(Bloomberg) -- Manchester United Plc., the world’s most valuable soccer team, forecast profit for 2018 below analyst estimates as higher player salaries eroded an increase in revenue following its return to the UEFA Champions League.
Broadcasting revenue for the first quarter rose 31 percent to 38.1 million pounds ($50.3 million), mainly as a result of participation in Europe’s elite competition. The qualification drove player salaries higher as employee benefits grew 12 percent over the prior year, the company said in a statement.
It maintained its forecast for adjusted Ebitda of 175 million to 185 million pounds for the fiscal year, compared with an average 184.6 million estimate of 5 analysts, according to data compiled by Bloomberg.
The English team returned to the UEFA Champions League this season after winning the second-tier Europa league in May, during manager Jose Mourinho’s first season at the club. The absence from the top continental competition was just its second in 21 years.
Manchester United’s net spend on players for 2017/18 currently stands at 95 million pounds, Chief Financial Officer Cliff Baty said on a call with analysts. That includes the 75 million pounds paid for Romelu Lukaku from Everton, a record price paid by an English club for a striker.
It was one of the six English clubs who recently attempted to negotiate a higher share of Premier League broadcasting rights. Executive Vice Chairman Ed Woodward attended a meeting of executives and owners on Thursday, during which a new three-season package of a minimum 190 games was agreed, and will be tendered for auction by year-end, according to a person familiar with the matter who asked not to be named discussing the private meeting.
Market expectations of Premier League broadcasting income should not be adjusted at this time, Baty said on the call. However, Champions League rights deals from the United Arab Emirates may lift broadcasting revenue further before the company’s next update in January, Baty said.
Manchester United shares were up 4 percent to $19.65 a share at 11:50 a.m. in New York, taking year-to-date gains to 39 percent. The share performance reflects increased investor interest in the company’s digital strategy, as well as the team’s improved on-field performance, JPMorgan & Chase Co. analyst Alexander Mees, who maintains an “Overweight” rating on the company, said ahead of the results.
Hedge fund ownership of Manchester United Plc shares doubled to 34.6 percent from 16.3 percent in the latest filing period, according to data compiled by Bloomberg. London-based Lindsell Train bought shares with a market value of $141 million in September.
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