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Champions League costs put brake on Manchester United profit

Reuters
Soccer Football - Premier League - Manchester United vs Burnley - Old Trafford, Manchester, Britain - December 26, 2017 Manchester United fans outside the stadium before the match Action Images via Reuters/Lee Smith

By Rahul B

(Reuters) - A return to the Champions League came at a price for Manchester United (MANU.N) as a related increase in player wages crimped core quarterly earnings for the Premier League soccer club.

United, whose leading players include Paul Pogba and David de Gea, are currently second in the 20-team English Premier League and play Sevilla in the last 16 of the Champions League later this month.

"Our solid business model has allowed us to invest in the future of the club with the extension of Jose Mourinho's contract as manager and the acquisition of Alexis Sanchez," Executive Vice Chairman Ed Woodward said.

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Manager Mourinho last month extended his contract until 2020, while Sanchez moved from Arsenal.

Woodward would not be drawn on the likely outcome of the new auction for domestic rights to broadcast Premier League matches, for which bids are due to be submitted on Friday.

Sky and BT currently shares the rights in a three-year deal worth 5.14 billion pounds ($7.2 billion).

United's adjusted earnings before interest, tax, depreciation and amortisation slipped 1.7 percent to 67.8 million pounds for the three months to the end of December.

Revenue increased 3.8 percent to 163.9 million pounds in the period -- the second quarter of its 2017-18 financial year.

However, salary expenses for the quarter came in 9.4 percent higher at 69.9 million pounds as players got more after a return to the Champions League.

The club, listed on the New York Stock Exchange, played down the significance of a 48.8 million pound non-cash accounting charge in the period after U.S. tax reforms took effect.

"There will be no impact on our financial competitiveness nor our ability to meet Financial Fair Play regulations from the charge," Chief Financial Officer Cliff Baty told analysts on a conference call.

Controlled by the American Glazer family, United have won the English league title a record 20 times.

However, local rivals Manchester City currently lead the Premier League with a handsome 13 point advantage over United.

Last season, United won the League Cup, as well as Europe's second-tier Europa League competition, securing a slot in the cash-rich Champions League for the current season.

Baty said financial forecasts for the year were based on reaching the last eight of the Champions League.

"If we do better than the quarter-finals that will impact our guidance," Baty said.

(Reporting by Rahul B in Bengaluru; Editing by Keith Weir)