Manchester United takes £51.5m debt penalty in currency hit

Manchester United (NYSE: MANU - news) has reported a £51.5m growth in its debt pile as it grapples the lack of Champions League football and the collapse in the value of 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 its 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 its 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.

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

It 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 Ibrahimović, 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 began work rebuilding.

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

United 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."