Manchester United’s accounts report £29m loss due to new tax cuts in last three months of 2017

Manchester United’s latest accounts show they lost £29m in the last three months of 2017 because of changes in corporate tax rates in the USA. Revenue for the quarter was up four per cent to £163.9m, and United still expect revenues for the year to be between £575m and £585m. In an announcement to the New York Stock Exchange, Ed Woodward, United executive vice-chairman, said: “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.

“We look forward to the remainder of the season with confidence.” The unusual loss has come about because United had to recalculate the value of deferred tax assets after the corporate tax rate in the USA was cut from 35 per cent to 21 per cent. United’s deferred tax asset is now less valuable under the new tax law and a re-evaluation of the asset has led to a “non-tax accounting write off of £48.8m.” The Sanchez deal, making him the highest-paid player in the club’s history, was not included in this round of United’s financial results.

United were knocked into the red by a non-cash write-off of £48.8million, leading to an overall loss of £29m for the six months to December 31, according to the club’s latest financial figures announced on Thursday.

It represents United’s worst results since a third-quarter loss of £65.8m in 2010. In the same period last year, they had made a profit of £18.7m. The club blamed it on Trump’s tax cuts which have slashed America’s corporation tax rate from among the highest in the west to one of the lowest as the US president tries to get the country’s economy moving. It has affected many companies worldwide, even those like United who only pay a fraction of their taxes in the US. The club’s chief financial officer, Cliff Baty, insisted that it is a one-off charge that has pushed United into a loss but will have no other impact. ‘It should be beneficial to the club in the long-term,’ said Baty.

 

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