Manchester United plc‘A truly global brand’: Manchester United plc ‘A truly global brand’ Team Members: Michael Crozier Sharon Hayes Paul McVeigh Ken Simpson Kathie Walker Course Tutors: Professor Patrick McNamee Dr Kate Stewart December 2004


The Market: The Market Industry Leisure Sports Football Global Sport Played by 240 million 1.5 million teams 300,000 clubs 28.8 billion watched the 2002 World Cup on TV in 213 countries Major Brands All European Total income - All 52 Leagues - £6.9 billion - Big 5 - £3.7 billion (54%) - English Premiership - £1.2 billion (33%)


The Products: The Products Matchdays (29%) Domestic League and Cup Tickets European Match Tickets Travel, Programmes, Catering and Hospitality Media (44%) TV deals for Domestic Matches TV deals for European Games TV rights Worldwide Commercial (27%) Sponsorships Non Matchday Activities (Catering Tours) Branded Products Other Activities (Finance, Betting)


Top 12 Clubs by Revenue (€ ms): Top 12 Clubs by Revenue (€ ms)


Competitive Analysis: Competitive Analysis Structuralist approach (Bain/Porter) Resource-based views (Barney & Arikan – 2002) V = v(Q, MW, F, MR) (Berman, Down & Hill – 2002) where Q = playing resources MW = coaching resources F = allegiance resources MR = management resources Emphasises importance of tacit knowledge and shared experiences


Q = Playing Resources: Q = Playing Resources Efficient Market Hypothesis : Cost = Quality Transfer fees = resource improvement capability Home Grown Talent = tacit knowledge/shared experiences A key driver of team performance A unique resource


MW : Coaching Resources: MW : Coaching Resources Causal relationship – tenure –v- success Tenure = tacit knowledge Tacit knowledge = Transfer + Integration success


F : Allegiance Resources: F : Allegiance Resources Fan base size = commercial success Current capacity = 68,200 (99% attendance) Arsenal’s new stadium = 60,000 (currently 38,500) Fan base > attendees


MR : Management Resources: MR : Management Resources PLC regulations and controls Sound commercial structure - Marketing centred 2002/03 growth = 22%


Current Market Conditions: Current Market Conditions Wary capital market Disappointing financial performances Transfer market downturn (-51% in 02/03) Wage downturn (Game theory) Return for capital as well as labour Matchday Revenue Stale : certainty of results Stadia expansion Broadcast market levelling off 44% of turnover (1.8 billion euros for Big 5) Emerging technologies (video-on-demand, mobile) Worldwide opportunities Disaggregation (rights sold by individual clubs) Commercial Activities Increasing world appetite Increasing capability to exploit


History of Business: History of Business 1878 – Newton Heath 1902 – Manchester United 1910 – Old Trafford 1991 – plc status


Activities and Corporate Structure: Activities and Corporate Structure


Product Definition: Product Definition


Slide14: Product Market Portfolio


Slide15: Different Sponsors Around the World USA Nike, Budweiser, Schick Wilkinson Sword and Pepsi Europe Vodafone and Ladbrokes South Africa Dimension Data Asia Fuji Film


SWOT: SWOT


Ownership: Ownership And many more… UBS Global Asset Management Maurice Watkins M&G Richard Kevin Post The Top 5 Barclays Global Invesco Asset Management Hermes Pension Management Miscellaneous Small Investors


Slide18: Turnover breakdown 2003 Earnings per Share (pence) 2000 2001 2002 2004 4.6 5.5 9.6 11.5 7.4 129.6 146.1 2000 2003 Turnover £m 2001 2002 2004 116.0 173.0 169.1 36.1 2002 33.8 55.1 Operating Profit £m 2000 2003 2001 2004 40.0 58.3 Financial Position


Mission Statement: Mission Statement ‘Our goal is, through innovation, commitment and evolution, to protect and develop the brand by sustaining the playing success on the field and growing the business to enhance the financial strength of the Group’


Core Strategies: Core Strategies Maintain the playing success Developing the value of media rights Leveraging the global brand Converting more fans to customers


Why is Manchester United a successful brand?: Why is Manchester United a successful brand? Manchester United does not refer to a specific product or range of products as most conventional brand names such as Coca-Cola does. The Manchester United brand encompasses a range of activities, services and products which have evolved as a result of its prominence in its core activity of being a successful football club brand.


Commercial Focus: Commercial Focus Targeting key markets Membership New business initiatives Re-alignment of sponsorship structure Nike Vodafone Driving profitability Re-structuring key deals Efficiency of content creation New business initiatives TREATING OUR FANS AS CUSTOMERS WORKING WITH THE RIGHT PARTNERS DEVELOPING OUR OWN MEDIA CONTENT


Pricing StrategyMid Range: Pricing Strategy Mid Range Matchday tickets Financial Services Financial services partnership with Bank of Scotland and Zurich Financial services to market products under the Manchester United finance brand. Official Merchandise The 2002 link up with sports giants Nike in a £300m deal spreading over a 13-year period for all footwear, apparel and equipment, licensed apparel and other merchandise bearing the Manchester United trademarks.


Promotion Strategy: Promotion Strategy Customer Focused Initiatives 1.7 million fans attending games MU Finance 116,000 customers International expansion One United 193,000 members International expansion 3.8 million shirts in 1st 2 years 6 million unique users p.a. c100k MUTV subscribers Customer Relationship Management Collected 2.5 million fan records Filling data gaps Segmentation of fan base Tailored communication Appropriate products and service Contractual improvement of data quality


Brand Growth: Brand Growth Merchandising Growth Domestic Merchandising presence at other football clubs Established presence in London stores International Seeking new opportunities in the Far East and North America Deals signed with NY Yankees and NJ Jets Marketing deal signed with Nike Leverage media rights effectively Media partnerships continued with BSkyB and Granada Media Group Develop PayTV revenue with MUTV Internet presence enhanced and ecommerce enabled Develop personalised content delivered direct to fans


Future Development: Future Development Old Trafford Stadium Expansion to over 75,600 seats Improve the match day experience Develop events and conferences for non-match day revenue Enhanced leisure facilities Red Cinema


Future Developments: Future Developments Continue Matchday successes Enhance Corporate Social Responsibility Support local community Backing national charities Fighting racism International contribution


Targeting Key Markets: Targeting Key Markets Strong focus on most attractive markets


Vision: Vision United …committed passion for success Non-discriminatory …accessible to all Innovative …to be ‘first to the ball’ at all times Team orientated …working together with dedication Excelling …to be the world-class leader Determined …in pursuit of success whilst being accountable


A Sustainable Global Brand?: A Sustainable Global Brand? Sustainability Potential Increase of Fan Base 9k extra seats = an extra £10m Coaching Change Financial Maximised Revenue Potential Strong Base and Good Management Threat of take-over by Glazer Increase of Borrowing against Assets Creating Debt + Interest Charges Less Money for New Players Performance Unique Environment Commercial Opportunities Competitive Advantage