from contracts with customers (continued)
4.3 Accounting policies and significant judgments
Revenue is measured at the fair value of consideration received or receivable from the Group’s principal activities excluding transfer
fees and value added tax. The Group’s principal revenue streams are Commercial, Broadcasting and Matchday. The Group recognizes
revenue when the transaction price can be determined; when it is probable that it will collect the consideration to which it is entitled;
and when specific performance obligations have been met for each of the Group’s activities as described below.
In instances where the transaction price contains an element of variable or contingent consideration, revenue is recognized based on the
most likely amount expected to be received, but only to the extent that it is highly probable that a significant reversal of cumulative
revenue recognized will not occur when the uncertainty associated with the variable or contingent consideration is subsequently resolved.
(i) Commercial
Commercial revenue (whether settled in cash or value in kind) comprises revenue receivable from the exploitation of the Manchester
United brand through sponsorship and other commercial agreements, including minimum guaranteed revenue, revenue receivable from
retailing Manchester United branded merchandise in the United Kingdom and licensing the manufacture, distribution and sale of such
goods globally, and fees for the Manchester United men’s first team undertaking tours.
Revenue is recognized over the term of the sponsorship agreement in line with the performance obligations included within the contract
and based on the sponsorship rights enjoyed by the individual sponsor. In instances where the sponsorship rights remain the same over
the duration of the contract, revenue is recognized as performance obligations are satisfied evenly over time (i.e. on a straight-line basis).
Retail revenue is recognized when control of the products has transferred, being at the point of sale to the customer. License revenue in
respect of right to access licences is recognized in line with the performance obligations included within the contract, in instances where
these remain the same over the duration of the contract, revenue is recognized evenly on a time elapsed (i.e. straight-line) basis.
Sales- based royalty revenue is recognized only when the subsequent sale is made.
Significant estimates
A number of sponsorship contracts contain significant estimates in relation to the allocation and recognition of revenue in line with
performance obligations. Minimum guaranteed revenue is recognized over the term of the sponsorship agreement in line with the
performance obligations included within the contract and based on the sponsorship benefits enjoyed by the individual sponsor. In
instances where the sponsorship rights remain the same over the duration of the contract, revenue is recognized as performance
obligations are satisfied evenly over time (i.e. on a straight-line basis).
Subsequent to the balance sheet date, on 21 July 2023, the Group signed a 10-year extension to its agreement with adidas which began
on 1 August 2015 and now terminates on 30 June 2035. The minimum guarantee payable over the term of this extended agreement is
£750 million per the original term and an additional £900 million due under the extension, resulting in a total of £1,650 million, subject
to certain adjustments. Payments due in a particular year may increase if the club’s men’s or women’s first teams win the Premier
League or Women’s Super League respectively, FA Cup or continental competitions with the maximum possible increase being
£4.4 million per annum. Payments may decrease if the men’s first team fails to participate in the UEFA Champions League. Under the
original term, if the men’s first team did not participate in the UEFA Champions League for two or more consecutive seasons, a deduction
of 30% was made in the second or other consecutive year of non-participation. As a result of the men’s first team qualifying for the
2023/24 Champions League, no deductions are due under the original term and there is no critical accounting estimate in relation to the
original term. Under the extended term, this clause has been amended to state that a £10 million deduction will be applied for each year
of non-participation in the UEFA Champions League, commencing from the 2025/26 season. Participation in the UEFA Champions
League is typically secured via a top 4 finish in the Premier League or winning the UEFA Europa League, and revenue is recognized
based on management’s estimate of how many non-participation events will occur over the life of the contract. In line with IFRS 15,
this estimate will be considered at each reporting date.
F-23
Notes to the consolidated financial statements (continued)
4 Revenue from contracts with customers (continued)
4.3 Accounting policies and significant judgments (continued)
(ii) Broadcasting
Broadcasting revenue represents revenue receivable from all UK and overseas broadcasting contracts, including contracts negotiated
centrally by the Premier League and UEFA.
Distributions from the Premier League comprise a fixed element (which is recognized evenly as each performance obligation is satisfied,
i.e. as each Premier League match is played), facility fees for live coverage and highlights of domestic home and away matches (which
are recognized when the respective performance obligation is satisfied, i.e. the respective match is played), and merit awards (which,
being variable consideration, are recognized when each performance obligation is satisfied i.e. as each Premier League match is played,
based on management’s estimate of where the men’s first team will finish at the end of the football season i.e. the most likely outcome
and to the extent that it is deemed highly probably that no revenue recognized will be reversed).
Distributions from UEFA relating to participation in European competitions comprise market pool payments (which are recognized over
the matches played in the competition, a portion of which reflects Manchester United’s performance relative to the other Premier League
clubs in the competition), fixed amounts for participation in individual matches (which are recognized when the matches are played)
and an individual club coefficient share (which is recognized over the group stage matches).
(iii) Matchday
Matchday revenue is recognized based on matches played throughout the year with revenue from each match (including season ticket
allocated amounts) only being recognized when the performance obligation is satisfied i.e. the match has been played. Revenue from
related activities such as Conference and Events or the Museum is recognized as the event or service is provided or the facility is used.
Matchday revenue includes revenue receivable from all domestic and European match day activities from Manchester United games at
Old Trafford, together with the Group’s share of gate receipts from domestic cup matches not played at Old Trafford, and fees for
arranging other events at the Old Trafford stadium. As the Group acts as the principal in the sale of match tickets, the share of gate
receipts payable to the other participating club and competition organizer for domestic cup matches played at Old Trafford is treated as
an operating expense.
F-24
Notes to the consolidated financial statements (continued)
5 Operating expenses
Employee benefit expenses (Note 7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term and low value leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Auditors’ remuneration: audit of parent company and consolidated financial statements . . .
Auditors’ remuneration: audit of the Company’s subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .
Auditors’ remuneration: audit-related services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Auditors’ remuneration: other audit services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Auditors’ remuneration: tax compliance and tax advice services . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange losses on operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation - property, plant and equipment (Note 13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation – right-of-use assets (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation - investment properties (Note 15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization – intangible assets (Note 16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sponsorship, other commercial and broadcasting costs. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
External Matchday costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Travel and entertaining costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal, professional and consultancy costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and utility costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other operating expenses (individually less than £10,000,000) . . . . . . . . . . . . . . . . . . . . . . . .
Exceptional items (Note 6). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6 Exceptional items
Compensation for loss of office . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Football League pension scheme deficit (Note 29) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
(331,374)
(379)
(588)
(165)
(17)
—
(10)
(2,989)
(11,876)
(1,692)
(280)
(172,684)
(26,083)
(37,750)
(15,835)
(18,178)
(34,008)
(27,209)
—
(681,117)
2022
£’000
(384,141)
(621)
(485)
(135)
(14)
(80)
(13)
(50)
(12,285)
(1,749)
(280)
(151,462)
(17,174)
(24,372)
(9,401)
(11,241)
(26,699)
(27,626)
(24,692)
(692,520)
2021
£’000
(322,600)
(514)
(30)
(646)
(14)
(105)
(35)
(874)
(12,987)
(1,698)
(274)
(124,398)
(10,861)
(9,022)
(4,616)
(10,370)
(16,454)
(22,926)
—
(538,424)
2023
£’000
—
—
—
2022
£’000
23,827
865
24,692
2021
£’000
—
—
—
Exceptional items in the current year were £nil.
In the prior year, compensation paid for loss of office relates to amounts payable to former men’s first team managers, certain members
of the playing, coaching and scouting staff and certain non-playing staff.
The Football League pension scheme deficit reflects the present value of the additional contributions the Group is expected to pay to
remedy the revised deficit of the scheme pursuant to the latest triennial actuarial valuation.
(i) Accounting policy
Exceptional items are disclosed separately in the financial statements where it is necessary to do so to provide further understanding of
the financial performance of the Group. They are material items of income or expense that have been shown separately due to the
significance of their nature or amount.
F-25
Notes to the consolidated financial statements (continued)
7 Employee benefit expenses
7.1 Employee benefit expenses and average number of people employed
Wages and salaries (including bonuses) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social security costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based payments (Note 28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Pension costs - defined contribution schemes (Note 29.2) . . . . . . . . . . . . . . . . . . . . .
2023
£’000
(288,451)
(35,057)
(3,386)
(4,480)
(331,374)
2022
£’000
(338,503)
(40,881)
(1,026)
(3,731)
(384,141)
2021
£’000
(283,463)
(33,773)
(2,002)
(3,362)
(322,600)
Details of the pension arrangements offered by the Company and the Group are disclosed in Note 29.
The average number of employees during the year, including directors, was as follows:
By activity:
Football – men’s and women’s players . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Football - technical and coaching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commercial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Media . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Administration and other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Average number of employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
Number
2022
Number
2021
Number
131
192
160
104
525
1,112
124
189
151
94
477
1,035
118
176
131
90
468
983
The Group also employs approximately 2,517 temporary staff to perform, among other things, catering, security, ticketing, hospitality
and marketing services during Matchdays at Old Trafford (2022: 1,045; 2021: 945), the costs of which are included in the employee
benefit expense above.
7.2 Key management compensation
Key management includes directors (executive and non-executive) of the Company. The compensation paid or payable to key
management for employee services, which is included in the employee benefit expense table above, is shown below:
Short-term employee benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share-based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Post-employment benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
(4,838)
(2,349)
(8)
(7,195)
2022
£’000
(6,893)
(284)
(8)
(7,185)
2021
£’000
(8,326)
(1,125)
(5)
(9,456)
F-26
Notes to the consolidated financial statements (continued)
8 Profit on disposal of intangible assets
Profit on disposal of registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Player loan income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
20,424
—
20,424
2022
£’000
18,971
2,964
21,935
2021
£’000
4,601
2,780
7,381
9 Net finance (costs)/income
Interest payable on bank loans and overdrafts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest payable on secured term loan facility, senior secured notes and revolving facilities . . .
Interest payable on lease liabilities (Note 14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of issue costs on secured term loan facility and senior secured notes . . . . . . . . . .
Foreign exchange losses on retranslation of unhedged US dollar borrowings(1) . . . . . . . . . . . . .
Unwinding of discount relating to registrations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassified from hedging reserve (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest on provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hedge ineffectiveness on cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value movements on derivative financial instruments:
Embedded foreign exchange derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total finance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest receivable on short-term bank deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gains on retranslation of unhedged US dollar borrowings(2). . . . . . . . . . . . . .
Reclassified from hedging reserve (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hedge ineffectiveness on cash flow hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value movement on derivative financial instruments:
2023
£’000
(3,076)
(30,671)
(208)
(745)
—
(8,326)
—
(287)
—
(1,604)
—
(44,917)
728
22,375
—
420
2022
£’000
(3,058)
(19,975)
(97)
(713)
(58,738)
(2,363)
—
—
(971)
—
—
(85,915)
145
—
326
—
Embedded foreign exchange derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net finance (costs)/income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
23,523
(21,394)
23,205
23,676
(62,239)
2021
£’000
(1,952)
(17,262)
(109)
(626)
—
(892)
(14,631)
—
—
—
(939)
(36,411)
3
48,015
—
1,234
58
49,310
12,899
(1) Unrealized foreign exchange losses on unhedged USD borrowings due to an unfavorable swing in foreign exchange rates.
(2) Unrealized foreign exchange gains on unhedged USD borrowings due to a favorable swing in foreign exchange rates.
(3) Foreign exchange gains/(losses) immediately reclassified from the hedging reserve for hedged future revenues no longer meeting
the hedge accounting criteria due to a change in denomination of the contract currency.
F-27
Notes to the consolidated financial statements (continued)
10 Income tax credit/(expense)
Current tax:
Current tax on loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment in respect of previous years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current tax (expense)/credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax:
US deferred tax:
Origination and reversal of temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Re-measurement of US deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment in respect of previous years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total US deferred tax expense (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UK deferred tax:
Origination and reversal of temporary differences . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustment in respect of previous years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of change in UK corporation tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total UK deferred tax credit/(expense) (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax credit/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax credit/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
A reconciliation of the total income tax credit/(expense) is as follows:
Loss before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss before tax multiplied by weighted average UK corporation tax rate of 20.5% (2022:
19.0% - UK corporation tax rate; 2021: 21.0% - weighted average US federal corporate
income tax rate) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax effects of:
Adjustment in respect of previous years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Difference in tax rates on non-US operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange losses on US dollar denominated tax basis . . . . . . . . . . . . . . . . . . . . . . . . .
Expenses not deductible for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Irrecoverable foreign tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of change in UK Corporation tax rate(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized foreign exchange gains not taxable in the US . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Re-measurement of foreign tax credit US deferred tax asset . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax credit/(expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
2022
£’000
2021
£’000
(217)
(116)
(572)
(905)
5,084
223
(625)
4,682
—
—
—
—
5,176
(375)
—
4,801
4,801
3,896
—
—
—
—
29,142
289
—
29,431
29,431
34,113
(3,972)
490
(688)
(4,170)
3,831
(66,561)
973
(61,757)
9,762
(800)
(11,224)
(2,262)
(64,019)
(68,189)
2023
£’000
(32,574)
2022
£’000
(149,623)
2021
£’000
(24,027)
6,678
28,428
5,046
(491)
—
—
(2,650)
(572)
931
—
—
3,896
512
—
—
(1,197)
(625)
6,995
—
—
34,113
663
216
(3,146)
(526)
—
(77,785)
7,343
—
(68,189)
(1) The credit of £931,000 arising in the fiscal year ended 30 June 2023 is a result of UK deferred tax being recognized at the UK
corporation tax rate of 25% but the total tax credit reconciliation is performed at the current year tax rate of 20.5% resulting in a
reconciling item. The current year weighted average UK corporation tax rate of 20.5% is a result of the increase in the UK
corporation tax rate from 19.0% to 25.0% in April 2023.
F-28
Notes to the consolidated financial statements (continued)
10 Income tax credit/(expense) (continued)
In addition to the amount recognized in the statement of profit or loss, the following amounts relating to tax have been recognized
directly in other comprehensive loss:
US deferred tax (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UK deferred tax (Note 17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total income tax expense recognized in other comprehensive loss . . . . . . . . . . . . . . . . . . . . .
2023
£’000
—
(1,018)
(1,018)
—
(1,018)
2022
£’000
—
(1,287)
(1,287)
—
(1,287)
2021
£’000
3,395
(1,947)
1,448
(2,017)
(569)
11 Loss per share
Loss for the year (£’000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Basic loss per share (pence) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted loss per share (pence)(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
(28,678)
(17.59)
(17.59)
2022
(115,510)
(70.86)
(70.86)
2021
(92,216)
(56.60)
(56.60)
(i) Basic loss per share
Basic loss per share is calculated by dividing the loss for the year by the weighted average number of ordinary shares in issue during the
financial year.
(ii) Diluted loss per share
Diluted loss per share is calculated by adjusting the weighted average number of ordinary shares in issue during the year to assume
conversion of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares: share awards
pursuant to the 2012 Equity Incentive Plan (the “Equity Plan”). Share awards pursuant to the Equity Plan are assumed to have been
converted into ordinary shares at the beginning of the financial year, or, if later, the date of issue of the potential ordinary shares.
(iii) Weighted average number of shares used as the denominator
Class A ordinary shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Class B ordinary shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average number of ordinary shares used as the denominator in calculating basic
2023
Number
‘000
54,537
110,208
(1,683)
2022
Number
‘000
51,952
112,732
(1,683)
2021
Number
‘000
41,939
122,683
(1,683)
loss per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
163,062
163,001
162,939
Adjustment for calculation of diluted loss per share assumed conversion into Class A
ordinary shares(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
Weighted average number of ordinary shares and potential ordinary shares used as the
denominator in calculating diluted loss per share(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
163,062
163,001
162,939
(1) For the years ended 30 June 2023, 30 June 2022 and 30 June 2021, potential ordinary shares are anti-dilutive, as their inclusion in
the diluted loss per share calculation would reduce the loss per share, and hence have been excluded.
F-29
Notes to the consolidated financial statements (continued)
12 Dividends
Dividends paid in the year were $nil (2022: $44,010,000; 2021: $14,665,000) equivalent to $nil (2022: $0.27; 2021: $0.09) per share.
The pounds sterling equivalents were £nil (2022: £33,553,000; 2021: £10,718,000) equivalent to £nil (2022: £0.2; 2021: £0.07) per
share.
13 Property, plant and equipment
At 1 July 2021
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended 30 June 2022
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended 30 June 2023
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i) Assets pledged as security
Freehold
property
£’000
Plant and
machinery
£’000
Fixtures
and fittings
£’000
278,987
(59,867)
219,120
219,120
2,390
—
(3,394)
218,116
281,377
(63,261)
218,116
218,116
6,046
(3,426)
220,736
287,413
(66,677)
220,736
38,309
(32,964)
5,345
5,345
2,706
231
(3,013)
5,269
39,562
(34,293)
5,269
5,269
8,921
(2,578)
11,612
46,706
(35,094)
11,612
73,528
(50,934)
22,594
22,594
2,791
(231)
(5,878)
19,276
75,394
(56,118)
19,276
19,276
7,530
(5,872)
20,934
75,873
(54,939)
20,934
Total
£’000
390,824
(143,765)
247,059
247,059
7,887
—
(12,285)
242,661
396,333
(153,672)
242,661
242,661
22,497
(11,876)
253,282
409,992
(156,710)
253,282
Property, plant and equipment with a net book amount of £214,705,000 (2022: £209,442,000) has been pledged to secure the revolving
facilities, the secured term loan facility and senior secured notes borrowings of the Group (see Note 25).
(ii) Depreciation methods and useful lives
Land is not depreciated. With the exception of freehold property acquired before 1 August 1999, depreciation is calculated using the
straight-line method to allocate cost, net of residual values, over the estimated useful lives as follows:
Freehold property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75 years
Computer equipment and software (included within Plant and machinery) . . . . . . 3 years
Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4-5 years
Fixtures and fittings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 years
Freehold property acquired before 1 August 1999 is depreciated on a reducing balance basis at an annual rate of 1.33%.
See Note 2.11 for the other accounting policies relevant to property, plant and equipment, and Note 2.10 for the Group’s policy regarding
impairments.
F-30
Notes to the consolidated financial statements (continued)
13 Property, plant and equipment (continued)
(iii) Capital commitments
See Note 32.1 for disclosure of capital commitments relating to property, plant and equipment.
14 Leases
(i) Amounts recognized in the consolidated balance sheet
The balance sheet shows the following amounts relating to leases:
Right-of-use assets:
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions to right-of-use assets in the year amounted £6,384,000 (2022: £1,428,000).
Lease liabilities:
2023
£’000
8,114
646
8,760
2022
£’000
3,655
417
4,072
Current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The following table provides an analysis of the movements in lease liabilities:
2023
£’000
1,036
7,844
8,880
As at 1 July 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As at 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2022
£’000
1,561
2,869
4,430
£’000
4,340
(1,444)
1,437
97
4,430
(2,142)
6,384
208
8,880
F-31
Notes to the consolidated financial statements (continued)
14 Leases (continued)
(ii) Amounts recognized in the consolidated statement of profit or loss:
Depreciation charge of right-of-use assets
Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plant and machinery . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense (included in finance cost) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expense relating to short-term leases (included in operating expenses). . . . . . . . . . . . . . . . . .
Expense relating to low value leases (included in operating expenses) . . . . . . . . . . . . . . . . . .
(iii) The group’s leasing activities and how these are accounted for
2023
£’000
2022
£’000
2021
£’000
(1,243)
(449)
(1,692)
(208)
(379)
—
(1,534)
(215)
(1,749)
(97)
(579)
(42)
(1,534)
(164)
(1,698)
(109)
(472)
(42)
The Group leases various offices and equipment. All leases with a term of more than 12 months, unless the underlying asset is of low
value, are recognized as a right-of-use asset, with a corresponding lease liability, at the date at which the leased asset is available for use
by the Group.
The lease agreements do not impose any covenants other than the security interests in the right-of-use assets that are held by the lessor.
Right-of-use assets may not be used as security for borrowing purposes.
Lease liabilities are initially measured on a present value basis. Lease liabilities include the net present value of lease payments, less any
lease incentives receivable. The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be
determined, which is generally the case for leases of the Group, the Group’s incremental borrowing rate is used, being the rate that the
Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic
environment with similar terms, security and conditions.
Lease payments are allocated between principal and finance cost. The finance cost is charged to profit or loss over the lease period so
as to produce a constant periodic rate of interest on the remaining balance of the liability for each period.
Right-of-use assets are initially measured at cost comprising the following:
•
•
•
•
the amount of the initial measurement of the lease liability;
any lease payments made at or before the commencement date less any lease incentives received;
any initial direct costs; and
restoration costs.
Right-of-use assets are depreciated over the shorter of the asset’s useful life and the lease term on a straight-line basis.
Payments associated with short-term leases of property, plant and equipment and all leases of low-value assets are recognized on a
straight-line basis as an expense in profit or loss. Short-term leases are leases with a lease term of 12 months or less.
F-32
Notes to the consolidated financial statements (continued)
15 Investment properties
At 1 July 2021
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended 30 June 2022
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended 30 June 2023
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated depreciation and impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i) Other amounts recognized in profit or loss for investment properties
£’000
32,193
(11,640)
20,553
20,553
(280)
20,273
32,193
(11,920)
20,273
20,273
(280)
19,993
32,193
(12,200)
19,993
Rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Direct operating (credits)/expenses from properties, all of which generated rental revenue . . . . . . . . . . . .
The future minimum rentals receivable under non-cancellable operating leases are disclosed in Note 32.2.
(ii) Carrying value of investment properties
2023
£’000
2,215
(23)
2022
£’000
2,240
294
Investment properties are held for long-term rental yields or for capital appreciation or both, and are not occupied by the Group.
Investment properties are initially measured at cost (comprising the purchase price, after deducting discounts and rebates, and any
directly attributable costs) and are subsequently carried at cost less accumulated depreciation and any provision for impairment.
Investment properties are depreciated using the straight-line method over 50 years. Investment properties were externally valued as of
30 June 2023 in accordance with the Royal Institution of Chartered Surveyors (“RICS”) Valuation — Global Standards 2017 on the
basis of Fair Value (as defined in the Standards). The fair value of investment properties as of 30 June 2023 was £32,970,000 (2022:
£38,250,000). The fair value of investment properties is determined using inputs that are not based on observable market data,
consequently the asset is categorized as Level 3.
(iii) Contractual commitments
The Group had no material contractual commitments to purchase, construct or develop investment properties or for repairs, maintenance
or enhancements (2022: not material).
F-33
Notes to the consolidated financial statements (continued)
16 Intangible assets
At 1 July 2021
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended 30 June 2022
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended 30 June 2023
Opening net book amount . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Disposals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization charge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023
Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . .
Net book amount . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i) Cost of and amortization methods and useful lives
Goodwill
£’000
Registrations
£’000
Other intangible
assets
£’000
421,453
—
421,453
421,453
—
—
—
421,453
421,453
—
421,453
421,453
—
—
—
421,453
861,210
(533,223)
327,987
327,987
151,564
(14,391)
(148,949)
316,211
779,197
(462,986)
316,211
316,211
247,355
(8,914)
(169,767)
384,885
16,644
(11,617)
5,027
5,027
3,100
—
(2,513)
5,614
18,817
(13,203)
5,614
5,614
3,347
—
(2,917)
6,044
421,453
—
421,453
924,829
(539,944)
384,885
22,164
(16,120)
6,044
Total
£’000
1,299,307
(544,840)
754,467
754,467
154,664
(14,391)
(151,462)
743,278
1,219,467
(476,189)
743,278
743,278
250,702
(8,914)
(172,684)
812,382
1,368,446
(556,064)
812,382
Goodwill arose largely in relation to the Group’s acquisition of Manchester United Limited in 2005 and represents the excess of the cost
of the acquisition over the fair value of the Group’s share of the net identifiable assets of the acquired subsidiary at the date of acquisition.
Goodwill is not amortized but it is tested annually for impairment or more frequently if events or changes in circumstances indicate it
might be impaired. Goodwill is carried at cost less accumulated impairment losses.
When goodwill is tested for impairment, the recoverable amount of the cash-generating unit is determined based on a value-in-use
calculation. This calculation requires the use of estimates, both in arriving at the expected future cash flows and the application of a
suitable discount rate in order to calculate the present value of these cash flows. These calculations have been carried out in accordance
with the assumptions set out below.
The value-in-use calculations have used pre-tax cash flow projections based on the financial budgets approved by management covering
a five-year period. The budgets are based on past experience in respect of revenues, variable and fixed costs, registrations and other
capital expenditure and working capital assumptions. For each accounting period, cash flows beyond the five-year period are
extrapolated using a terminal growth rate of 2.0% (2022: 2.0%), which does not exceed the long term average growth rate for the UK
economy in which the cash generating unit operates.
Management considers there to be one material cash generating unit for the purposes of the annual impairment review, being the
operation of professional football clubs.
The other key assumptions used in the value in use calculations for each period are the pre-tax discount rate, which has been determined
at 11.8% (2022: 8.4%) for each period, certain assumptions around progression in domestic and UEFA club competitions, notably the
Champions League.
F-34
Notes to the consolidated financial statements (continued)
16 Intangible assets (continued)
(i) Cost of and amortization methods and useful lives (continued)
Management determined budgeted revenue growth based on historical performance and its expectations of market development. The
discount rates are pre-tax and reflect the specific risks relating to the business.
The following sensitivity analysis was performed:
increase the discount rate by 1% (post-tax);
•
• more prudent assumptions around qualification for European competitions; and
•
increase future capital expenditure.
In each of these scenarios the estimated recoverable amount substantially exceeds the carrying value for the cash generating unit and
accordingly no impairment was identified.
Having assessed the future anticipated cash flows, management believes that any reasonably possible changes in key assumptions would
not result in an impairment of goodwill.
The costs associated with the acquisition of players’ and key football management staff registrations are capitalized at the value of the
consideration payable, being the discounted value of cashflows payable under the relevant agreements. This discount is then unwound
through finance costs over the life of each contract. Costs include transfer fees, Premier League levy fees, agents’ fees incurred by the
club and other directly attributable costs. Costs also include the estimated value of any contingent consideration, which is primarily
payable to the player’s former club (with associated levy fees payable to the Premier League), once payment becomes probable.
Subsequent reassessments of the amount of contingent consideration payable are also included in the cost of the player’s and key football
management staff registration.
Registrations costs are fully amortized using the straight-line method over the period covered by the player’s and key football
management staff contract. Where a contract is extended, any costs associated with securing the extension are added to the unamortized
balance (at the date of the amendment) and the revised book value is amortized over the remaining revised contract life.
The Group will perform an impairment review on intangible assets, including player and key football management staff registrations, if
adverse events indicate that the amortized carrying value of the asset may not be recoverable. While no individual can be separated from
the single cash generating unit (“CGU”), being the operations of the Group as a whole, there may be certain circumstances where an
individual is taken out of the CGU, when it becomes clear that they will not participate with the club’s first team again, for example, a
player sustaining a career threatening injury or is permanently removed from the first team squad for another reason. If such
circumstances were to arise, the carrying value of the individual would be assessed against the Group’s best estimate of the individual’s
fair value less any costs to sell.
Other intangible assets comprise website, mobile applications, software and trademark registration costs and are initially measured at
cost and are subsequently carried at cost less accumulated amortization and any provision for impairment. Amortization is calculated
using the straight-line method to write-down assets to their residual value over the estimated useful lives as follows:
Website, mobile applications and software. . . . . . .
Trademark registrations . . . . . . . . . . . . . . . . . . . . . .
3 years
10 years
See Note 2.14 for the other accounting policies relevant to intangible assets and Note 2.10 for the Group’s policy regarding impairments.
F-35
Notes to the consolidated financial statements (continued)
16 Intangible assets (continued)
(i) Cost of and amortization methods and useful lives (continued)
Significant estimates — value of registrations
The costs associated with the acquisition of players’ and key football management staff registrations include an estimate of any
contingent consideration that is probable at the balance sheet date. The estimate of the probable contingent consideration payable requires
management to assess the likelihood of specific performance conditions being met which would trigger the payment of the contingent
consideration. This assessment is carried out on an individual basis. The maximum additional amount that could be payable as of 30 June
2023 is disclosed in Note 31.1. The estimate over the probability of contingent consideration payable could impact the net book value
of registrations and amortization recognized in the statement of profit or loss.
The unamortized balance of existing registrations as of 30 June 2023 was £384.9 million (2022: £316.2 million), of which £157.9 million
(2022: £130.6 million) is expected to be amortized in the year ending 30 June 2024 (2022: year ending 30 June 2023). The remaining
balance is expected to be amortized over the four years to 30 June 2028 (2022: three years to 30 June 2026). This does not take into
account player additions following the end of the reporting period, which would have the effect of increasing the amortization expense
in future periods, nor does it consider disposals subsequent to the end of the reporting period, which would have the effect of decreasing
future amortization charges. Furthermore, any contract renegotiations would also impact future charges.
(ii) Capital commitments
See Note 32.1 for disclosure of capital commitments relating to other intangible assets.
(iii) Internally generated other intangible assets
Other intangible assets include internally generated assets whose cost and accumulated amortization as of 30 June 2023 was £2,103,000
and £2,103,000 respectively (2022: £2,103,000 and £2,091,000 respectively).
17 Deferred tax
Deferred tax assets and deferred tax liabilities are offset where the Group has a legally enforceable right to do so. The following is the
analysis of the deferred tax balances (after allowable offset):
UK deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
The movement in deferred tax assets and deferred tax liabilities during the year is as follows:
At 1 July . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credited to statement of profit or loss (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expensed to other comprehensive income (Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit relating to share-based payments(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
3,304
3,304
2022
£’000
7,402
7,402
2023
£’000
7,402
(4,801)
1,018
(315)
3,304
2022
£’000
35,546
(29,431)
1,287
—
7,402
F-36
Notes to the consolidated financial statements (continued)
17 Deferred tax (continued)
The movement in US net deferred tax assets are as follows:
At 1 July 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expensed/(credited) to statement of profit or loss (Note 10). .
At 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expensed/(credited) to statement of profit or loss (Note 10). .
At 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net
operating
losses and
interest
restriction
£’000
(3,359)
(4,492)
(7,851)
875
(6,976)
Unrealized
foreign
exchange
and
derivative
movements
£’000
—
4,575
4,575
(1,779)
2,796
Property,
plant and
equipment
£’000
3,359
(83)
3,276
904
4,180
Total(2)
£’000
—
—
—
—
—
(1) Credits relating to share-based payments arise on the movement in the share price on equity-settled awards between the grant date
and the reporting date – see consolidated statement of changes in equity above.
(2) The deferred tax assets were written down in the year ended 30 June 2021 to the extent that they will not shelter profits arising from
the unwinding of the deferred tax liability. This is due to the change in the substantively enacted UK Corporation tax rate from 19%
to 25%, effective April 2023. The current US federal corporate income tax rate is 21%. As a result of this change the US deferred
tax asset is no longer forecast to give rise to a future economic benefit. It is expected that any future US tax payable will be sheltered
by future foreign tax credits arising from UK tax payable. Future increases in the US federal corporate income tax rate could result
in a reversal of the US deferred tax asset write down.
The movement in UK net deferred tax liabilities are as follows:
Accelerated
tax
depreciation Intangibles
Non
qualifying
property
Property
fair value
adjustment
At 1 July 2021 . . . . . . . . . . . . . . . . . . . . . . .
(Credited)/expensed to statement of profit
£’000
609
£’000
15,000
£’000
17,482
£’000
17,442
Net
operating
losses
£’000
(12,180)
Other(1)
£’000
(2,807)
Total(2)
£’000
35,546
or loss (Note 10) . . . . . . . . . . . . . . . . . . . .
(229)
1,359
(5)
(631)
(32,427)
2,502
(29,431)
Expensed to other comprehensive income
(Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022 . . . . . . . . . . . . . . . . . . . . . .
Expensed/(credited) to statement of profit
—
380
—
16,359
—
17,477
—
16,811
40
(44,567)
1,247
942
1,287
7,402
or loss (Note 10) . . . . . . . . . . . . . . . . . . . .
1,222
(622)
(631)
(2,290)
(2,475)
(4,801)
Expensed to other comprehensive income
(Note 10) . . . . . . . . . . . . . . . . . . . . . . . . . .
Credit relating to share based payments . .
At 30 June 2023 . . . . . . . . . . . . . . . . . . . . . .
—
—
1,602
—
—
15,737
17,472
16,180
—
—
349
—
(46,508)
669
(315)
(1,179)
1,018
(315)
3,304
(5)
—
—
(1) The “Other” deferred tax asset balance primarily comprises foreign exchange differences; fair value movements recognized in the
hedging reserve; pensions not paid in the year and salaries not paid before 31 March 2024.
(2) Of the total deferred tax liability, £3,304,000 is expected to be settled after more than one year.
F-37
Notes to the consolidated financial statements (continued)
17 Deferred tax (continued)
Significant estimates - recognition of deferred tax assets
Deferred tax assets are recognized only to the extent that it is probable that the associated deductions will be available for use against
future profits and that there will be sufficient future taxable profit available against which the temporary differences can be utilized,
provided the asset can be reliably quantified. In estimating future taxable profit, management uses “base case” approved forecasts which
incorporate a number of assumptions, including a prudent level of future uncontracted revenue in the forecast period. In arriving at a
judgment in relation to the recognition of deferred tax assets, management considers the regulations applicable to tax and advice on their
interpretation and potential future business planning. Future taxable income may be higher or lower than estimates made when
determining whether it is appropriate to record a tax asset and the amount to be recorded. Furthermore, changes in the legislative
framework or applicable tax case law may result in management reassessing the recognition of deferred tax assets in future periods.
At 30 June 2023 there is an unrecognized US deferred tax asset of £90,548,000 which is detailed below (2022: £87,609,000 in respect
of foreign tax credits in the US):
Unrecognized US deferred tax asset . . . . . . .
Foreign
tax credits
£’000
20,553
Net operating
General
Accruals not
paid within 8.5
Salary not
paid with
months of
2.5 months
year end of year end
£’000
3,488
£’000
4,089
losses and
interest
restriction
£’000
56,071
Intangible
assets
£’000
Other
£’000
3,235
Total
£’000
90,548
At 30 June 2023, the Group had no unrecognized UK deferred tax assets (2022: £nil).
18 Inventories
3,112
2023
£’000
2022
£’000
2,200
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,165
(i) Accounting policy
Inventories are stated at the lower of cost and net realizable value. Cost is determined using the first-in, first-out (FIFO) method. The
cost of finished goods comprises cost of purchase and, where appropriate, other directly attributable costs. It excludes borrowing costs.
Net realizable value is the estimated selling price in the ordinary course of business less estimated costs necessary to make the sale.
(ii) Amounts recognized in profit or loss
Inventories recognized as an expense during the year ended 30 June 2023 amounted to £12,307,000 (2022: £11,345,000; 2021:
£5,061,000). These were included in operating expenses.
Write down of inventories to net realizable value amounted to £244,000 (2022: £119,000; 2021: £194,000). These were recognized as
an expense during the year and included in operating expenses.
Reversal of previous inventory write-down amounted to £119,000 (2022: £194,000 2021: £127,000). These were recognized as a credit
during the year and included in operating expenses.
F-38
Notes to the consolidated financial statements (continued)
19 Trade receivables
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: provision for impairment of trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: non-current portion
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i) Accounting policy
2023
£’000
69,729
(16,259)
53,470
22,303
31,167
2022
£’000
91,207
(12,240)
78,967
29,757
49,210
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. Trade
receivables are recognized initially at fair value. The Group holds trade receivables with the objective to collect the contractual cash
flows and therefore measures them subsequently at amortized cost using the effective interest method, less provision for impairment.
Details about the Group’s impairment policies and the calculation of the provision for impairment are provided in Note 30.1(b). If
collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.
(ii) Amounts included in trade receivables
Net trade receivables include transfer fees receivable from other football clubs of £42,309,000 (2022: £50,418,000) of which
£22,303,000 (2022: £29,757,000) is receivable after more than one year. Net trade receivables also include £13,207,000 (2022:
£19,903,000) of deferred revenue that is contractually payable to the Group, but recorded in advance of the earnings process, with
corresponding amounts recorded as contract liabilities — deferred revenue.
(iii) Fair value of trade receivables
Gross contractual trade receivables pre discounting as at 30 June 2023 were £54,393,000 (2022: £80,150,000).
(iv) Impairment and risk exposure
Information about the impairment of trade receivables, their credit quality and the Group’s exposure to foreign exchange risk, interest
rate risk and credit risk can be found in Note 30.
F-39
Notes to the consolidated financial statements (continued)
20 Derivative financial instruments
The Group has the following derivative financial instruments:
Used for hedging:
Interest rate swaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward foreign exchange contracts . . . . . . . . . . . . . . . . . . . . .
At fair value through profit or loss:
Embedded foreign exchange derivatives. . . . . . . . . . . . . . . . . .
Forward foreign exchange contracts . . . . . . . . . . . . . . . . . . . . .
Less non-current portion:
Used for hedging:
Interest rate swaps. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forward foreign exchange contracts . . . . . . . . . . . . . . . . . . . . .
At fair value through profit or loss:
Embedded foreign exchange derivatives. . . . . . . . . . . . . . . . . .
Forward foreign exchange contracts . . . . . . . . . . . . . . . . . . . . .
Non-current derivative financial instruments . . . . . . . . . . .
Current derivative financial instruments . . . . . . . . . . . . . . .
(i) Fair value hierarchy
2023
2022
Assets
£’000
Liabilities
£’000
Assets
£’000
Liabilities
£’000
4,173
378
11,258
—
15,809
—
378
7,114
—
7,492
8,317
—
(1,615)
(64)
—
(1,679)
—
(748)
—
—
(748)
(931)
2,458
—
20,286
315
23,059
2,458
13,786
218
16,462
6,597
—
—
—
(81)
(81)
—
—
(49)
(49)
(32)
Derivative financial instruments are carried at fair value. The different levels used in measuring fair value have been defined in
accounting standards as follows:
• Level 1 - the fair value of financial instruments traded in active markets is based on quoted market prices at the end of the
reporting period.
• Level 2 - the fair value of financial instruments that are not traded in an active market is determined using valuation techniques
which maximize the use of observable market data and as little as possible on entity-specific estimates. If all significant inputs
required to fair value an instrument are observable, the instrument is included in Level 2.
• Level 3 - if one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
(ii) Valuation techniques used to determine fair value
All of the financial instruments detailed above are included in Level 2. Specific valuation techniques used to value financial instruments
include:
• The fair value of interest rate swaps is calculated as the present value of the estimated future cash flows based on observable
yield curves;
• The fair value of embedded foreign exchange derivatives is determined as the change in the fair value of the embedded
derivative at the contract inception date and the fair value of the embedded derivative at the end of the reporting period; the
fair value of the embedded derivative is determined using forward exchange rates with the resulting value discounted to present
value; and
• The fair value of forward foreign exchange contracts is determined using forward exchange rates at the end of the reporting
period, with the resulting value discounted back to present value.
F-40
Notes to the consolidated financial statements (continued)
21 Cash and cash equivalents
Cash at bank and in hand . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents for the purposes of the consolidated statement of cash flows are as above.
22 Share capital
2023
£’000
76,019
2022
£’000
121,223
At 1 July 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee share-based compensation awards — issue of shares . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Employee share-based compensation awards — issue of shares . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
164,677
68
164,745
97
164,842
53
—
53
—
53
Number of shares
(thousands)
Ordinary shares
£’000
The Company has two classes of ordinary shares outstanding: Class A ordinary shares and Class B ordinary shares, each with a par
value of $0.0005 per share. The rights of the holders of Class A ordinary shares and Class B ordinary shares are identical, except with
respect to voting and conversion. Each Class A ordinary share is entitled to one vote per share and is not convertible into any other
shares. Each Class B ordinary share is entitled to 10 votes per share and is convertible into one Class A ordinary share at any time. In
addition, Class B ordinary shares will automatically convert into Class A ordinary shares upon certain transfers and other events,
including upon the date when holders of all Class B ordinary shares cease to hold Class B ordinary shares representing, in the aggregate,
at least 10% of the total number of Class A and Class B ordinary shares outstanding. For special resolutions (which are required for
certain important matters including mergers and changes to the Company’s governing documents), which require the vote of two-thirds
of the votes cast, at any time that Class B ordinary shares remain outstanding, the voting power permitted to be exercised by the holders
of the Class B ordinary shares will be weighted such that the Class B ordinary shares shall represent, in the aggregate, 67% of the voting
power of all shareholders. All shares issued by the Company are fully paid.
As of 30 June 2023, the Company’s issued share capital comprised 54,634,231 (2022: 54,537,360) Class A ordinary shares and
110,207,613 (2022: 110,207,613) Class B ordinary shares. During the year ended 30 June 2022, 9,500,000 Class B ordinary shares were
converted into an equivalent number of Class A ordinary shares. 1,682,896 Class A ordinary shares are currently held in treasury.
Distributable reserves have been reduced by £21,305,000, being the consideration paid for these shares. See Note 23.
23 Treasury shares
At 30 June 2023 and 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,683)
Number of shares
(thousands)
£’000
(21,305)
F-41
Notes to the consolidated financial statements (continued)
24 Trade and other payables
2023
£’000
2022
£’000
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Social security and other taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: non-current portion
Trade payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
302,708
12,039
62,271
20,595
397,613
160,649
492
161,141
236,472
192,863
18,982
89,016
22,073
322,934
101,301
1,046
102,347
220,587
(i) Accounting policy
Trade and other payables are liabilities for goods and services provided to the Group prior to the end of the financial year which are
unpaid. They are recognized initially at their fair value and subsequently measured at amortized cost using the effective interest method.
They are classified as current liabilities if payment is due within one year or less. If not they are presented as non-current liabilities.
(ii) Amounts included in trade payables
Trade payables include transfer fees and other associated costs in relation to the acquisition of registrations of £276,626,000 (2022:
£181,545,000) of which £160,649,000 (2022: £101,301,000) is due after more than one year. Of the amount due after more than one
year, £80,256,000 (2022: £54,732,000) is expected to be paid between 1 and 2 years, and the balance of £80,393,000 (2022:
£46,569,000) is expected to be paid between 2 and 5 years.
(iii) Amounts included in accrued expenses
Accrued expenses include £1,632,000 (2022: £828,000) related to share-based payment transactions expected to be cash-settled.
(iv) Fair value of trade payables
Gross contractual trade payables pre discounting as at 30 June 2023 were £317,809,000 (2022: £196,396,000). The fair value of other
payables is not materially different to their carrying amount.
F-42
Notes to the consolidated financial statements (continued)
25 Borrowings
Senior secured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured term loan facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest on senior secured notes and revolving facilities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: non-current portion
Senior secured notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Secured term loan facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(i) Secured borrowings and assets pledged as security
2023
£’000
332,112
175,223
100,000
5,961
613,296
332,112
175,223
507,335
105,961
2022
£’000
347,173
183,192
100,000
5,757
636,122
347,173
183,192
530,365
105,757
The senior secured notes of £332,112,000 (2022: £347,173,000) is stated net of unamortized issue costs amounting to £2,113,000 (2022:
£2,591,000). The outstanding principal amount of the senior secured notes is $425,000,000 (2022: $425,000,000). The senior secured
notes have a fixed coupon rate of 3.79% per annum and interest is paid semi-annually. The senior secured notes mature on 25 June 2027.
The Group has the option to redeem the senior secured notes in part, in an amount not less than 5% of the aggregate principal amount
of the senior secured notes then outstanding, or in full, at any time at 100% of the principal amount plus a “make-whole” premium of
an amount equal to the discounted value (based on the US Treasury rate) of the remaining interest payments due on the senior secured
notes up to 25 June 2027.
The senior secured notes were issued by our wholly-owned subsidiary, Manchester United Football Club Limited, and are guaranteed
by Red Football Limited, Red Football Junior Limited, Manchester United Limited and MU Finance Limited and are secured against
substantially all of the assets of those entities and Manchester United Football Club Limited. These entities are all wholly-owned
subsidiaries of Manchester United plc.
The secured term loan facility of £175,223,000 (2022: £183,192,000) is stated net of unamortized issue costs amounting to £1,720,000
(2022: £1,979,000). The outstanding principal amount of the secured term loan facility is $225,000,000 (2022: $225,000,000). The
secured term loan facility attracts interest of the SOFR plus an applicable margin of between 1.25% and 1.75% per annum and interest
is paid monthly. The remaining balance of the secured term loan facility is repayable on 26 August 2029, although the Group has the
option to repay the secured term loan facility at any time before then.
The secured term loan facility was provided to our wholly-owned subsidiary, Manchester United Football Club Limited, and is
guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited, MU Finance Limited and Manchester
United Football Club Limited and is secured against substantially all of the assets of each of those entities. These entities are all
wholly- owned subsidiaries of Manchester United plc.
The Group also has £100,000,000 (2022: £100,000,000) in outstanding loans and £200,000,000 (2022: £200,000,000) in borrowing
capacity under our revolving facilities. £150,000,000 of the facilities terminate on 4 April 2025 and the remainder terminates on
25 June 2027.
F-43
Notes to the consolidated financial statements (continued)
25 Borrowings (continued)
(i) Secured borrowings and assets pledged as security (continued)
The revolving facilities are guaranteed by Red Football Limited, Red Football Junior Limited, Manchester United Limited, MU Finance
Limited and Manchester United Football Club Limited and secured against substantially all of the assets of those entities. These entities
are wholly-owned subsidiaries of Manchester United plc.
The Group’s revolving facilities, the secured term loan facility and the note purchase agreement governing the senior secured notes each
contain certain covenants, including a financial maintenance covenant that requires the Group to maintain a consolidated profit/loss for
the period before depreciation, amortization of, and profit on disposal of, registrations, exceptional items, net finance costs and tax
(“EBITDA”) of not less than £65 million for each 12 month testing period, as well as customary covenants, including (but not limited
to) restrictions on incurring additional indebtedness; paying dividends or making other distributions, repurchasing or redeeming our
capital stock or making other restricted payments; selling assets, including capital stock of restricted subsidiaries; entering into
agreements that restrict distributions of restricted subsidiaries; consolidating, merging, selling or otherwise disposing of all or
substantially all assets; entering into sale and leaseback transactions; entering into transactions with affiliates; and incurring liens.
(ii) Compliance with covenants
The Group has complied with all covenants under its revolving facilities, the secured term loan facility and the note purchase agreement
governing the senior secured notes during the 2023 and 2022 reporting period.
26 Provisions
At 1 July 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charged to profit or loss:
Reassessment of provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional provisions recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Charged to profit or loss:
Reassessment of provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional provisions recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: non-current portion
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1) Other provision
Other(1)
£’000
Tax(2)
£’000
722
4,080
421
—
1,143
(267)
—
876
93
783
1,259
6,162
11,501
264
298
12,063
—
12,063
Total
£’000
4,802
1,680
6,162
12,644
(3)
298
12,939
93
12,846
Other provision includes, amongst other items, make good provisions as the Group is required to restore the leased premises of its office
spaces to their original condition at the end of the respective lease terms. A provision has been recognized based upon the estimated
expenditure required to remove any leasehold improvements. The remaining term on such leased properties is between 9 months and
10 years.
(2) Tax provision
Provision in respect of player related tax matters. The timing of cash outflows is by its nature uncertain but it is management’s best
estimate that these will be made within the next 12 months.
F-44
Notes to the consolidated financial statements (continued)
27 Cash flow information
27.1 Cash generated from operations
Loss before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments for:
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Profit on disposal of intangible assets . . . . . . . . . . . . . . . . . . . .
Net finance costs/(income) . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash employee benefit expense - equity-settled share-
based payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange losses on operating activities . . . . . . . . . . . .
Reclassified from hedging reserve . . . . . . . . . . . . . . . . . . . . . .
Changes in working capital:
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract assets – accrued revenue . . . . . . . . . . . . . . . . . . . . . . .
Trade receivables(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract liabilities – deferred revenue . . . . . . . . . . . . . . . . . . .
Trade and other payables(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash generated from operations . . . . . . . . . . . . . . . . . . . . . .
Note
13, 14, 15
16
8
9
28
2023
£’000
(32,574)
13,848
172,684
(20,424)
21,394
1,753
2,989
267
(965)
(1,704)
(7,093)
24,433
(8,359)
(6,261)
(31,139)
8
128,857
2022
£’000
(149,623)
14,314
151,462
(21,935)
62,239
198
50
(672)
(120)
(8,825)
4,305
(520)
(1,109)
41,618
22,480
7,842
121,704
2021
£’000
(24,027)
14,959
124,398
(7,381)
(12,899)
2,085
874
2,239
106
(282)
5,422
71,695
(221)
(49,407)
5,415
4,802
137,778
(1) These amounts exclude non-cash movements and movements in respect of items reported elsewhere in the consolidated statement
of cash flows, primarily in investing activities (where the timing of acquisitions and disposals and related cash flows can differ),
resulting in:
•
•
a decrease in changes to trade receivables of £1,064,000 (2022: increase of £7,673,000; 2021: decrease of £17,210,000); and
an increase in changes to trade and other payables of £105,818,000 (2022: increase of £40,276,000; 2021: decrease of
£12,652,000).
27.2 Net debt reconciliation
Net debt is defined as non-current and current borrowings minus cash and cash equivalents. Net debt is a financial performance indicator
that is used by the Group’s management to monitor liquidity risk. The Group believes that net debt is meaningful for investors as it
provides a clear overview of the net indebtedness position of the Group and is used by the Chief Operating Decision Maker in managing
the business.
F-45
Notes to the consolidated financial statements (continued)
27 Cash flow information (continued)
27.2 Net debt reconciliation (continued)
The following tables provide an analysis of net debt and the movements in net debt for each of the periods presented.
Net debt at 1 July 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net debt at 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other changes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net debt at 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current Current
borrowings
£’000
465,049
borrowings
£’000
65,187
— 40,000
570
105,757
— (30,464)
30,668
507,335 105,961
65,316
530,365
(23,030)
Cash and cash
equivalents
£’000
(110,658)
(7,980)
(2,585)
(121,223)
46,343
(1,139)
Total
£’000
419,578
32,020
63,301
514,899
15,879
6,499
(76,019) 537,277
Other changes largely comprise foreign exchange gains or losses arising on re-translation of the US dollar denominated secured term
loan facility and senior secured notes, incurrence and amortization of debt issue costs and the movement on accrued interest on senior
secured notes (which will be presented as operating cash flows in the statement of cash flows when paid), partially offset by foreign
exchange gain or losses arising on translation of foreign currency denominated cash and cash equivalents.
28 Share-based payments
The Company operates a share-based award plan, the 2012 Equity Incentive Award Plan (the “Equity Plan”), established in 2012. Under
the Equity Plan, 16,000,000 Class A ordinary shares have initially been reserved for issuance pursuant to a variety of share-based awards,
including share options, share appreciation rights, or SARs, restricted share awards, restricted share unit awards, deferred share awards,
deferred share unit awards, dividend equivalent awards, share payment awards and other share-based awards. Of these reserved shares,
14,679,924 remain available for issuance.
Certain directors, members of executive management and selected employees have been awarded Class A ordinary shares, pursuant to
the Equity Plan. These shares are subject to varying vesting schedules over multi-year periods. Employees are not entitled to dividends
until the awards vest. The fair value of these shares was the quoted market price on the date of award, adjusted where applicable for
expected dividends i.e. the fair value of the awards was reduced. It is assumed that semi-annual dividends will be paid for the foreseeable
future. The Company may choose whether to settle the awards wholly in shares or reduce the number of shares awarded by a value equal
to the recipient’s liability to any income tax and social security contributions that would arise if all the shares due to vest had vested.
Accordingly, the awards may be either equity-settled or cash-settled.
Movements in the number of share awards outstanding and therefore potentially issuable as new shares are as follows:
Number of Class A ordinary shares
At 1 July 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Awarded . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross award
368,434
195,339
(181,694)
382,079
Net settlement (post tax)
192,051
108,298
(96,871)
203,478
The fair value of the shares awarded during the year was $23.85 (£18.75) (2022: $10.59 (£8.72)) per share. Awards made in the year
ended 30 June 2023 were approved by the Remuneration Committee subsequent to the year-end date.
For the year ended 30 June 2023, the Group recognized total expenses related to equity-settled share-based payment transactions of
£1,753,000 (2022: £198,000; 2021: £1,386,000) and total expenses related to cash-settled share-based payment transactions of
£1,632,000 (2022: £828,000; 2021: £616,000).
F-46
Notes to the consolidated financial statements (continued)
29 Pension arrangements
29.1 Defined benefit scheme
The Group participates in the Football League Pension and Life Assurance Scheme (‘the Scheme’). The Scheme is a funded multi-
employer defined benefit scheme where members may have periods of service attributable to several participating employers. The Group
is unable to identify its share of the assets and liabilities of the Scheme and therefore accounts for its contributions as if they were paid
to a defined contribution scheme. The Group has received confirmation that the assets and liabilities of the Scheme cannot be split
between the participating employers. The Group is advised only of the additional contributions it is required to pay to settle the deficit.
These contributions could increase in the future if one or more of the participating employers exits the Scheme.
The last triennial actuarial valuation of the Scheme was carried out at 31 August 2020 where the total deficit on the ongoing valuation
basis was £27.5 million. The accrual of benefits ceased within the Scheme on 31 August 1999, therefore there are no contributions
relating to the current accrual. The Group pays monthly contributions based on a notional split of the total expenses and deficit
contributions of the Scheme.
The Group currently pays total contributions of £555,000 per annum and this amount will increase by 5% per annum from September
2023. Based on the actuarial valuation assumptions, this will be sufficient to pay off the deficit by 30 April 2025.
As of 30 June 2023, the present value of the Group’s outstanding contributions (i.e. its future liability) is £1,058,000 (2022: £1,602,000).
This amounts to £567,000 (2022: £556,000) due within one year and £491,000 (2022: £1,046,000) due after more than one year and is
included within other payables.
A charge of £865,000 was made to the statement of profit or loss in the year ended 30 June 2022 representing the present value of the
additional contributions the Group is expected to pay to remedy the revised deficit of the Scheme. There was no such charge in the year
ended 30 June 2023.
The funding objective of the Trustees of the Scheme is to have sufficient assets to meet the Technical Provisions of the Scheme. In order
to remove the deficit revealed at the previous actuarial valuation (dated 31 August 2020), deficit contributions are payable by all
participating clubs. Payments are made in accordance with a pension contribution schedule. As the Scheme is closed to accrual, there
are no additional costs associated with the accruing of members’ future benefits. In the case of a club being relegated from the Football
League and being unable to settle its debt then the remaining clubs may, in exceptional circumstances, have to share the deficit.
Upon the wind-up of the Scheme with a surplus, any surplus will be used to augment benefits. Under the more likely scenario of there
being a deficit, this will be split amongst the clubs in line with their contribution schedule. Should an individual club choose to leave
the Scheme, they would be required to pay their share of the deficit based on a proxy buyout basis (i.e. valuing the benefits on a basis
consistent with buying out the benefits with an insurance company).
29.2 Defined contribution schemes
Contributions made to defined contribution pension arrangements are charged to the statement of profit or loss in the period in which
they become payable and for the year ended 30 June 2023 amounted to £4,480,000 (2022: £3,731,000; 2021: £3,362,000). As at 30 June
2023, contributions of £659,000 (2022: £532,000) due in respect of the current reporting period had not been paid over to the pension
schemes.
The assets of all pension schemes to which the Group contributes are held separately from the Group in independently administered
funds.
F-47
Notes to the consolidated financial statements (continued)
30 Financial risk management
30.1 Financial risk factors
This note explains the Group’s exposure to financial risks and how those risks could affect the Group’s future financial performance.
The Group’s overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential
adverse effects on the Group’s financial performance. The Group uses derivative financial instruments to hedge certain risk exposures.
The policy for each financial risk is described in more detail below.
a) Market risk
(i) Foreign exchange risk
The Group is exposed to the following foreign exchange risks:
• Significant revenue received in Euros primarily as a result of participation in UEFA club competitions. During the year ended
30 June 2023 the Group recognized a total of €32.9 million of revenue denominated in Euros (2022: €79.6 million; 2021:
€84.1 million). The Group ordinarily seeks to hedge the majority of the foreign exchange risk of this revenue either by using
contracted future foreign exchange expenses (including player transfer fee commitments) or by placing forward contracts, at
the point at which it becomes reasonably certain that it will receive the revenue.
• Significant amount of commercial revenue denominated in US dollars. During the year ended 30 June 2023 the Group
recognized a total of $98.0 million of revenue denominated in US dollars (2022: $106.1 million; 2021: $59.6 million). The
foreign exchange risk on these US dollar revenues is hedged to the extent possible (see Note 30.2 below).
• Risks arising from the US dollar denominated secured term loan facility and senior secured notes (see Note 25). At 30 June
2023 the secured term loan facility and senior secured notes included principal amounts of $650.0 million (2022:
$650.0 million) denominated in US dollars. The foreign exchange risk on these US dollar borrowings (net of the Group’s US
dollar cash balances) is hedged to the extent possible (see Note 30.2 below). Interest is paid on these borrowings in US dollars.
Foreign exchange gains or losses arising on re-translation of our unhedged US dollar borrowings are recognized in the statement
of profit or loss immediately and are subject to UK Corporation tax. From time to time, we may use foreign currency options
to manage the unfavorable impact that foreign exchange volatility may have on our cash flows.
• Payments and receipts of transfer fees may also give rise to foreign exchange exposures. Due to the nature of player transfers
the Group may not always be able to predict such cash flows until the transfer has taken place. Where possible and depending
on the payment profile of transfer fees payable and receivable the Group will seek to hedge future payments and receipts at the
point it becomes reasonably certain that the payments will be made or the income will be received. When hedging income to
be received, the Group also takes account of the credit risk of the counterparty.
• Payments of operating expenses may also give rise to foreign exchange exposures. We seek to hedge future payments either
by using future foreign exchange revenue or by placing forward contracts.
It is the policy of the Group to enter into forward foreign exchange contracts to cover specific foreign exchange payments and receipts.
The following table details the forward foreign exchange contracts outstanding at the reporting date:
Buy Euro . . . . . . . . . . . . . . . .
Average
exchange
rate
1.149 (170,817) (148,709)
Foreign
currency
€’000
value
£’000
Notional
2023
Fair
value
£’000
(2,112)
Average
exchange
rate
1.1675
Foreign
currency
€’000
2022
Notional
value
£’000
Fair
value
£’000
(86,262) (73,885)
234
F-48
Notes to the consolidated financial statements (continued)
30 Financial risk management (continued)
30.1 Financial risk factors (continued)
a) Market risk (continued)
(i) Foreign exchange risk (continued)
The Group also has a number of embedded foreign exchange derivatives in host Commercial revenue contracts. These are recognized
separately in the financial statements at fair value since they are not closely related to the host contract. As of 30 June 2023, the fair
value of such derivatives was an asset of £11,258,000 and a liability of £64,000 (2022: asset of £20,286,000 and liability of £nil).
Further, we are exposed to cash flow risk on fluctuations in foreign exchange rates. Foreign exchange gains or losses arising on re-
translation of our unhedged US dollar borrowings are recognized in the statement of profit or loss immediately and are subject to UK
Corporation tax. From time to time, we may use foreign currency options to manage the unfavorable impact foreign exchange volatility
may have on our cash flows.
The Group’s exposure to material foreign currency risk at the end of the reporting period, expressed in pounds sterling, was as follows:
Contract assets — accrued revenue . . . . . . . . . . . . . . . . . . . . . .
Trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Trade and other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative financial liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .
Sensitivity
2023
2022
Euro
£’000
3,099
8,801
22,905
—
(150,288)
—
—
(115,483)
US Dollar
£’000
499
3,730
45,914
11,258
(3,057)
(512,788)
(64)
(454,508)
Euro
£’000
1,890
28,832
49,277
—
(120,994)
—
—
(40,995)
US Dollar
£’000
250
15,575
32,460
2,458
(149)
(536,038)
—
(485,444)
As shown in the table above, the Group is primarily exposed to changes in Euro/GBP and USD/GBP exchange rates. The sensitivity of
equity and post-tax profit as at 30 June 2023 was as follows:
•
•
•
•
if pounds sterling had strengthened by 10% against the Euro, with all other variables held constant, equity and post-tax profit
for the year would have been £8.9 million higher (2022: £3.0 million higher).
if pounds sterling had weakened by 10% against the Euro, with all other variables held constant, equity and post-tax profit for
the year would have been £10.9 million lower (2022: £3.7 million lower).
if pounds sterling had strengthened by 10% against the US dollar, with all other variables held constant, equity and post-tax
profit for the year would have been £35.0 million higher (2022: £35.7 million higher).
if pounds sterling had weakened by 10% against the US dollar, with all other variables held constant, equity and post-tax profit
for the year would have been £42.8 million lower (2022: £43.7 million lower).
F-49
Notes to the consolidated financial statements (continued)
30 Financial risk management (continued)
30.1 Financial risk factors (continued)
a) Market risk (continued)
(ii) Cash flow and fair value interest rate risk
The Group has no significant interest bearing assets other than cash on deposit which attracts interest at a small margin above UK base
rates.
The Group’s interest rate risk arises from its borrowings. Borrowings issued at variable interest rates expose the Group to cash flow
interest rate risk. Borrowings issued at fixed rates expose the Group to fair value interest rate risk. The Group’s borrowings are
denominated in US dollars and pounds sterling. Full details of the Group’s borrowings and associated interest rates can be found in Note
25.
The Group manages its cash flow interest rate risk where considered appropriate using interest rate swaps. Such interest rate swaps have
the economic effect of converting a portion of variable rate borrowings from floating rates to fixed rates. The impact on equity and post-
tax profit of a 1.0% shift in interest rates would not be material to any periods presented. Details of the interest rate swaps committed to
at the reporting date are provided in Note 30.2 below.
b) Credit risk
Credit risk is managed on a Group basis and arises from contract assets, trade receivables, other receivables, favorable derivative
financial instruments, and cash and cash equivalents.
The Group applies the IFRS 9 simplified approach to measuring expected credit losses which uses a lifetime expected provision for
impairment for all trade receivables, other receivables and contract assets. To measure the expected credit losses, trade receivables, other
receivables and contract assets have been grouped based on shared risk characteristics and the days past due. Contract assets relate to
unbilled revenue and have substantially the same risk characteristics as the trade receivables for the same types of contracts.
Gross trade receivables can be analysed by due date and whether or not impaired as follows:
Neither past due nor impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Past due, not impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Not past due, impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Past due, impaired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross trade receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
49,390
4,080
4,296
11,963
69,729
2022
£’000
64,434
14,533
110
12,130
91,207
A substantial majority of the Group’s Broadcasting revenue is derived from media contracts negotiated by the Premier League and
UEFA with media distributors, and although the Premier League obtains guarantees to support certain of its media contracts, typically
in the form of letters of credit issued by commercial banks, it remains the Group’s single largest credit exposure. The Group derives
commercial and sponsorship revenue from certain corporate sponsors, including global, regional, mobile, media and supplier sponsors
in respect of which the Group may manage its credit risk by seeking advance payments, instalments and/or bank guarantees where
appropriate. The substantial majority of this revenue is derived from a limited number of sources. The Group is also exposed to other
football clubs globally for the payment of transfer fees on players. Depending on the transaction, some of these fees are paid to the
Group in instalments. The Group tries to manage its credit risk with respect to those clubs by requiring payments in advance or, in the
case of payments on instalment, requiring bank guarantees on such payments in certain circumstances. However, the Group cannot
ensure these efforts will eliminate its credit exposure to other clubs. A change in credit quality at one of the media broadcasters for the
Premier League or UEFA, one of the Group’s sponsors or a club to whom the Group has sold a player can increase the risk that such
counterparty is unable or unwilling to pay amounts owed to the Group. Derivative financial instruments and cash and cash equivalents
are placed with counterparties with an investment grade Moody’s rating.
F-50
Notes to the consolidated financial statements (continued)
30 Financial risk management (continued)
30.1 Financial risk factors (continued)
b) Credit risk (continued)
Credit terms offered by the Group vary depending on the type of sale. For seasonal match day facilities and sponsorship contracts,
payment is usually required in advance of the season to which the sale relates. For other sales the credit terms typically range from
14 - 30 days, although specific agreements may be negotiated in individual contracts with terms beyond 30 days. For player transfer
activities, credit terms are determined on a contract by contract basis. Of the net total trade receivable balance of £53,470,000
(2022: £78,967,000), £42,309,000 (2022: £50,418,000) relates to amounts receivable from various other football clubs in relation to
player trading.
Management considers that, based on historical information about default rates, the current strength of relationships (a number of which
are recurring long term relationships), and forward-looking information, the credit quality of trade receivables and other receivables that
are neither past due nor impaired, and for contract assets, is good. Trade receivables that are past due but not impaired relate to
independent customers for whom there is no recent history of default. Accordingly, the identified provision for impairment for these
receivables was immaterial. The identified provision for impairment of trade receivables that are past due and impaired is 100%.
The closing provision for impairment of trade receivables as of 30 June 2023 reconciles to the opening provision for impairment as
follows:
Provision as of 1 July . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Decrease)/increase in provision recognized in profit or loss during the year . . . . . . . . . . . . . . . . . . . . . .
Unused amount reversed – cash received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables written off during the year as uncollectible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Receivables offset against contract liabilities - deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange gains on retranslation recognized in profit or loss during the year. . . . . . . . . . . . . . . .
Provision as of 30 June . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
12,240
(72)
(535)
(127)
4,724
29
16,259
2022
£’000
4,971
2,277
(93)
(764)
5,842
7
12,240
Trade receivables and contact assets are written off when there is no reasonable expectation of recovery. The creation and release of
provision for impaired receivables have been included in ‘other operating expenses’ in the statement of profit or loss.
While other receivables, favorable derivative financial instruments, and cash and cash equivalents are also subject to the impairment
requirements of IFRS 9, the identified provision for impairment on these items was immaterial.
c) Liquidity risk
The Group’s policy is to maintain a balance of continuity of funding and flexibility through the use of secured term loan facilities, senior
secured notes and other borrowings as applicable. The annual cash flow is cyclical in nature with a significant portion of cash inflows
ordinarily being received prior to the start of the playing season. Ultimate responsibility for liquidity risk management rests with the
executive directors of Manchester United plc. The directors use management information tools including budgets and cash flow forecasts
to constantly monitor and manage current and future liquidity.
F-51
Notes to the consolidated financial statements (continued)
30 Financial risk management (continued)
30.1 Financial risk factors (continued)
c) Liquidity risk (continued)
Cash flow forecasting is performed on a regular basis which includes rolling forecasts of the Group’s liquidity requirements to ensure
that the Group has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing
facilities at all times so that the Group does not breach borrowing limits or covenants on any of its borrowing facilities. The Group’s
borrowing facilities are described in Note 25. Financing facilities have been agreed at appropriate levels having regard to the Group’s
operating cash flows and future development plans.
Surplus cash held by the operating entities over and above that required for working capital management are invested by Group finance
in interest bearing current accounts or money market deposits. As of 30 June 2023, the Group held cash and cash equivalents of
£76,019,000 (2022: £121,223,000).
The table below analyses the Group’s non-derivative financial liabilities into relevant maturity groupings based on the remaining period
at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows
including interest and therefore differs from the carrying amounts in the consolidated balance sheet.
Trade and other payables excluding social security and other taxes(1) . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-trading derivative financial instruments(2):
Cash outflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less than 1
year
£’000
216,555
121,835
1,965
340,355
Between 1 Between 2
and 5 years
and 2 years
£’000
£’000
90,720
84,851
394,092
24,883
2,839
1,142
487,651
110,876
Over 5 years
£’000
—
190,177
7,700
197,877
847
(4,172)
337,030
531
(18)
111,389
865
(113)
488,404
—
—
197,877
Trade and other payables excluding social security and other taxes(1) . . . . . . . . . . .
Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-trading derivative financial instruments(2):
Cash inflow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
At 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
198,693
120,091
1,673
320,457
56,418
19,660
514
76,592
49,294
57,979
248
107,521
—
552,422
3,543
555,965
(1,294)
319,163
(1,336)
75,256
(63)
107,458
—
555,965
(1) Social security and other taxes are excluded from trade and other payables balance, as this analysis is required only for financial
instruments.
(2) Non-trading derivatives are included at their fair value at the reporting date.
F-52
Notes to the consolidated financial statements (continued)
30 Financial risk management (continued)
30.2 Hedging activities
The Group uses derivative financial instruments to hedge certain exposures, and has designated certain derivatives as hedges of cash
flows (cash flow hedge).
The Group hedges the foreign exchange risk on contracted future US dollar revenues whenever possible using the Group’s US dollar
net borrowings as the hedging instrument. The foreign exchange gains or losses arising on re-translation of the Group’s US dollar net
borrowings used in the hedge are initially recognized in other comprehensive income, rather than being recognized in the statement of
profit or loss immediately. Amounts previously recognized in other comprehensive income and accumulated in the hedging reserve are
subsequently reclassified into the statement of profit or loss in the same accounting period, and within the same statement of profit or
loss line (i.e. commercial revenue), as the underlying future US dollar revenues, which given the varying lengths of the commercial
revenue contracts will be between July 2023 to June 2025. The foreign exchange gains or losses arising on re-translation of the Group’s
unhedged US dollar borrowings are recognized in the statement of profit or loss immediately (within net finance income/costs). The
table below details the net borrowings being hedged at the reporting date:
USD borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hedged USD cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net USD debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Hedged future USD revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unhedged USD borrowings(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Closing exchange rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
$’000
650,000
(57,500)
592,500
(52,000)
540,500
1.2716
2022
$’000
650,000
(37,000)
613,000
(22,800)
590,200
1.2151
(1) A further portion of the profit and loss exposure (within net finance income/costs) on unhedged USD borrowings is naturally offset
by the fair value of foreign exchange based embedded derivatives in host Commercial revenue contracts.
The Group hedges its cash flow interest rate risk where considered appropriate using interest rate swaps. Such interest rate swaps have
the economic effect of converting a portion of variable rate borrowings from floating rates to fixed rates. The effective portion of changes
in the fair value of the interest rate swap is initially recognized in other comprehensive income, rather than being recognized in the
statement of profit or loss immediately. Amounts previously recognized in other comprehensive income and accumulated in the hedging
reserve are subsequently reclassified into the statement of profit or loss in the same accounting period, and within the same statement of
profit or loss line (i.e. finance costs), as the underlying interest payments, which given the term of the swap will be between July 2023
to June 2024. The following table details the interest rate swaps at the reporting date that are used to hedge borrowings:
150,000
Current hedged principal value of loan outstanding ($‘000) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 month $ SOFR 1 month $ LIBOR
Rate paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Fixed 1.9215%
Fixed 2.032%
Expiry date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30 June 2024
30 June 2024
150,000
2023
2022
As of 30 June 2023, the fair value of the above interest rate swaps was an asset of £4,173,000 (2022: asset of £2,458,000).
The Group also ordinarily seeks to hedge the majority of the foreign exchange risk on revenue arising as a result of participation in
UEFA club competitions, either by using contracted future foreign exchange expenses (including player transfer fee commitments) or
by placing forward foreign exchange contracts, at the point at which it becomes reasonably certain that it will receive the revenue. The
Group also seeks to hedge the foreign exchange risk on other contracted future foreign exchange expenses using available foreign
exchange cash balances and forward foreign exchange contracts.
F-53
Notes to the consolidated financial statements (continued)
30 Financial risk management (continued)
30.2 Hedging activities (continued)
Details of movements on the hedging reserve are as follows:
Balance at 1 July 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences on hedged foreign exchange risks. . . . . . . . . . .
Reclassified to profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax relating to above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Movement recognized in other comprehensive income. . . . . . . . . . . .
Balance at 30 June 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences on hedged foreign exchange risks. . . . . . . . . . .
Reclassified to profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax relating to above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Movement recognized in other comprehensive income. . . . . . . . . . . .
Reclassified . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange differences on hedged foreign exchange risks. . . . . . . . . . .
Reclassified to profit or loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax relating to above . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Movement recognized in other comprehensive income. . . . . . . . . . . .
Balance at 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Future US
dollar
revenues
£’000
(17,941)
4,325
14,956
Interest
rate swap Other
£’000
£’000
Total,
before tax
£’000
Tax
£’000
Total,
after tax
(9,136)
— 4,015
—
—
4,015
19,281
(5,121)
1,340
—
(1,733)
—
(770)
— 7,579
—
—
7,579
(2,503)
—
(1,163)
1,004
287
— (2,490)
— 1,892
—
—
(598)
(77)
300
(228)
—
—
72
— 7,525
7,520
— 1,084
(20)
—
—
— 1,715
—
—
—
1,064
1,715
1,291
8,584
4,173
128
521 (26,556)
1,835
16,848
4,015
—
22,698
(3,858)
(1,433)
(998)
7,579
—
5,148
7,525
8,815
2,088
267
1,715
—
4,070
12,885
2,458
£’000
(32,565)
(6,009)
—
1,835
— 16,848
4,015
—
(569)
(569)
22,129
(569)
(10,436)
(6,578)
— (1,433)
(998)
—
—
7,579
(1,287)
(1,287)
3,861
(1,287)
7,525
—
950
(7,865)
2,088
—
267
—
—
1,715
(1,018)
(1,018)
3,052
(1,018)
4,002
(8,883)
Based on exchange rates existing as of 30 June 2023, a 10% appreciation of the UK pounds sterling compared to the US dollar would
have resulted in a credit to the hedging reserve in respect of future US dollar revenues of approximately £3,717,000 (2022: credit of
£1,706,000) before tax. Conversely, a 10% depreciation of the UK pounds sterling compared to the US dollar would have resulted in a
debit to the hedging reserve in respect of US dollar future revenues of approximately £4,543,000 (2022: debit of £2,085,000) before tax.
Summary of hedging reserve
The Group’s hedging reserve comprises of two separate hedging reserves, the cash flow hedge reserve and the cost of hedging reserve.
Details of balances in each reserve (net of tax) are shown below.
Cash flow hedge reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of hedging reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total hedging reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,815
1,187
4,002
950
—
950
At 30 June 2023 At 30 June 2022
£’000
£’000
F-54
Notes to the consolidated financial statements (continued)
30 Financial risk management (continued)
30.3 Capital risk management
The Group manages its capital to ensure that entities in the Group will be able to continue as going concerns while maximising the return
to shareholders through the optimisation of the debt and equity balance. Capital is calculated as “equity” as shown in the balance sheet
plus net debt. Net debt is calculated as total borrowings (including current and non-current borrowings as shown in the balance sheet)
less cash and cash equivalents and is used by management in monitoring the net indebtedness of the Group. A reconciliation of net debt
is shown in Note 27.2.
As of 30 June 2023, the Group had total borrowings of £613.3 million (2022: £636.1 million). As described in Note 25 above, the
Group’s revolving facilities, the secured term loan facility and the note purchase agreement governing the senior secured notes each
contain certain covenants that restrict the activities of Red Football Limited and its subsidiaries. As of 30 June 2023, the Group was in
compliance with all covenants under its revolving facilities, the secured term loan facility and the note purchase agreement governing
the senior secured notes.
31 Contingent liabilities and contingent assets
31.1 Contingent liabilities
The Group had contingent liabilities at 30 June 2023 in respect of:
(i) Transfer fees
Under the terms of certain contracts with other football clubs and agents in respect of player transfers, additional amounts, in excess of
the amounts included in the cost of registrations, would be payable by the Group if certain substantive performance conditions are met.
These excess amounts are only recognized within the cost of registrations when the Group considers that it is probable that the condition
related to the payment will be achieved. The maximum additional amounts that could be payable is £133,142,000 (2022: £112,372,000).
No material adjustment was required to the amounts included in the cost of registrations during the year (2022: no material adjustments)
and consequently there was no material impact on the amortization of registration charges in the statement of profit or loss (2022: no
material impact). As of 30 June 2023, the maximum amount payable by type of condition and category of player was:
Type of condition:
MUFC appearances/team success/new contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International appearances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First team
squad
£’000
Other
£’000
Total
£’000
71,998
10,141
31,925
114,064
17,359
1,719
—
19,078
89,357
11,860
31,925
133,142
As of 30 June 2022, the potential amount payable by type of condition and category of player was:
Type of condition:
MUFC appearances/team success/new contract . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
International appearances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First team
squad
£’000
58,462
10,158
31,987
100,607
Other
£’000
10,609
1,156
—
11,765
Total
£’000
69,071
11,314
31,987
112,372
F-55
Notes to the consolidated financial statements (continued)
31 Contingent liabilities and contingent assets (continued)
31.1 Contingent liabilities (continued)
(ii) Tax matters
We are currently in active discussions with UK tax authorities over a number of tax areas in relation to arrangements with players and
players’ representatives. It is possible that in the future, as a result of discussions between the Group and UK tax authorities, as well as
discussions UK tax authorities are holding with other stakeholders within the football industry, interpretations of applicable rules will
be challenged, which could result in liabilities in relation to these matters. The information usually required by IAS 37 ‘Provisions,
Contingent Liabilities and Contingent Assets’, is not disclosed on the grounds that it is not practicable to be disclosed.
(iii) Legal matters
While we are involved from time to time in various claims and lawsuits arising in the normal course of business, there are no pending
claims or legal proceedings to which the Group is a party which we expect to have a material effect on the Group’s financial position,
results of operations or cash flows.
31.2 Contingent assets
(i) Transfer fees
Under the terms of certain contracts with other football clubs in respect of player transfers, additional amounts would be payable to the
Group if certain specific performance conditions are met. In accordance with the recognition criteria for contingent assets, such amounts
are only disclosed by the Group when probable and recognized when virtually certain. As of 30 June 2023, the amount of such receipt
considered to be probable was £nil (2022: £nil).
32 Commitments
32.1 Capital commitments
As of 30 June 2023, the Group had contracted capital expenditure relating to property, plant and equipment amounting to £5,152,000
(2022: £1,185,000) and to other intangible assets amounting to £nil (2022: £1,476,000). These amounts are not recognized as liabilities.
32.2 Non-cancellable operating leases
(i) The group as lessor
The Group leases out its investment properties. The minimum rentals in relation to non-cancellable operating leases are receivable as
follows:
Within 1 year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Later than 1 year but not later than 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Later than 5 years . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
1,656
4,131
10,337
16,124
2022
£’000
1,734
3,423
10,665
15,822
F-56
Notes to the consolidated financial statements (continued)
33 Events occurring after the reporting period
33.1 Registrations
The playing registrations of certain footballers have been disposed of on a permanent or temporary basis, subsequent to 30 June 2023,
for total proceeds, net of associated costs, of £39,751,000. The associated net book value was £9,951,000. Also subsequent to 30 June
2023, solidarity contributions, training compensation, sell-on fees and contingent consideration totalling £140,000, became receivable
in respect of previous playing registration disposals.
Subsequent to 30 June 2023, the registrations of certain players were acquired or extended for a total consideration, including associated
costs, of £207,967,000. Payments are due within the next 5 years. Also, subsequent to 30 June 2023, sell-on fees and contingent
consideration totalling £1,363,000 became payable in respect of previous playing registration acquisitions.
33.2 Adidas contract extension
On 21 July 2023, the Group signed a 10-year extension to its agreement with adidas which began on 1 August 2015 and now terminates
on 30 June 2035. Further information on this is provided in Note 4.3(i) of these financial statements.
33.3 Revolving facilities
On 3 July 2023, a drawdown on the Group’s revolving facilities of £50.0 million was made. This comprised of £30.0 million under our
initial revolving facility with Bank of America and £20.0 million under our revolving facility with Santander.
On 3 August 2023, a further drawdown on the Group’s revolving facilities was made. This comprised of a £45.0 million drawdown
under our initial revolving facility with Bank of America and £5.0 million under our revolving facility with Santander. This took the
total drawdown as of 3 August 2023 to £200.0 million from available facilities of £300.0 million.
On 10 October 2023, a further drawdown on the Group’s revolving facilities was made. This comprised of a £35.0 million drawdown
under our initial revolving facility with Bank of America, a £12.5 million drawdown under our bilateral facility with Bank of America
and a £12.5 million drawdown under our revolving facility with Santander. This took the total drawdown as of 10 October 2023 to
£260.0 million from available facilities of £300.0 million.
33.4 Qualcomm front of shirt partnership agreement
On 12 September 2023, the Group signed an expanded agreement with Qualcomm Technologies, Inc. that will see the Snapdragon®
brand displayed on the front of the playing shirts of both our Men’s and Women’s teams, commencing from the start of the 2024/25
season. Amounts realised in relation to the signing of this agreement, which include charges relating to the changes to the existing
TeamViewer shirt sponsorship, will be recognized in the first quarter of the year ended 30 June 2024.
34 Related party transactions
Trusts and other entities controlled by six lineal descendants of Mr. Malcolm Glazer collectively own 4.37% (2022: 4.37%) of our issued
and outstanding Class A ordinary shares and all of our issued and outstanding Class B ordinary shares, representing 95.62% (2022:
95.62)% of the voting power of our outstanding capital stock.
F-57
Notes to the consolidated financial statements (continued)
35 Subsidiaries
The Group’s subsidiaries at 30 June 2023 are set out below. The proportion of ownership interest held equals the voting rights held by
the Group.
Principal activity
Name of entity
Red Football Finance Limited* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dormant company
Red Football Holdings Limited* . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holding company
Red Football Shareholder Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holding company
Red Football Joint Venture Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holding company
Red Football Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holding company
Red Football Junior Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holding company
Manchester United Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Holding company
Alderley Urban Investments Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manchester United Football Club Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manchester United Women’s Football Club Limited . . . . . . . . . . . . . . . . . . . . . . . . . . .
Manchester United Interactive Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dormant company
MU 099 Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dormant company
MU Commercial Holdings Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-trading company
MU Commercial Holdings Junior Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-trading company
MU Finance Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Non-trading company
MU RAML Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MUTV Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Media company
RAML USA LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Dormant company
Property investment
Professional football club
Professional football club
Retail and licensing company
% of ownership
interest
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
* Direct investment of Manchester United plc, others are held by subsidiary undertakings.
All of the above are incorporated and operate in England and Wales, with the exception of Red Football Finance Limited which is
incorporated and operates in the Cayman Islands and RAML USA LLC which is incorporated in the state of Delaware in the United
States. The registered office or principal executive office of all the above, with the exception of RAML USA LLC, is Sir Matt Busby
Way, Old Trafford, Manchester, M16 0RA, United Kingdom. The registered office of RAML USA LLC is Corporation Trust Centre,
1209 Orange Street, Wilmington, New Castle County, Delaware 19801, USA.
F-58
Notes to the consolidated financial statements (continued)
36 Additional information - Financial Statement Schedule I
Schedule I has been provided pursuant to the requirements of Securities and Exchange Commission (“SEC”) Regulation S-X Rule 12-
04(a), which require condensed financial information as to financial position, cash flows and results of operations of a parent company
as of the same dates and for the same periods for which audited consolidated financial statements have been presented, as the restricted
net assets of Manchester United plc’s consolidated subsidiaries as of 30 June 2023 exceeded the 25% threshold.
As of 30 June 2023, the Group had total borrowings of £613.3 million (2022: £636.1 million). As described in Note 25 above, the
Group’s revolving facilities, the secured term loan facility and the note purchase agreement governing the senior secured notes each
contain certain covenants that restrict the activities of Red Football Limited and its subsidiaries, including restricted payment covenants.
The restricted payment covenants allow dividends in certain circumstances, including to the extent dividends do not exceed 50% of the
cumulative consolidated net income of Red Football Limited and its restricted subsidiaries, provided there is no event of default and
Red Football Limited is able to meet the principal and interest payments on its debt under a fixed charge coverage test. As of 30 June
2023, the Group was in compliance with the restricted payment covenants and all other covenants under its revolving facilities, the
secured term loan facility and the note purchase agreement governing the senior secured notes.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with International
Financial Reporting Standards have been condensed or omitted. The footnote disclosures contain supplemental information only and,
as such, these statements should be read in conjunction with the notes to the accompanying consolidated financial statements.
The condensed financial information has been prepared using the same accounting policies as set out in the consolidated financial
statements, except that investments in subsidiaries are included at cost less any provision for impairment in value.
As of 30 June 2023, 2022 and 2021 there were no material contingencies, significant provisions of long-term obligations, mandatory
dividend or redemption requirements of redeemable stocks or guarantees of the Company, except for those which have been separately
disclosed in the consolidated financial statements, if any.
During the year ended 30 June 2023, cash dividends equivalent to $nil (2022: $0.27; 2021: $0.09) per share were declared and paid by
the Company. The pounds sterling equivalents were £nil (2022: £0.21; 2021: £0.07) per share.
Condensed statement of profit or loss of the Company
Operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income from shares in group undertakings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finance income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss)/profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Loss)/profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2023
£’000
(13,788)
—
113
(13,675)
—
(13,675)
Year ended 30 June
2022
£’000
(4,325)
33,553
124
29,352
(1)
29,351
2021
£’000
(4,253)
10,718
—
6,465
(1)
6,464
There were no items of other comprehensive loss or income in the years ended 30 June 2023, 2022 or 2021 and therefore no statement
of comprehensive income/(loss) has been presented.
F-59
Notes to the consolidated financial statements (continued)
36 Additional information - Financial Statement Schedule I (continued)
Condensed balance sheet of the Company
ASSETS
Non-current assets
Investment in subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
EQUITY AND LIABILITIES
Equity
Share capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Share premium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities
Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total equity and liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Condensed statement of changes in equity of the Company
Balance at 1 July 2020 . . . . . . . . . . . . . . . . . . . . . . . . .
Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income for the year . . . . . . . . .
Equity-settled share based payments . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at 30 June 2021 . . . . . . . . . . . . . . . . . . . . . . . .
Profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive income for the year . . . . . . . . .
Equity-settled share based payments . . . . . . . . . . . . . . .
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at 30 June 2022 . . . . . . . . . . . . . . . . . . . . . . . .
Loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total comprehensive loss for the year . . . . . . . . . . . .
Equity-settled share based payments . . . . . . . . . . . . . . .
Balance at 30 June 2023 . . . . . . . . . . . . . . . . . . . . . . . .
Share
premium
£’000
68,822
—
—
—
—
68,822
—
—
—
—
68,822
—
—
—
68,822
Treasury
shares
£’000
(21,305)
—
—
—
—
(21,305)
—
—
—
—
(21,305)
—
—
—
(21,305)
Share
capital
£’000
53
—
—
—
—
53
—
—
—
—
53
—
—
—
53
F-60
As of 30 June
2023
£’000
2022
£’000
319,265
319,265
90
715
805
320,070
53
68,822
(21,305)
246,187
293,757
26,313
26,313
320,070
Retained
earnings
£’000
264,282
6,464
6,464
2,085
(10,718)
262,113
29,351
29,351
198
(33,553)
258,109
(13,675)
(13,675)
1,753
246,187
319,265
319,265
1,047
131
1,178
320,443
53
68,822
(21,305)
258,109
305,679
14,764
14,764
320,443
Total equity
£’000
311,852
6,464
6,464
2,085
(10,718)
309,683
29,351
29,351
198
(33,553)
305,679
(13,675)
(13,675)
1,753
293,757
Notes to the consolidated financial statements (continued)
36 Additional information - Financial Statement Schedule I (continued)
Condensed statement of cash flows of the Company
2023
£’000
Year ended 30 June
2022
£’000
2021
£’000
Cash flows from operating activities
(Loss)/profit before income tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments for:
Non-cash employee benefit expense - equity-settled share-based payments . . . . . . . . . . . . . .
Foreign exchange losses/(gains) on operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in working capital:
Other receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tax paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash inflow from operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash flows from financing activities
Dividends paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash outflow from financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . .
Net increase/(decrease) in cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(13,675)
29,352
1,753
116
957
11,549
—
700
—
—
(116)
584
131
715
198
(35)
150
3,837
(1)
33,501
(33,553)
(33,553)
35
(17)
148
131
6,465
2,085
263
—
2,120
(1)
10,932
(10,718)
(10,718)
(263)
(49)
197
148
The following reconciliations are provided as additional information to satisfy the Schedule I SEC requirements for parent-only financial
information.
IFRS (loss)/profit reconciliation:
Parent only — IFRS (loss)/profit for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional loss if subsidiaries had been accounted for on the equity method of
2023
£’000
2022
£’000
2021
£’000
(13,675)
29,351
6,464
accounting as opposed to cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated IFRS loss for the year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(15,003)
(28,678)
(144,861)
(115,510)
(98,680)
(92,216)
IFRS equity reconciliation:
Parent only — IFRS equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional loss if subsidiaries had been accounted for on the equity method of
293,757
305,679
309,683
accounting as opposed to cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated — IFRS equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(189,807)
103,950
(178,171)
127,508
(37,171)
272,512
F-61
The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized
the undersigned to sign this annual report on its behalf.
SIGNATURES
Date: 27 October 2023
Manchester United plc
(Registrant)
/s/ Richard Arnold
By:
Name:Richard Arnold
Title: Chief Executive Officer
94