Manchester United, the world’s richest soccer club, reported a 54 percent drop in half-year profits due to lower television revenue and heavy spending on players like England striker Wayne Rooney.
The club is the takeover target of U.S. billionaire Malcolm Glazer who is examining United’s finances before deciding whether to make a formal offer for the 1999 European champions.
“The due diligence process is continuing. If and when a formal offer is made we will give our advice to shareholders,” said Finance Director Nick Humby in an interview after results.
United’s pretax profits fell to 12.4 million pounds ($23.6 million) for the six months to January 31 from 26.8 million.
United warned last September of a profits fall of 14 million pounds this year because of a new Premier League broadcasting deal and the club’s third-place finish last season which cut earnings from the European Champions League this season.
Wages rose to 46.6 percent of turnover compared to 40.8 percent in the previous first half due to the signing of Rooney and Argentine defender Gabriel Heinze, and new contracts for Dutch striker Ruud van Nistelrooy and manager Alex Ferguson.
Humby said wage costs will rise to over 50 percent of revenue for the club’s full year to end-July 2005. Rooney cost United 27 million pounds in a move from Everton last August.
Earlier this month, United were dumped out of the lucrative European Champions League by AC Milan to miss out on the competition’s quarter-finals.
Strong matchday and commercial revenues offset the fall in media revenues to leave group turnover largely unchanged at 91.6 million pounds, United said.
Glazer owns 28.8 percent of United and American football’s Tampa Bay Buccaneers. United has 32.2 million pounds of cash in the bank and one of the best-known brands in the world.
Shares in the club, floated in 1991, nudged higher Tuesday. They have more than doubled over the past two years as takeover fever has heated up.
The success of any Glazer bid is dependent on the support of United’s top shareholders, the Irish race horse tycoons John Magnier and JP McManus who own 28.9 percent. They have held talks with Glazer in the past about the sale of their stake.
The 15-times English champions said it had spend 0.5 million pounds to deal with the takeover threat, and this would increase significantly if a formal bid was made.
