Manchester United face £20m Adidas Champions League blow

Manchester United's £750m deal with Adidas is the most lucrative in the Premier League

Manchester United will lose more than £20m in sponsorship income from Adidas if they fail to qualify for next year's Champions League.

The German sportswear giant is in the second season of a 10-year, £750m deal.

After announcing a fall in first-quarter revenue, United said the annual payment will reduce by 30% if they do not reach Europe's flagship competition for a second successive season.

United are sixth in the Premier League, six points off the top four.

"There is a clause in the Adidas contract that applies if we are missing from the Champions League for two years in a row," said United's chief financial officer Cliff Baty.

"An example would be if we [were due to receive] £70m [in a given year], we would not receive £21m."

The sum is taken off each year of the contract, with the first payment covering the years for which the deal - which came into force in 2015 - has been active.

Baty said a failure by United to get out of the Europa League group stage this season would cost the club "single digit millions".

United's failure to qualify for this season's Champions League has already had an impact on their 2016-17 finances.

First-quarter revenue - to 30 September - was down £3.4m (2.8%) to £120.2m, with matchday income down 32.3% to £16.8m. Profit was £6.2m.

The reduction in income is largely down to United playing three fewer home games than in the same period in 2015.

Debt has risen 18% to £337.7m, due to the fall in the pound against the dollar since the Brexit vote.

Executive director Ed Woodward said: "Our financial results for this quarter reflect the impact of our non-participation in the Uefa Champions League."

The club's commercial revenue rose 4.4% to £74.3m, with overall revenue for the year expected to be between £530m and £540m.

United made four signings in the summer transfer window, including France midfielder Paul Pogba for a world record £89m and Sweden striker Zlatan Ibrahimovic.

They are sixth in the Premier League and through to the quarter-finals of the EFL Cup but outside the qualification places for the knockout phase of the Europa League with two games remaining.

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