Man Utd pay price of failure

Manchester United today announced a surprising fall in pre-tax profits and admitted that failure in Europe last season will hit their financial performance over the next 12 months.

Despite posting a record operating profit of £58.3 million for the year ended 31 July, reinvesting the cash from the sale of David Beckham to Real Madrid in new players hit the club's profit level before tax.

It posted a pre-tax profit of £ 27.9 million, down from £39.3 million last year. The club also showed a slight drop in turnover as income fell to £169 million from £173 million.

United's £11m dip in pre tax profits was a direct result of player trading in the year. United spent £44m on new talent including Gabriel Heinze, Kleberson, Cristiano Ronaldo, Louis Saha and Alan Smith. The current figures don't include the £27m spent on Wayne Rooney in August and explain why United are predicting a difficult financial year ahead.

Last year United banked a net surplus on player trading, mostly from the sale of David Beckham to Real Madrid, worth £12.9m. But this year they made a £3.1m net loss on player trading. This also included writing off almost £2m on the sales of Fabian Barthez and Diego Forlan.

In a statement to the Stock Exchange this morning, chairman Sir Roy Gardner said: "Short-term results will be affected by a sharp drop in media revenues. Following the latest FAPL TV deals, revenue is expected to fall by around £8 million this year (21 per cent of total FAPL TV revenue for 2003-04) and then stay flat over the following two years.