Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Manchester United Earnings Conference Call. At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [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. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to Manchester United’s second quarter 2020 earnings call. A corresponding press release containing our financial results was issued earlier this morning and can be accessed on our IR website. Today’s call is being recorded and webcast, and a replay will also be available on our site for 30 days thereafter. 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 cautionary note included with our earnings release as well as additional risk factors discussions in our prior filings with the SEC. With us on the call today are Ed Woodward, our Executive Vice Chairman; Richard Arnold, our Group Managing Director; Cliff Baty, our Chief Financial Officer; and Hemen Tseayo, our Head of Corporate Finance. I will now turn the conference call over to Executive Vice Chairman, Ed Woodward, for his opening remarks. Ed?

Thank you. Thank you, everyone, for joining us today. Before we proceed with our usual earnings call, I would like to pay tribute briefly to Harry Gregg, who died earlier this month at age 87. Harry was one of the heroes of the Munich air disaster and a key member of Matt Busby team of talented young players, known as the Busby Babes, making 247 appearances for the club. To borrow Sir Alex Ferguson’s words, Harry was a man of great character and a true legend to their club. Our thoughts and prayers are with him, with his family and friends. I’d like to provide an overview of progress towards our number one priority, winning trophies with the team playing entertaining and attacking football. Since our last call in November, we progressed to the knockout stages of Europa League. We are through to the fifth round of the FA Cup, and we remain in the mix to qualify for the Champions League. This season is one of rebuild with many changes for this quarter. In terms of players who’ve left or gone out on loan, new players who we brought into the club and Academy graduates that we brought through to the first team. This process will continue as we implement our plan and our footballing vision under Ole and his coaching staff. Despite being linked to 111 players in January, our acquisition of just one of them, Bruno Fernandes is an important step in that direction, demonstrating our commitment to adding experienced world-class recruits to the exciting crop of Academy graduates that are at the heart of this developing team. We’ll take the same planned disciplined approach this coming summer. In addition to the first team signings, somewhere under the radar, we’ve also made a number of exciting ease…

Thanks, Ed. Before I provide an update on our business activities, I’d like to say that the thoughts of everyone at Manchester United with those currently impacted by the coronavirus outbreak. In respect of the virus’ impact, it’s too early to understand the global implications, but we are actively monitoring the situation. Turning first to our media and digital operations. Earlier in the quarter, we announced a new strategic partnership with Alibaba, which provides exclusive Manchester United Club content in China across Alibaba’s multi-platform ecosystem. We launched with the first of its kind dedicated Manchester United channel on Alibaba’s content platform, Youku. This makes our own highly engaging content available to over 700 million consumers in China. Whilst we have only recently launched our Youku channel, we are positive on the long-term potential opportunity to satisfy strong demand for our content among our significant fan base in China, the most digitally connected country in the world. Moving to our global mobile app. We continue to improve our app functionality to deepen fan engagement by a more enhanced personalization, gamification of content and an even more dynamic second screen experience for Matchday. A bigger focus for the first half of our fiscal year has been evolving our cross-platform digital content offerings, in particular, more branded content offerings via the mobile app, including highly successful collaborations with adidas, Gulf, Swissquote and HCL during the quarter. We are also pleased to announce the recent launch of our new podcast platform and the launch of our first official podcast, which has been extremely well received and offers a new opportunity to deliver high-quality unique plus focused stories and content to our fans and followers around the world. Turning to nonowned and operated platforms. Our social media engagement remains robust, with particularly strong engagement surrounding…

Thanks, Richard. As a reminder, year-on-year comparisons relative to fiscal 2019 have been impacted by the absence of Champions League broadcasting revenues and the cadence of matches on a quarterly basis. In terms of headline figures, total revenues for the second quarter were £168.4 million, down £40.2 million versus the prior year, with adjusted EBITDA of £72.1 million down £32.2 million versus the prior year. For the full year, we continue to expect revenues and EBITDA for fiscal 2020 to track in line with our previous annual guidance. Turning to the key items in the results. Total commercial revenues were £70.6 million, an increase of £4.7 million versus the prior year, with sponsorship revenues of £45.1 million, an increase of £4.8 million over the prior year. Retail merchandising and licensing revenues for the quarter were in line at £25.5 million. Broadcasting revenues decreased by £39 million due to the – in the quarter due to £64.7 million due to our participation in the Europa League compared to the Champions League in the prior year. As previously highlighted, the second quarter is where we see the biggest year-on-year impact from the reduction in UEFA broadcast revenues due to the five of the six group games taking place in the quarter. Matchday revenues decreased by £5.9 million to £33.1 million given the impact of one less Premier League home match and one less home European match in the quarter, which is only partially offset by an additional midweek Domestic Cup home match relative to last year. Moving down the income statement. Operating expenses, excluding depreciation and amortization, were down £8 million versus the prior year. This includes wages, which were down £7 million, primarily due to a reduction in player salaries as a result of non participation in the Champions League as…

Thank you. We will now begin the question-and-answer session. [Operator Instructions] And our first question will come from Randy Konik of Jefferies. Please go ahead.

Hey, thanks a lot. I guess, my first question for Ed. I know it’s a little bit of a fluid situation, but we saw the news earlier this – in the last couple of months regarding the Manchester City situation. Maybe just give us – maybe you probably can’t comment on that situation in particular, but maybe give us some perspective on what you’ve been seeing from your side of the woods as it relates to financial fair play and the regulations and the teeth that it has on the teams in the Premier League? Thanks.

Yes, I mean, as you predicted, Randy, I’m not going to comment on City or any other clubs relating to those events. But what I will say is there – I mean I go to a lot of UEFA related meetings being on the ECA Board and also Deputy Chairman of UCC SA which is a joint venture between the ECA and UEFA. And I see a strong commitment from UEFA to ensure that financial fairplay continues to deliver the benefits that it clearly has in the industry. And if you look at the last sort of five years, the overall operating profits across the top leagues in the 50, 55 countries in Europe, they’ve gone from pretty large losses all the way up to breakeven and small operating profits. So I think it’s been beneficial overall. And clearly it’s up to the regulators to manage that.

Got you. And I guess Richard maybe can you give some perspective, expand upon the deal with Alibaba has the channel on Youku has that helped lead to further or acceleration of MANU app downloads and any measurement around increased engagement of the – around the MANU app as a result of the recent partnership with Alibaba?

So, obviously the partnership is very new and it’d be a little bit wild to be extrapolating off the basis of the few weeks of data we’ve got today. That having been said yes, we have seen a massive increase in the engagement levels, we’re able to achieve off the back of having Alibaba alongside as promoting our content. In respective app versus through their channel, our analysis today is that China is a heavily portal-led market. And the consumers actually use a relatively small number of tools to access content. And correspondingly, our expectation is that the Yuku channel and our engagement through Alibaba’s platform will be very important to us in continuing to drive that engagement with them and indeed for them and continuing to be able to engage their consumers using our content.

Very helpful. And then I guess lastly, one thing that’s kind of noticeable is obviously the breadth, and the power, and the scale and the global nature of the MANU brand, is this – it shows that power with the signing of Mondelez, 26th global partner. And it seems like it’s been a re-acceleration in partnerships again. So, are there other things you are kind of trying to think about in terms of helping to bring even more added value to these partners that you had been thinking about in different ways versus in the traditional ways of bringing value to those brands and partnering with you, let’s say three or four or five years ago?

Yes, that’s a good question. I mean, obviously the world has changed fairly rapidly. Two aspects, I think, are very powerful in driving perhaps renewals more than new apartments. And again, the first thing that goes hand in hand is our renewal rate is industry leading, we believe. And that’s a function of the satisfaction that partners have in us delivering on their objectives, which is a function of two things. Firstly the work that’s gone into and I alluded to in our update the work has gone into digital activities in making sure that the fan engagement lead activity in respect to being, again, we believe the best in the world, that engaging fan digitally with our content and that translates into the results. And correspondingly, being able to manage sponsors to achieve phenomenal success in their digital engagement through our IP and content without it being intrusive to fans in terms of being perceived as advertising or otherwise. So yes, from that point of view the use of analytics, the use of AI and the other bits and pieces that have been woven into that work that we’re doing in terms of supporting existing sponsors, I think, is in combination with the privileged position we have, having the biggest, most engaged, passionate fan base in the world, put us in a prime position to acquire and retain the partners we’ve got.

Very helpful. Thanks guys.

Thank you.

Our next question comes from Laurie Davison of Deutsche Bank. Please go ahead.

Hi guys, it’s Laurie here from Deutsche. First question just on the shirt sponsorship deal, so we’ve had press reports of a £17 million deal with Haier versus the £64 million, I believe, you’re getting from Chevrolet previously on a per annum basis. Can you comment on the veracity of those deals? Secondly, just in terms of what you mentioned about rebuild for the squad. When we’re thinking about player CapEx beyond the current fiscal year £190 million guidance, what should we be thinking about in terms of higher, lower versus that level for the following years? Thanks.

So in respect to the first question, we’ve communicated previously that the shirt process is underway and ongoing. We’ve communicated previously that at the point at which a deal is concluded, as you would expect, given its materiality, we will announce that in the usual way. That hasn’t happened. And concurrently, we’ve also indicated that we won’t be providing running commentary on how that process and the associated negotiations are proceeding. So beyond speculation, there isn’t – from the press, there is nothing further I can add in respect of that ongoing process.

Laurie, it’s Cliff here, in answer to your second question, in terms of future sort of player CapEx. As you can imagine, we don’t guide on what that will be for sort of – for obvious reasons. What I will say and reiterate what I said last quarter and then I’ve just said just now is that the level of CapEx spend that we’ve got this year does reflect the accelerated payment and deferred receipt profile of last summer’s activity. So if you stroll that through to what that really means, that does mean that our future commitments, liabilities are in a very good place, I guess, you’d say, compared to where we might be in a more typical or in other years. So in terms of what that means, that means we’ve got – we have obviously less liabilities looking forward. And that would impact what our CapEx will be.

Thanks. Just to follow-up on that, though, would it be fair to say that we should be considering that you would most likely reinvest that those – that headroom that you’ve got as those liabilities roll off?

I say, we don’t give sort of that direct guidance. So I mean, if you look at history, you can look at where the squad is, and what comments that Ed has just made as well in terms of what we’re trying to do with the squad and how we’re going to build the squad. But we wouldn’t give any direct guidance to what that number will be, we’ll tell you a new – we will tell you by the time we speak in September once the transfer window is done.

Okay, thanks guys. Thank you.

[Operator Instructions] And our next question comes from Bryan Goldberg of Bank of America Merrill Lynch. Please go ahead.

Thank you very much. I had a follow-up on sponsorship. I was wondering if you could update us on sort of what kind of key verticals are out there that might be unsold or renewing this year or next year? How we could maybe think about opportunity there? And then not specifically about your Jersey deal, but I was wondering if you could just sort of help us think about how the sponsorship market plays for that type of inventory? How is the market plays different today versus when you initiated that deal, I guess, right before you went public? So that’s my sponsorship question or series of questions. And then I actually have a second one, and forgive me if this was asked earlier, I joined a little late, but coronavirus implication, I recognize that this is impossible to predict the situation and hopefully, the worst is behind us, but could you help us think about how your revenue contracts work? Are any of them tied to the actual delivery of live sports content? We’re just trying to get our heads around potential exposures to possibly cadence of the situation worsen from here. Thanks.

So in respect of the first two questions, I’ll answer those. So the question was, if I understand it correctly, how should we view open or renewing categories in respect to the overall sponsorship business. I think there’s two or three points, I would refer to. The first is that we continue to be successful in segmenting and defining new previously unexplored categories in terms of the work we’re doing. So success, for example, Maui Jim and the work that’s happened there. The work that has gone on the Marriott affinity programs, the work that’s going on with Kohler as a bathroom and kitchens organization as well as generators, demonstrating the appeal of what we offer in categories that perhaps other people haven’t explored and been successful in the same way. The second aspect, I would say is that when you look at the build rate of our categories compared to the most popular categories for the industry in general, actually, we have a fairly significant number of open categories that we would have a strong expectation for the future in terms of being good categories. So if you look at soft drinks, consumer electronics, for example as well as a number of the technology and software verticals there continues to be a big opportunity in open existing categories. And the final point, and again, I alluded to this in the earlier conversation, our renewal rate, we believe, is industry leading. There’s a lot of investment and very skilled individuals that work in servicing our clients and delivering on their ambitions and goals, and that results in very strong renewals. And that allows us to generate fairly significant continued growth with them as they see the benefit of the rights as well as in category improvement in price points, which…

Thank you, Rich. And third question Bryan, I think, was obviously around coronavirus. And first and foremost, I’ll kind of repeat what Richard said earlier in the call, if you’ve missed it, which was our thoughts go out to everyone in China and other countries affected by it. We’ve got many supporters, obviously, in China and the rest of Asia and staff in Hong Kong. So our first concern is for people’s welfare. It’s a very fluid situation, and we’re monitoring it closely. We’re aware of the impact to sporting events in Asia and what’s obviously been happening in Italy the last two days. But to date, we haven’t seen any disruption to sporting events in the UK, and we are continuing to monitor the situation and will follow any and all guidance from the relevant authorities, including the Premier League and UEFA.

That’s it. Thank you very much.

Thank you.

This concludes the question-and-answer session. The conference has now also concluded. Thank you for attending today’s presentation, you may now disconnect.