Manchester United plc (MANU) Q4 2022 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Manchester United Earnings Conference Call. [Operator Instructions] We would like to remind everyone that this conference call is being recorded. I will now turn the call over to Corinna Freedman, Head of Investor Relations for Manchester United.

Thank you, Roger. Hello, everyone and welcome to Manchester United's Fourth Quarter Fiscal 2022 Earnings Call. A press release containing our financial results was issued earlier today and can be accessed on our Investor Relations website. This call is being recorded and webcast and a replay of this call will be available on our website for 30 days. Before we begin and as a matter of formality, we would like to remind everyone that this conference call will include estimates and forward-looking statements which are subject to various risks and uncertainties that could cause our actual results to differ materially from these statements. Any such estimates or forward-looking statements should be considered along with the disclosures included with our earnings release as well as additional risk factor discussions contained in our filings with the SEC. Members of our executive leadership team participating on the call today include Richard Arnold, our Chief Executive Officer; Football Director, John Murtough; Collette Roche, COO; Phil Lynch, CEO of Digital Products and Experiences; Victoria Timpson, CEO of Alliances and Partnerships and Cliff Baty, our CFO. We will begin with our prepared remarks. We will then open up the call to your questions. Investors are also invited to e-mailing questions to our general IR inbox at ir@manutd.co.UK. I will now turn the conference call over to Richard Arnold, our Chief Executive Officer, for his opening remarks. Richard?

Thank you. Good morning and welcome to everyone joining. Clearly, our on-pitch performance and finishing sixth in the Premier league last season fell short of our aims and expectations. In response, we've made important and necessary changes, including new leadership for the men's third team under Erik ten Hag and the strengthening of the playing squad during the summer transfer window. We also continue to develop our Women's Squad which now contains 4 of the England Lionesses, who are victorious in this year's UEFA European Championship. Our youth pipeline also remains strong with major trophy wins for both our men's under 18 and women's under 21 Academy teams’ last season. Our football Director, John Murtough, will walk you through these developments in more detail shortly but I want to stress that we're working tirelessly behind the scenes to create the conditions for renewed football success. That includes ongoing investment in the training facilities at Carrington. When we last spoke, we set out our mission to support our football teams in developing the titles and trophies that we know, Manchester United should be competing for. This encompasses football, fans, facilities and financials. This process is ongoing. However, we have already put in place many of the foundations of new structures and talent to drive long-term success. We'll hear more color from the rest of the executive leadership team shortly on the progress we've made thus far. Ultimately, we know that the strength of Manchester United rests on the passion and loyalty of our fans. That's why we've made improving fan engagement, one of our strategic priorities. In January, we launched our fans Advisory Board as a new channel for Board level dialogue between fan representatives and the club, its management and owners. And this model has since been embraced by the Premier League as a mandatory model for other clubs to follow. We also have a number of other fan initiatives in process. We will continue to strengthen our engagement with our fans around the world, both through physical and digital activity. This summer, we completed our first full pre-season tour in 3 years following COVID, playing in front of over 350,000 fans in 5 cities. Collette Roche, our Chief Operating Officer, will share more highlights of the tour later in the call. For fans old Trafford, we believe they deserve excellent facilities and experiences when attending matches. Earlier this year, we appointed master planners to explore options for potential redevelopment of our stadium and the club owned land which surrounds it. We're at an early stage of a multiyear project and we will continue to gather input and feedback from our fans and other stakeholders on these options before making any firm decisions and we will update the market in due course. Whilst remaining committed to long-term investment in the stadium, we will be disciplined in our capital plans which must be sustainable and mindful of the macroeconomic pressures and inflationary environment currently impacting the U.K. and wider global economies. The Club has shown strong momentum in our commercial operations, reflecting both the welcome return of match-going fans to the stadium after the pandemic and the strength of our venue, merchandising and partnership operations. Despite global economic headwinds, we see strong tailwinds for the value of global TV rights for Premier League and UEFA competitions and a competitive sponsorship market with many new market entrants looking to build and strengthen their brand through association with leading global sports brands such as ours. While the FIFA World Cup in Qatar this winter will cause some disruption to our usual cadence of games. We expect it to further fuel the profile and popularity of football around the world with many of our first team players expected to take part for their respective nations. In terms of digital activity, the volume and global reach of our club media content continues to grow across both owned and operated channels and all the major social media platforms. Phil Lynch, our CEO of Digital Product and experiences will speak further to the opportunities ahead as we explore new forms of digital engagement with fans. Victoria Timpson, our CEO of Alliances and partnerships will provide an update on recent highlights from our sponsorship operations. While Cliff Baty, our CFO, will review our financial results and provide our outlook for fiscal '23. In summary, everyone at the club is aligned on a clear strategy to deliver sustained success on the pitch and a sustainable economic model of it. The mutual benefit fans, shareholders and other stakeholders. We believe the building blocks for future success are being put in place but we acknowledge there is still much more for us to do this season and beyond and that success will not happen overnight. As a club, we're moving forward, united and committed to achieving our goals. I'll now hand the call over to first to John Murtough, our Football Director, who will provide an update on our football activities.

Thank you, Richard. I'd like to start with a quick recap of key achievements and strategic developments across our football operation during the fiscal year. Starting with the men's first team. Most important development during the '21/'22 season was the appointment of Erik ten Hag as Manager. After a thorough search and due diligence process, it was clear towards that Eric was the strongest candidate based on his outstanding coaching record, his commitment to the proactive attacking football we want to play and the vision and ambition he showed for the role. There is still a long way to go but we've already seen during his first 4 months in charge and increased Unity, focus and drive that bodes well for the future. During the summer, we made significant investment in the first team squad with the permanent addition of 5 regular starters, including a balance of experienced international players and younger emerging talents. We also saw a higher-than-usual number of departures and this was an equally important part of refreshing the squad after the disappointing '21, '22 season. We will continue to support Eric ensuring he has the players with the right quality and character to achieve success while ensuring that investment remains consistent with our commitment to financial sustainability. Overall, we are ahead of schedule in our recruitment plans as envisaged at the start of the summer and we do not anticipate the same level of activity in future windows. As always, our planning focuses on the summer window. We are also pleased with the 7 additions made to our women's squad and look forward to seeing the team continue to develop under Marc Skinner after last year's solid fourth place finish in the Women's Super League. Another high point this year was our under 18 Men's Academy team winning the FA Youth comp for a record 11th time in May in front of over 67,000 fans at Old Trafford by far the highest attendance ever achieved in the competition. And there was also a success for our women's under 21s who achieved a fantastic double win of both the WSL Academy League and the WSL Academy Corp. Nurturing of youth will always remain a cornerstone of this club and we are excited as ever about the talent we have coming through in both our men's and our women's Academies. Overall, while there is still a great deal of work ahead, we are confident that the right people and process have been put in place to support our teams in their pursuit of success. I'll now hand over to Collette Roche, our Chief Operating Officer, who will provide a brief update on club operations. Collette?

Thank you, John. I'd now like to set out a few highlights from club operations during the last quarter and full fiscal year as well as some more recent key developments, including our summer tour. It was another strong year for ticket demand with over 135,000 people on our waiting list for season tickets, support to loyalty is something that we never take for granted. This year, we were able to once again keep general admission prices frozen for the 11th straight year. We experienced a record sellout of our 2022-'23 season tickets this year with the lowest churn ever as we offered our supporters even more flexibility, including the ability to opt out of cup matches. This allowed us to introduce a new cup season ticket package, providing more fans with the opportunity to experience Old Trafford. We have also introduced various ways in which fans can pass on their tickets if they cannot attend matches, including the ability to donate tickets to our foundation. We are pleased to announce that our executive club sweets and boxes also sold out in record time and at record revenue levels. Our paid membership program is once again experiencing another record year with our highest ever sign offs recorded, exceeding 275,000 global members at the end of this fiscal year. This momentum has continued into the current fiscal year as we have already surpassed this level in the current season. We are also delighted to see stronger ticket demand for our women's matches as the thrilling win by England's national team in the European championship this year featured 4 current Manchester United players and has boosted interest at club level across the WSL. This year, season ticket demand for our women's matches have increased 55% versus the previous year. And before a ball had been kicked, we sold more tickets than we did across the entire season last year. Old Trafford was fortunate to host the opening game of the Euros in July with nearly 69,000 fans in attendance, a record for women's match in the U.K. prior to the final held just a few weeks later at Wembley. And we'll welcome back even more women's fans to Old Trafford for a third WSL match in December against Aston Villa. We are very optimistic for continued momentum of the women's game. As Richard highlighted in his opening remarks, this past July, we returned to our normal summer tour operations with 6 matches across 3 continents, 4 countries and 5 cities in 3 weeks. Over 350,000 fans were in attendance, generating record tour revenues at a rate significantly higher than our last tour in 2019 which also comprise the same number of matches in similar territories. Preseason summer tours are critical in preparing the team for the start of the season, while at the same time, bringing our global fans closer to the club they love. Tours also support our partners and media teams in achieving their commercial objectives and Phil and Victoria will both speak toward the highlights in that regard. Over the summer, we completed several infrastructure upgrades and other maintenance projects, both Old Trafford and at Carrington Training Center as we remain committed to offering our fans a positive experience, enhanced safety and an unrivaled atmosphere. I'll now hand the call over to Phil Lynch for an overview of digital products and experiences.

Thanks, Collette. Since our last earnings call, our digital products and experiences team continued to build upon the strong performance we achieved in the first half of the year and this momentum continues into fiscal 2023. We achieved record results in multiple club KPIs, including engagement, total video views, daily average users, new digital subscribers, new app registrations and importantly, e-commerce revenues. Strong e-commerce sales were driven by record sales of new kits supported by compelling digital content. United Direct, our online store, had its biggest ever year with website traffic, up 73%. E-commerce sales for the full fiscal year were nearly double the revenue generated in prior year due to the strong collaboration of our retail, digital marketing, CRM and content teams and due to investment in technologies which will continue to enhance our e-commerce operations in the future. We also achieved record first week sales for our 2022-23 Home and Away kits which launched in July. Through social media, we continue to directly engage with our fans around the world and we achieved 2.8 billion digital interactions, a 72% increase relative to the prior fiscal year, designating Manchester United as the number one most engaged club or sports team on social media worldwide. And to put this into context, this is more social interactions than every team combined in any of the 4 major U.S. sports leagues and more interactions than other major sports properties, including the Indian Premier League, Formula One and USC. We also broke a club record this year in video with over 8.5 billion video views, the most for any sports team globally. We will continue to expand to new formats and platforms to directly connect with our fans around the world. On our owned and operated platforms, the evolution of our industry-leading mobile app continued with the full rollout of our enhanced Club app this past quarter which allows us to deliver more world-class, seamless MU content with increased fan interactivity. Integration of MUTV within the core Club app has been a success, contributing to record video views on our platforms. Fans around the world from the Stretford End at Old Trafford to Indonesia can now experience the very best of our club's video content, including every single united match since 1992. We are proud to highlight that fan downloads have pushed our app to the number one most downloaded in the sports category in over 100 markets globally. In addition, our app was the most used Sports Club app for the 2021-'22 season with more average monthly active users than the next 2 biggest Premier League clubs combined. For the fourth quarter, our app experienced a 31% increase in average daily active users versus the prior fiscal year, again, another club record. This was in part driven by our summer tour which my colleagues earlier, positively highlighted and I'll echo those sentiments as our summer tour contributed to a record number of registrations for our app as it was the only place to view our tour matches live. We will also be focused on rolling out more new and exciting content via our app and we have an array of exciting projects in the works, including the launch of 2 additional podcast brands which fans can now access directly via our app. Fans are now also able to access MUTV via their Samsung and Sony Smart TVs. In addition to Apple TV, Xbox, Amazon Fire and Roku as part of the club's efforts to increase accessibility of Manchester United content. In the upcoming months, we plan to further expand our Connected TV rollout to extend to other smart TV models as well. We currently renewed our agreement with Sky for the distribution of the linear MUTV channel in the U.K. and Ireland and this partnership makes MUTV available to Sky's 12 million pay TV subscribers. Our linear television network continues to be the most subscribed football channel in the United Kingdom. And through our linear partners, we now have access to over 71 territories and continue to pursue prospects to expand MUTV's footprint. From our 220 million plus social media followers to our owned and operated media and content platforms, including our industry-leading club, our fans enjoy a 360-degree digital experience, fueled by constant content creation. Enhancing and evolving our digital capabilities and engagement continues to represent a massive opportunity for us and for our fans. It also enables us to better provide fans with features, experiences and products that express our fans enduring passion for this cloud. And to give you just a brief update on our longer-term digital strategy, Manchester United will continue to explore more innovative opportunities to strategically leverage our IP, opportunities that are always guided by a fan-centric point of view. In collaboration with our partnership with Tezos, we are exploring a range of blockchain-enabled fan offerings, including digital collectibles, among other digital products with a primary focus on fan utility and we will have more info to share on that front in the coming months. I'll now hand the call over to Victoria Timpson for an overview of alliances and partnerships. Thank you.

Thank you, Phil. Partnerships have always been a key driver of the revenue that supports our overall objective of football success. And in turn, our partners benefit from Manchester United's strong affinity and best in sports global awareness. This year, we launched a record number of principal partnerships and welcome TeamViewer, DXC and Tezos as global principal partners. We also signed new and recent notable deals with Qualcomm, Extreme Networks, EcoLabs, therapody and Betfred [ph]. Turning to renewals; we have renewed 8 global partnerships in fiscal 2022, including DHL, Marriott and Remington, amongst others. We also renewed our licensing agreement with new era. We returned to more normalized partner activations this quarter in April as the club held its first in-person ' ILoveUnited event ' in Miami since the onset of the pandemic. We hosted 22 global partners with more than 2,000 U.S. fans and we are looking forward to hosting more events in our key growth markets. We also returned normal summer tour activities with 22 global commercial partners and our tour activations generated nearly 125 million global digital impressions. These results demonstrate continued robust sponsorship interest against its difficult global macro backdrop, demonstrating the enduring appeal of live sports and the global passion for Manchester United. I’ll now hand the call over to Cliff Baty, who will review our financial results.

Thank you, Victoria. I'll now talk you through our results for the full year and then I'll speak to our current expectations for the upcoming fiscal year. Turning first to the full year fiscal '22 results. We'd like to remind you that year-on-year comparisons of prior year are impacted by Covid pandemic effects and the changes to fixed schedules and operations that occurred in fiscal '21. Total revenues for the period were £583.2 million. This was £89.1 million higher than the prior year, owing to the return of fans this season, offset by a reduction in broadcasting revenues due to the lower number of games played. Adjusted EBITDA was £81.1 million, down £14 million from the prior year due to increased player wages and a return to more normalized operational cost base. Turning to the key items in the results. Total commercial revenues of £257.8 million, with sponsorship revenues of £147.9 million, £7.7 million higher due to new partnerships and a reduction in COVID-19-related contract variations. Merchandising and licensing revenues were £109.9 million, up £17.9 million, reflecting the reopening of the mega store at all traffic as well as the continued strong growth in the e-commerce royalties. Broadcasting revenues for the year were £214.9 million, a decrease of £39.9 million due to the impact of COVID on the prior year's fixture schedule. In fiscal 2022, the Club paid 38 Premier League games as normal. Whilst in fiscal '21, we played 44 Premier League matches due to the carryover from the previous season. Matchday revenues were £110.5 million, an increase of £103.4 million due to the return of fans for the whole season. Moving down the income statement. Operating expenses, excluding depreciation, amortization and exceptional items, increased by £103.1 million. This includes wages which were up 19.1%, in line with expectations following significant play investments made last summer. Other operating expenses increased by £41.5 million due to the return of fans roll traffic as well as the reopening of the mega store and inflationary pressure on certain costs. Depreciation and amortization costs were £165.8 million for fiscal '22, an increase of £26.4 million due to the level of investment in the playing squad. Exceptional items for the year were £24.7 million, primarily in relation to the departure of Ole Gunnar Solskjaer and Ralf Rangnick and related coaching and scouting staff. Net finance costs for the year was £62.2 million, a significant increase from the prior year due to the foreign exchange impact on the unhedged portion of our U.S. debt. This noncash charge was caused by a significant weakening of sterling versus the U.S. dollar as the bulk of our debt is denominated in U.S. dollars. It's important to reiterate that cash interest costs were unaffected by foreign exchange and were in line with prior years at around £21 million. Turning now to our balance sheet. At the end of June, cash balances were up -were £121.2 million, up £10.5 million compared to the prior year. This increase in cash includes the drawdown of an additional £40 million from our revolving credit facilities during the year. The CapEx expenditure was £85.1 million for the period. Net debt was £514.9 million, an increase of £95.4 million compared to the prior year. £64.6 million of this increase was solely due to foreign exchange impact on the U.S. dollar debt. In real terms, our debt increased by the additional £40 million drawdown of the replacement cost facility, revolving credit facility previously mentioned. It is worth noting that the club lost over £200 million of cash due to the Covid pandemic that has required use of our RCF facility. And now turning to our guidance. We expect full year fiscal '20 revenues of £580 million to £600 million which will be impacted by 3 primary drivers. First, the start of the new Premier League rights cycle; Second, participation in the European League versus the Champions League relative to fiscal '22. And finally, normalized summer tour revenue. We expect fiscal 2023 adjusted EBITDA to be between £100 million to £110 million. This reflects savings on player wages as a result of UCL remuneration clauses and results in an overall wage reduction versus fiscal '22 of high single digits. Adjusted EBITDA guidance also reflects the continued investment in the playing squad as well as elevated utility costs which are forecast to be several million pounds above prior year. In addition, further continued movement of sterling to U.S. dollar exchange rate will impact our net finance costs and net debt calculation, wherever these are noncash impacts. Finally, I'd also like to provide some color on a few other key items you may find instructive in modeling our fiscal '23 results. We expect amortization to be £180 million. This can change if we buy or sell players or extend the player's contract. And lastly, our committed net player CapEx for fiscal 2023 currently stands at approximately £120 million. As always, we thank you for your continued interest in Manchester United. And with that, we are now ready for your questions. Operator?

[Operator Instructions] The first question is from Randy Konik of Jefferies.

Great. Maybe I could start with Phil. You talked about -you gave some great specifics on just the amount of impressions or engagement that's done on the Manu app and viewership versus other sports teams, sports leagues, et cetera. So can you elaborate a little bit more on some of the things you're working on to kind of continue to monetize the great library of content you have, maybe other non-ordinary things, I don't know about Netflix or Amazon, stuff like that. Anything in that direction you're thinking of to continue to kind of widen the viewership potential and monetization potential for all the great content you guys have?

Yes. No, it's a great question and thanks for asking. I think ultimately, Obviously, there's a lot of demand from the market to engage with our products. And I think if you look back on the last year, a lot of it was to continue to build and we talked about that by migrating MUTV and the One app together. And I think now that we have a more simplified user experience, I think of some of these monetization opportunities that you're talking about outside of the content discussion now become a lot more, I guess, streamlinable if that makes sense because we're now starting to have a singular view of our customer in a way to kind of personalize and target. So I think you'll continue to see a lot more work in terms of personalization, marrying user content preferences with actual content to consume. And then as well, as I referenced earlier, some of the stuff we're doing in the blockchain space. And then obviously, we continue to talk to folks, everybody in the market around various original productions but nothing slated right now.

Got it. And I think maybe this one is for Richard. Old Trafford, you gave a really good statement or, I think, collected about hoping the ticket price is flat for, I think, over 10 years now, yet revenues continue to grow from the stadium because of I'm assuming more utilization or higher prices in the executive boxes and other areas. Can you elaborate a little bit more on how you're thinking about kind of continuing drive increased utilization and revenue opportunity from old Trafford while continuing to kind of really work well with the fans to kind of keep those ticket prices flat, at least on the core side on the seats. And just give us some flavor on what you're thinking there as you think about redevelopment or other enhancement opportunities for the stadium going forward?

Yes. Thanks, Randy. I mean I think you that the importance of the Club places on a full and vibrant old Trafford supporting the team. In terms of the affordability for the general fan, we work very hard, not just on ticket prices but also beer and other commonly purchased items to make sure that those costs have been capped at an affordable level against the backdrop of sort of fairly significant inflation elsewhere. And that's about broadening that loyalty in that passionate fan base. We saw strong demand through COVID. And I know that our fans are very appreciative of the flexibility that we're showing in terms of the ticketing policies, both to the people who continue to need to shield from COVID as well as those affected economically who needed time to get back on their feet. As you alluded, there's been sort of 2 drivers of increased revenues in the stadium. And again, what you'll see as we go into this current year is that trend being borne out. And that's twofold. One is increased innovation in ensuring that every seat has someone sat in it. And again, every stadium in the world will know that one reason or another, there are people who buy tickets and end up being not able to make it. The percentages we're seeing are now incredibly low by virtue of some innovations we put in. So the ability to donate the ticket to our foundation which means that people in the local area that may not be able to afford to go can go to the game. The ability for tickets to be bought back by the club, particularly for those traveling from a long distance, they're traveling from Scandinavia or Ireland, we know in advance that if a game is rescheduled or is it a midweek evening game, it could be more difficult to attend. So the club has been proactively contacting those fans with a view to buying their ticket back and making it available. The third aspect relates to the membership and ensuring that as many tickets as possible, whether that -whether returned or made available for sale for people not using them are filled with members and that’s rapidly growing. We believe we will be headed towards having the largest membership base of any club in any sport in the world. And that is reflective of the demand for those tickets. And again, that we are achieving success in ensuring that every seat is filled for every game. At the other end of the spectrum, what you’re seeing is that the stadium continues to see very high demand for high-end experiences. And just as we work hard to make sure that the entry level and the average price for the average fan remains affordable for the most expensive experiences we’ve been seeking by way of the facilities but also the pricing to ensure that, that helps the overall mix and the overall revenue generated from the stadium to support not just its maintenance but also future developments and ongoing developments. And I think that, that balance has been important in continuing to grow revenues without putting through prices that make it unaffordable for the average match going fan and that’s been a tenant throughout and one that we continue to believe. Final piece on that, Randy, again. This relates to our fan Advisory Board. One of the areas they asked us to address was how cut tickets are sold. Historically, those were bundled with season tickets with an obligation to purchase. And the feedback from our fan Advisory Board was they would like to look at it again. That’s again from a strategic point of view, that was done and we split the cut tickets from the general season ticket so that fans have a choice. And again, that’s particularly important. Many cup games are midweek and that is more difficult, particularly for those traveling internationally, as I said previously, Ireland and Scandinavia that there are season ticket holders around the world as well as those that are in work that struggle to get straight to the game afterwards. And we split that product and we found there’s been incredible demand for people who are unable to get a season ticket who now can get a season ticket to cup games. And correspondingly, it’s made life a lot simpler for those who are unable or found it difficult to attend midweek games. And that’s been an example of the benefit of the enhanced engagement and communication we’ve had through the Fan advisory Board, where we’ve been able to tackle some of these issues and improve things for the fan but also for the club.

Our next questions comes from Xian Siew with BNP Paribas.

Maybe on the EBITDA guidance. Just wondering, you did £185 million in EBITDA in fiscal '19. Obviously, 23 guidance below that. But maybe can you just help us think about the path back to that level, pre-COVID level? How do we kind of get back there over time will be helpful.

Yes, Xian Siew. I mean I think the first thing to think about is looking at EBITDA but one thing that we want to take away is the strength of the business' revenues and the confidence we have in that because to a degree, EBITDA then is a function of a couple of things. Clearly, the number you're talking there is Champions League. So yes, this club needs to be in the Champions League. So getting back into the Champions League and success on the football side will improve that level of EBITDA. Now obviously, we do have a mitigation about that with the way our contracts are structured but it's still a sort of £20 million, £25 million plus and probably will be more lucrative in the next season, the next cycle of the Champions League with the new format. So that's one thing. I think if you look at the level of player investments, we have had a high level of player investments probably coming out at the back of Covid these last couple of years. I think we were shy in guiding to the 20% increase in wages that we've seen this year this time last year. And that, obviously, a slightly elevated level is still ongoing this year. I'd expect a return to sort of more normalized levels of wages now that we operate in a market. It's a competitive market and we want to make sure we have the right players and the right team outside there. But certainly, there has been a level of elevated investment in these last couple of years. And then also we are suffering as every club and every business is from the sort of the inflationary shocks that we're seeing at the moment. So I referenced that in terms of utilities but that's also affecting us and other football clubs in many areas in terms of travel and flights, et cetera, as well as basic wages. But I think assuming that comes back under control, the key things are basically getting back into the Champions League potential return to normalization of wages. But most importantly, it's the strong growth in revenues that will take us back up to those levels and we're very comfortable with that.

Okay, makes a lot of sense. And then you highlighted some of the industry developments, for example, the UEFA financial sustainability with capping revenues 70% or capping, I guess, spend at 70% of revenues. Maybe can you help us think about how that impact -how that will shape, I guess, your decisions going forward and maybe how that helps positions you versus the competition as you think about kind of those industry changes?

Yes. I think there's sort of two factors in that. And again, you alluded to that in the question. The first is the impact on the market. And the second is how we're looking at this from our own performance going forward. And historically, I think in respect to the market, of course, we've seen from the historic trend that whenever regulations have been implemented that seek to manage costs and improve profitability. Those have had an effect. We saw that with the cost measures that were implemented in the Premier League and indeed, in the European competitions previously. And that is something as a club we believe in, in terms of making the whole football pyramid sustainable. And you've alluded to the work that's going on through UEFA but there is also work going on in English football in terms of making sure that every club up and down the pyramid can continue to have a long future that matches the long history that many of these clubs have. So our expectation is that this regulation will bring costs and revenues into a healthier balance and provide for a sustainable future for football. In respect of our own activities, I think there are 2 aspects to this. The first is the change that we've seen in the current season and as John alluded to in his remarks, there were a high number of players leaving an outcome at the end of last season that demonstrated a need for us to strengthen. I think as you look at our activity in this space, historically, we've had to strike a balance between investing in the talent needed to perform at the levels expected of Manchester United and that high-end expectation is good for our fans but it's also good for our shareholders. And we have to balance that with the sustainability in the near term and the long term. And we believe that both of those aims are helped by FFP and are consistent with our own aims of making sure that the investments that we make are effective in driving the sporting performance. That’s good for fans. It’s good for the club and it’s good for the club’s investors.

And ladies and gentlemen, this concludes our question-and-answer session. I'd like to turn the conference back over to the management team for any final remarks.

Thank you, everyone, for joining and we look forward to speaking with you again.

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day. Thank you.