Manchester United take £51.5m debt penalty in currency hit

Manchester United (NYSE: MANU - news) have reported a £51.5m growth in debt as the club grapples with a lack of Champions League football and the collapse in the pound.

The Premier League club said first quarter net profits fell 76% to £1.2m from £5m in the same period last year - with operating profits 35% lower.

The club blamed their failure to qualify for Europe's top club competition and fewer home games at the start of the 2016/17 season for the financial performance off the pitch during the three months to 30 September.

Total (LSE: 524773.L - news) revenue came in 3% lower at £120.2m but the club, controlled by the American Glazer family, maintained their revenue and profit forecasts for the financial year as a whole.

United said net debt - a source of frustration among fans since the Glazers took control in 2005 - had risen 18% to £337.7m in the first quarter.

They blamed the £51.5m increase over the same period in 2015 on "the impact of foreign exchange rate movements" on its dollar denominated debt.

United charted a sterling exchange rate movement from $1.5128 on 30 September last year to $1.2941, but added that investment in the first team squad had also been taken into account.

The club signed Eric Bailly, Zlatan Ibrahimovic, Henrikh Mkhitaryan and Paul Pogba - the latter for a world record fee of £89m from Juventus (Milan: JUVE.MI - news) - as new manager Jose Mourinho worked to rebuild the squad.

The club are currently in sixth place in the Premier League.

United's executive vice-chairman, Ed Woodward, said: "While our financial results for this quarter reflect the impact of our non-participation in the UEFA Champions League, we are pleased that we remain on track to deliver record revenues for the coming year.

"During the quarter we added a number of top quality players to our squad, which once again demonstrates our determination to challenge for trophies."