Manchester United Just Proved the Ratcliffe Cost-Cutting Plan Is Working - Sort Of

"The cost transformation story is real. Employee benefit expenses fell 9.0% to $101.6M and net finance costs dropped from $50.9M to $18.8M on favorable FX movements, combining to drive the earnings swing. The absence of UEFA competition for the men's team in FY2026 remains the central revenue drag, with partner revenue down 13.5% partly due to the expired Tezos training kit deal worth $7.8M with no announced replacement."

"Investors watching MANU should focus on two things heading into the back half of FY2026: whether the men's team secures a UEFA-qualifying finish (currently 4th in the Premier League), and whether management can close the partnership gap before year-end. A return to European competition in FY2027 would meaningfully change the revenue trajectory."

"For now, the profitability improvement is encouraging, but the tightening cash position and rising debt, with $650M in USD-denominated non-current borrowings exposed to currency swings, are worth monitoring closely."

Manchester United's Q2 FY2026 results showed improved profitability primarily through cost reduction rather than revenue expansion. Employee benefit expenses decreased 9.0% to $101.6M and net finance costs fell from $50.9M to $18.8M due to favorable foreign exchange movements, driving the earnings swing. However, revenue faced headwinds from the men's team's absence from UEFA competition and the expiration of the Tezos training kit partnership worth $7.8M with no replacement announced. Partner revenue declined 13.5% overall. The stock closed at $17.36, down 3.72% from the prior week. Key concerns include the tightening cash position, rising debt levels, and $650M in USD-denominated borrowings exposed to currency fluctuations. Future performance depends on securing UEFA qualification and closing partnership gaps.

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