Commercialization of Football – Manchester United Fc

COMMERCIALIZATION OF FOOTBALL – MANCHESTER UNITED FC

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Commercialization of Football – Manchester United FC

Introduction

Football has witnessed evolution in the recent decades such that it has transformed into a commercialized entity. For instance, before the 1992 season, Premier League was mostly a weekend hobby and more about competitive rivalry among the participating team. However, football clubs are now focusing its performances from a business perspective. Annual revenue has become just as important as a team’s performance in the pitch. The reasons for such changes are attributed to globalization whereby a team’s fan bases stretches across the globe and not just within the local community. Such revolutions have had ripple effect whereby even wages and salaries paid to players has tremendously increased over the years. For example, weekly wages increased from an average of £400 per week in 1960s to a player getting as high as £290,000 per week in 2018.

Clubs are now able to afford paying such high wages due to increased earnings and ownership by billionaires. Other sources of revenue include ticket sales, sponsorships and TV broadcasting rights. Most importantly, football clubs have discovered the importance of branding and financial significances of overall commercialization of football. Therefore, this paper examines commercialization of football with Manchester United as the case study.  

Overview of Manchester United as Business

In terms of trophies and milestone achievements, Manchester United is regarded as the most successful football club in the English Premier League. The club is also considered the most valuable club in the world, a fete it achieved in 2018 after surpassing Real Madrid and Barcelona. Moreover, it is the first and only football club to be listed on the NYSE and boasts of more than 700 million followers worldwide. The club has the highest number of Premier League titles even though the club has not lifted the trophy since the departure of Sir Alex Ferguson in 2013. Despite the club’s poor performance on the pitch, its financial accomplishments have been impressive over the same period.

The club has been getting richer and richer over the years, which is good news to shareholders and the owners, but a bad news for its fans. Manchester United’s financial success has promoted other clubs to emulate their business model. As observed by Edensor (p.83 2015), the club’s success has opened up a new viewpoint into football, which is the business part. Clubs are increasingly engaging into the commercial part of football in the same manner as the enthusiasm for need to win trophies. Nevertheless, Garcia and Welford (p.518) recognize that it is still important for a club like Manchester United to win trophies and improve its performance on the pitch because it helps the club’s overall financial success.    

Ways Man United Generates Revenue

Since Lee Woodward took over from David Gill as Manchester United’s CEO, the club’s largest sources of revenue have been coming from sponsorship agreements. For instance, in Woodward’s first financial year at Manchester United, the club’s sponsorships amounted to £135.8, which contributed to 31.4 percent of the total revenue. Broadcasting and matchday revenues contributed 30.1 and 25 percent of total earnings respectively (Richards, par.7 2018). Ever since, total revenues for the club have followed similar pattern, which is illustrated below.    

• Tickets

With a sitting capacity of 75,000, Old Trafford is the largest stadium in the English Premier League, which means that ticket sales have always been Man United’s main source of income until the shift into sponsorships became possible. Matchday earnings are mainly derived from weekend premier league matches and European competitions such as Champions League and Europa League. Other than tickets sales during these matchdays, the club’s revenues also stream from foods, drinks and parking.

Because of a loyal fan base, Old Trafford has the highest utilization rate in the English premier league. Like any other football team, matchday revenues for Manchester United tend to fluctuate with the team’s performance in both domestic and European leagues. For example, the team’s failure to make an appearance in the Champions League in 2016/17 season resulted in its matchday earnings declining by 11 percent (McCaskill, par.31 2017). However, because of revived performance in the 2017/18 season, the matchday earnings went up by 13 percent.

• Transfers

The club is dedicated and highly committed to its philosophy of blending top players in the world with excellent graduates from the club’s academy. In fact, Manchester United boasts of the highest number of academy graduates on playing for the premier league than any other team. The exposure enables these graduates to achieve recognition, which then increases the young players’ monetary value (Szymanski, par.26 2015). When the graduates are finally sold, they attract high transfer fees, hence profit for Manchester United. Due to increased revenue from selling young graduates, the club is able to compete for top talent across Europe. Moreover, during every transfer window, the team gets to make extra earnings, however minimal, by selling top players and acquiring equally high-valued players.    

• Sponsorships

Sponsorships are the club’s biggest revenue earner. Man United has monetized its brand on a global level by signing various sponsorship deals. Some of these deals include the likes of Adidas, General Motors, Nike, Toshiba and Bulova. Hobbs (par.34 2017) discerns that the sponsorships are strategic whereby the partnerships are not only with local businesses, but also with firms operating on a global platform. The intentions of the sponsorships are to reach as many Man United fans as possible.

Regarding sponsorship revenues in 2018, the club recorded a growth of two percent to bring home £173 million. Other than the usual Chevrolet and Adidas deals, the club partnered with Kohler for the club’s first shirtsleeve attire. In essence, the sponsorships derive revenues by placing corporate logos on the team’s training kit and the team’s shirt. An example of such revenue is Nike’s sponsorship whereby the club made a deal of 302.9 million from 2005 to 2018.