Britain's Manchester United soccer club, acquired last year by US national Malcolm Glazer and his family, has presented its new owners with a 20% slump in profits - triggered by a fall in TV rights income.
The downturn reflects the club's relatively poor performance during the 2004-05 season when it finished third in the English Premier League. Fans the world over expect to see Man-U, as it is affectionately known, topping the table.
Even though the club is not the money-printing machine of old, many companies would be delighted to post operating profits before depreciation, amortisation and exceptional charges of £46 million ($82.07m; €66.86m) for the eleven months to June 31. This, however, is 20% below its year-on-year earnings of £58.3m.
Not good news for clan Glazer, who also own US National Football League team, the Tampa Bay Buccaneers. The family snatched Man-U in a highly leveraged £790m hostile takeover amid high-octane opposition both by fans and the UK media.
To fund their bid the Glazers borrowed £265m from J P Morgan, secured against the club's Old Trafford stadium and squad of players. Plus a further £275m via high-interest PIK (pay in kind) loans from US hedge funds that offer investors a 12% yield and squeeze a higher percentage from borrowers.
The PIKs are likewise secured against the Glazers' assets including Man-U and cannot be unloaded during year one.
When hyping their bid for the club, Glazer and his family made much of their plan to achieve a fifty per cent rise in club revenues over five years and a trebling of operating profits. But the club's latest figures suggest this is a distant dream.
Nonetheless, Man-U still trumpets itself as the globe's richest soccer club. A claim robustly refuted by Real Madrid of Spain.
Data sourced from Financial Times Online; additional content by WARC staff