Manchester United continues growth spiral

By Kenneth Cortsen on September 19, 2013 in Sport Economy, Sport Management, Sport Marketing

Manchester United just announced another record annual revenue and thus saw the total amount increase by 13.4 % (total revenues of £363.2 mio.) for the fiscal year ending the 30^th of June, 2013 (2012/2013 season). Manchester United experienced a small decrease in turnover in the 2011/2012 season compared to the year before but now the club is back on the right track. United has shown strong form regarding the club’s ability to negotiate new commercial deals for what reason commercial revenues increased by 29.7 %. The good result has also influenced the debt level positively and the debt decreased by 10.9 %. While United is doing very well on the sponsorship and matchday front, the club faced a small shrinkage in its broadcast revenues due to minimized earnings from the UEFA Champions League.

This growth spiral positions Manchester United well in connection with the club’s ambition to ‘be the best football club in the world – both on and off the pitch’ (source: Manchester United). Salaries rose by 11.6 %, which is not only allocated to players but also in relation to the club’s investment in new digital operations – and that follows one of the trends in top football that ‘you must be willing to invest at all levels to keep up the pace with the best national and international competition’. It also seems to be a sound strategy to follow given the rapid rise of emerging technologies and its impact on sports consumption, e.g. sports fan spend 1-2.5 hours per week consuming sport on social platforms and in most markets there are very good growth rates when measuring the level of sports consumed via social networks and online devices and we are probably getting ready for an era of ‘connective television’, which top clubs like United naturally adapt to.

Overall, Manchester United had a profit of £17.2 mio. for the year. From a business perspective, that is very good news but football clubs at this level have to manage the balance between building and enhancing the brand and the business operations to maximize profits on one side and investing in players and thus securing a ‘profitable’ sporting position of the other side. A top club like United has also had to face ‘negative fan voices’ due to minimal transfer activities for what reason it turned out to be a good thing for the club that Wayne Rooney stayed and that the club made sure to communicate that funds for transfer activities were available to the new manager David Moyes – a smart strategic move by the club’s communications department since information and thus a good relationship with fans is key to growth in professional sports. This point illustrates how important it is for a sports property to share information with its most important stakeholder groups and there is always an explanation behind a story. Now, time will show if the club’s minimal actions on the transfer market and the explanation behind it are enough to manage the fan relationship – the upcoming sporting performances will show and United underlined its support to David Moyes when signing a six-year contract. Additionally, Ferguson’s tenure with United showed that shaping and nurturing a world-class football culture and club is a long-term process. From my perspective, it also makes some sense to get to know the team and its current strengths and weaknesses before flying out and buying tons of new players.

Such decisions require time and strategic decision-making seems to be a big part of United’s business model on and off the pitch, which is also illustrated in how the club integrates its players in commercial activities. That behavior also shows in terms of how the club’s commercial activities are ‘fine-tuned’ in connection to what the club does to cater to its differentiated commercial categories and markets.