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Manchester United have blamed Donald Trump’s overhaul of the US tax system for their high half-year loss.
United, who are owned by American tycoons the Glazer family, were forced to make an accounting write-off of almost £49 million after the US president’s reforms resulted in the corporate tax rate being cut from 35 per cent to 21 per cent in December.
It led to United reporting losses of £12.87 million in the first half of the financial year after posting a profit of £18.7 million in the six months to Dec 31 2016, although the club stressed the situation would have no impact on their ability to compete financially in the transfer market or meet Uefa’s Financial Fair Play rules.
“The reduction in tax rate has resulted in a non-cash accounting charge of £48.8 million to be recorded in the quarter,” Cliff Baty, United’s chief financial officer, told an investor call yesterday.
“It’s important to reiterate this is a non-cash accounting charge only which has no impact on our financial competitiveness, nor our ability to meet financial fair play regulations.”
United are still forecasting turnover for the year of between £575 million and £585 million, while revenues for the three months to Dec 31 were up four per cent to £163.9 million. Operating profit for the quarter was down 23 per cent on the same period in the previous year to £28.7 million.
Wage costs rose 9.4 per cent to £69.6 million, with the club’s return to the Champions League this season boosting player salaries, although it also helped increase broadcasting revenue by 17 per cent over the quarter to £61.6 million.
Meanwhile, Ed Woodward, United’s executive vice-chairman, said the signing of Alexis Sanchez was already proving a money spinner for the club, despite Manchester City pulling out of a deal over the spiralling cost of the deal. Sanchez is earning £14 million a year after tax at Old Trafford following his move to Arsenal in a swap deal with Henrikh Mkhitaryan.
Sanchez’s arrival set a new record for shirt sales in January – three times the previous highest – and also broke a series of records on social media.
As well as being United’s biggest ever Instagram post with two million likes and comments, the announcement of Sanchez’s signing was the club’s most shared Facebook post and United’s most retweeted post ever. #Alexis7 was also the No 1 trending topic on Twitter worldwide.
“To put all that into context, the announcement posts generated 75 per cent more interactions than the announcement of the sale of the world’s most expensive player last summer, when Neymar moved from Barcelona to PSG,” Woodward told investors.