LONDON: Manchester United manager Jose Mourinho and his players have been left in no doubt about the financial cost if they fail to finish term in the Premier League’s top four.

After announcing a fall in first-quarter revenue, United confirmed the club 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 with United who face a crucial test against Arsenal in the Premier League tomorrow/Saturday.

United said the annual payment will reduce by 30pc if they do not reach Europe’s flagship competition for a second successive season.

Currently Mourinho’s men stand sixth in the Premier League, six points off the top four, have reached the quarter-finals of the League Cup but are outside the qualification slots for the knockout phase of the Europa League with two games remaining.

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

“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 even a failure by United to reach 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 September 30 – was down £3.4m (2.8pc) to £120.2m, with matchday income down 32.3pc 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 rose 18pc to £337.7m because of 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 4.4pc 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.

** The Premier League has reportedly concluded a remarkable TV deal in China, exploding from $21.6m to $233m a year from 2019. The $700m contract will be the Premier League’s record overseas deal.