INVESTOR PRESENTATION - Manchester United
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INVESTOR PRESENTATION
IMPORTANT DISCLOSURE
• This presentation contains estimates and forward-looking statements made pursuant to the safe harbour provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are based on our current expectations and estimates with respect to current and future events and trends which affect or may affect
our business operations. All statements that address future operating, financial or business performance or our strategies or expectations are forward-looking
statements.
In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,”
“intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible” and other comparable terminology. These statements are subject
to many risks, uncertainties and factors relating to our operations and business environment, which may cause our actual results to be materially different from any
future results, express or implied, by such statements. Among these factors are (1) our ability to maintain and enhance our brand and reputation; (2) our ability to attract
and retain key personnel, including players; (3) the performance and popularity of our first team; (4) our ability to properly manage our growth; (5) our ability to
maintain, train and build an effective international sales and marketing infrastructure; (6) the negotiation and pricing of key media contracts; (7) our ability to maintain
strong relationship with certain third parties; (8) our ability to deal with competition in Europe and internationally; (9) our ability to adequately protect our intellectual
property; and (10) the effectiveness of our digital media strategy. Additional information concerning these and other factors can be found in Manchester United plc’s
filings with the United States Securities and Exchange Commission.
• New risks and uncertainties arise from time to time, and it is impossible for us to predict these events or how they may affect us. It should be remembered that the price
of the Class A ordinary shares and any income from them can go down as well as up. We disclaim any intention or obligation to update or revise any forward-looking
statements, whether as a result of new information, future events and/or otherwise, except to the extent required by law.
• This presentation contains a discussion of EBITDA and Adjusted EBITDA, which are non-IFRS measures and are not uniformly or legally defined financial measures.
EBITDA is defined as profit/(loss) for the period from continuing operations before net finance costs, tax credit/(expense), depreciation, and amortization of players’
registrations, and Adjusted EBITDA is defined as EBITDA adjusted for profit on disposal of players’ registrations and operating expenses—exceptional items. Adjusted
EBITDA is included in this presentation because it is a measure of our operating performance and our management believes 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 have provided reconciliations of EBITDA and Adjusted EBITDA to the most directly comparable IFRS measures in the Appendix to this presentation.
EBITDA and Adjusted EBITDA should not be considered substitutes for comparable measures prepared in accordance with IFRS. EBITDA and Adjusted EBITDA, as
determined and measured by us, should also not be compared to similarly titled measures reported by other companies.
1
INVESTMENT HIGHLIGHTS
Sports content is Football is #1 Sport Global popularity Own/control our
‘must have’ and PL is #1 League equivalent only remaining businesses
growing MU is #1 Team to Olympics or which are all driven by
World Cup our global brand
2
CONTENT IS KING
CONTENT GENERATORS CONTENT BUYERS
SPORTS TRADITIONAL
VALUE
SELL
STUDIO DISRUPTORS/OTT
3 Indicates Private Companies
VALUE OF SPORTS CONTENT IS RISING
Current deals commanded significant premiums
% CAGR over previous rights deal
Tenor of new contract (yrs)
18.7%
12.2% 12.2%
10.3%
5.7%
NFL MLB NBA Premier League Champions League
(US Rights) (1)
8 8 9 6 3
4 Source: National Football League, Premier League, Major League Baseball,
National Basketball Association
(1) Based upon press articles
PREMIER LEAGUE IS THE NO.1 LEAGUE - TRULY GLOBAL
85% of the Premier League audiences are driven by international markets
15% 7%
24%
36%
64% FINAL
76%
85% 93%
Domestic International
5 Source: Repucom 2016, Futures Sport & Entertainment 2016, Reuters
MOST SUCCESSFUL TEAM IN THE MOST POPULAR LEAGUE
Premier League Club Trophies Won Year Broadcasting Value
(since 1992 – 1st Season of the Premier League) (yearly values £ billion) - 2017/18 season
2.7
12 20 3
FA Cups English European
3 League Titles Cups
5 1.3
1 1.1 1.1
0.8
7
13 8
1 1
5 3 3 3
Chelsea Arsenal Liverpool Manchester England Germany Spain Italy France
City
FAPL FA Cup UCL
6 Source: TV Sports Markets, ESPN, Reuters, SportsPro, Forbes
LARGEST GLOBAL FAN BASE
EUROPE
N. AMERICA 90m ASIA
34m 325m
S. AMERICA
MIDDLE EAST/AFRICA
37m 173m
659 million Manchester United followers worldwide
7 Source: Kantar Sport 2012
THE MOST WATCHED CLUB
19 of the ‘all-time top 20’ Premier League broadcasts feature Manchester United
The Oscars NBA Finals Finale Europa League Final
2018 2017/18 season 2017 2016/17
46.6m* 42.6m 16.5m 122.7m
*26.5m US audience multiplied by estimated global uplift of 76%.
8 Source: Futures Sport & Entertainment, Nielsen
158M CONNECTIONS ON SOCIAL MEDIA
FACEBOOK TWITTER SINA WEIBO
Over Over Over
73.3m 21.3m 9.3m
followers followers* followers
More followers than the NBA’s #MUFC most tweeted sports The No.1 Football Club on
top 4 teams combined hashtag ever Sina Weibo
INSTAGRAM LINE YOUTUBE
Over Over Over
25.2m 15.5m 1.3m
followers followers subscribers
Became the biggest Premier Became the site’s biggest football Became the fastest growing sports club
League club in 22 days club within 4 months channel to ever launch on Youtube
As at January 2019
9 * All language feedsOUR BUSINESS
BUSINESS OVERVIEW
LIVE GAMES VENUE SPONSORSHIP RETAIL, MERCHANDISING, DIGITAL MEDIA
APPAREL AND LICENSING
11
OWNED/CONTROLLEDMULTIFACETED BUSINESS MODEL
2008 2018
MATCHDAY
£110 million
18%
COMMERCIAL
£64 million COMMERCIAL
MATCHDAY 25% £276 million
£101 million 47%
40%
BROADCASTING
BROADCASTING £204 million
£91 million 35%
35%
£256m Revenue £590m Revenue
£81m EBITDA £177m EBITDA
12HIGH REVENUE VISIBILITY
Commercial
• £750m kit deal with adidas contracted out to 2025
• $559m shirt deal with Chevrolet contracted out to 2021
• Training kit deal with Aon contracted out to 2021
• Typically deals are 3-5yrs (with no playing performance clauses)
Broadcasting
• FAPL (Domestic & International) contracted out to 2019 with
ew shirt2.jpg
Domestic agreed for next three year cycle commencing 2019
• UCL contracted out to 2021
Matchday
• 63,000 of 76,000 seats are seasonally pre-sold
13LIVE GAMES
TRADITIONAL MEDIA
Increasing consumer and advertiser appetite for premium live content
Annual Broadcasting Contract Values
Premier League Domestic Premier League International Champions League (1)
£ million per annum £ million per annum ¤ million per annum
1,712 1,950
1,257
1,006 1,038 (2) 1,059
865
719
569 593
455
237
2008-10 2011-13 2014-16 2017-19 2008-10 2011-13 2014-16 2017-19 2010-12 2013-15 2016-18 2019-21
15 Source: Deloitte, FAPL, UEFA, TV Sports Markets, Press Reports
(1) Amount distributed to clubs participating in the competition
(2) Based upon guidance from FAPL. Average over three yearsVENUE
OUR MATCHDAY BUSINESS
74,879 2M >8,000 >220,000
SEAT STADIUM ANNUAL ATTENDANCE EXECUTIVE CLUB SEATS MEMBERSHIPS
99% OCCUPANCY FOR PREMIER LEAGUE GAMES SINCE 1998/1999
Ticket Allocation (in ‘000s)
Season Tickets 53
Executive Clubs (Suites & Box Seats) 8
Away Fans 3
Other (1) 4
Sub-total 70
Matchday VIP 2
Available for Official Members 4
Total 75
17 Source: European Football Statistics; Manchester United
(1) Includes supporter clubs, sponsors, etc.COMMERCIAL
SPONSORSHIP - NO.1 MARKETING PLATFORM
We enable our partners to amplify the marketing & growth of their businesses
Brand Affinity & Global Reach & Unique Access to Players & Marketing Support &
Association with Success Media Visibility Aon Training Complex/ Global Activations
Old Trafford
19COMMERCIAL
£ million
268 276 276
97 104 103
189 197
32
37
165 171 172 173
152
2014 2015 2016 2017 2018
Sponsorship Retail, Merchandising, Apparel & Product Licensing
20SEGMENTATION STRATEGY
TOURS Annual Value of Shirt Sponsorship
(£ million)
REGIONALS
GLOBALS 50
40
30
49.2
20
10 19.6
14.1
8.0
0
2000/06 2006/10 2010/14 2014/21
21RETAIL, MERCHANDISING, APPAREL & PRODUCT LICENSING
RETAIL, MERCHANDISING, APPAREL & PRODUCT LICENSING
adidas Owned/Controlled by Manchester United
£75m p.a. to 2025
CO-BRANDED PRODUCTS IN-STORE ECOMMERCE MONO BRANDED
LICENSING
23DIGITAL MEDIA
OUR DIGITAL MEDIA OPPORTUNITY
Bespoke Content
Highlights
Social Media
Platforms New Digital Media
App and Site
Sponsorship,
advertising & venue
MUTV App &
Connected TV
Platforms E-commerce
25COSTS
INDUSTRY UPDATE
UEFA Financial Fair Play (FFP) Aggregate European top division clubs Operating Profit
(¤ million)
- Break-even requirement in force 2013/14
FFP break-even
- Clubs should have no overdue payments rules come
into effect
- Enhanced reporting for clubs with a net spend of greater
than €100m in a window 1,400
799 832
- Consistency in applied accounting principles 727
339
- Fair market value of sponsorship agreements
(382) (112)
-112
-382
2011 2012 2013 2014 2015 2016 2017
27 Source: ECA September 2017PLAYER EXPENDITURE & ACCOUNTING
• Blend of youth & experience Last 5 years net player capital expenditure (£ million)
- Approximately one quarter of our first team
members from academy
- Carried on the balance sheet at zero book value
• Recent acquisitions
- Summer 2017 – 4 players
- January 2018 – 1 player 140
- Summer 2018 – 3 players 124
100 106
97
79
• Player registrations
- Transfer fee booked on balance sheet
- Transfer fee amortised over life of contract
A
A
A
A
A
E
- Remaining book value amortised over length of
/19
/14
/15
/16
/17
/18
18
16
13
14
15
17
new contract when signed
28TOTAL WAGES
£ million
50%
45%
45%
50%
51%
296
263
215 233
203
2014 2015 2016 2017 2018
Total Wages as % of Total Revenue
29ADJUSTED EBITDA
£ million
Europa
League Win
No European 34%
37%
Football 30%
30% 30%
192 200
177
130 120
2014 2015 2016 2017 2018
Adjusted EBITDA margin
30 Note: Adjusted EBITDA is adjusted for profit on disposal of players’ registrations and exceptional operating expensesAPPENDIX
TOTAL REVENUE
£ million
= 6. 4%
14- ’ 1 8
A G R ’
C
581 590
No European 515
Football
433
395 276 276
268
189
197
194 204
136 140
108
108 91 107 111 110
2014 2015 2016 2017 2018
Matchday Broadcasting Commercial
32 Note: 2015 was impacted from lack of European footballTHE IMPORTANCE OF COMMERCIAL REVENUES
2016/17 Commercial Revenue 2016/17 Adjusted EBITDA
47% 34%
£275m £200m
31% 24%
£117m £84m
16/17 Top 7 16/17 Top 7
Average excluding MU Average excluding MU
Commercial Revenue as % of Total Revenue Adjusted EBITDA Margin
33 Source: Company filingsBALANCE SHEET & CASH FLOW SUMMARY
• Strong balance sheet with ample Key Balance Sheet Data & Leverage Statistics (£ million)
liquidity
- Undrawn RCF of £125 million
(1)
YE 2015 YE 2016 YE 2017 YE 2018
• USD Senior Secured Notes of $425
million
Cash & cash equivalents 155.8 229.2 290.3 242.0
- Maturity June 2027 at 3.79%
• Term Loan facility of $225 million Total borrowings 411.0 490.1 503.4 495.8
- Maturity June 2025, no
amortisation at
LIBOR +1.25% - 1.75% p.a. Net Debt : Adjusted
2.1x 1.4x 1.1x 1.4x
EBITDA
34 Note: Secured Term Loan facility margin based on total net leverage ratio at the applicable time
Note: Adjusted EBITDA is adjusted for profit on disposal of players’ registrations and exceptional operating expenses
(1) Increase in Total borrowings from 2016 impacted by movement in GBP / USD FX rate. Gross borrowings remained consistent at $650mRECONCILIATION TO ADJUSTED EBITDA
£‘000 2015 2016 2017 2018
Profit/(loss) for the period (1,168) 36,371 39,177 (37,270)
Adjustments
Net finance costs 35,215 20,017 24,277 18,038
Tax (credit)/expense (2,821) 12,462 17,361 63,367
Depreciation 10,324 10,079 10,228 10,755
Amortization of players’ registrations 99,687 88,009 124,434 138,380
EBITDA 141,237 166,938 215,477 193,270
Adjustments
(Profit)/loss on disposal of players registrations (23,649) 9,786 (10,926) (18,119)
Exceptional expense/(credit) 2,336 15,135 (4,753) 1,917
Adjusted EBITDA 119,924 191,859 199,798 177,068
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