Manchester United, brand of Hope and

glory

Presented by:Pritish Jana (09IB-039)Rachit Kaul (09IB-040)Rahul Anwala (09IB-042)Rahul Chatterjee (09IB-043)Rajesh Singh (09IB-044)Raghav Agarwal (09IB-041)

Flow of presentation

• Man U’s History• Manchester United Transformation• The united Stratagem• Factors affecting United's future• Question 1: governance contention• Question 2:decision autopsy• Question 3:ethics again• Question 4: cultural payoff’s

Man U’s History

MUFC: History 1• Manchester United was formed in 1878 as

Newton Heath LYR Football Club by the Carriage and Wagon department of the Lancashire and Yorkshire Railway depot at Newton Heath.

• The club changed its name after coming close to bankruptcy in 1902

• In 1909, the club moved to its current home, Old Trafford, the third-largest football ground in the United Kingdom.

• In 1958, the Munich air disaster claimed the lives of eight of its players.

• In 1968, under the management of Matt Busby, Manchester United became the first English football club to win the European Cup.

MUFC: History 2• In 1986, Sir Alex Ferguson  took over as the manager

and is regarded as the most successful manager in the club's history, having won 26 major honours.

• The club is unique in having won the Premier League, the FA Cup and the UEFA Champions League in a single season, a feat known as The Treble, doing so in 1998–99.

• Manchester United holds a joint-record of 18 league titles, four League Cups and a record 11 FA Cups

• After being floated on the London Stock Exchange in 1991, the club was purchased by the Glazer family in May 2005 in a deal valuing the club at almost £800 million.

• Manchester United became a global brand valued by Forbes magazine at $285 million

• The club is stated worth £1.19 billion, making it the most valuable football club in the world

The Business of Football: Brand Beckham• Beckham’s medical and subsequent contract signing

ceremony was enthusiastically covered by world media.• MANU accepted 30m pound transfer bid for Beckham

from Barcelona.• But he chose to join Real Madrid.• Madrid squeezed down the transfer fee to a maximum of

25m pound.• Madrid started maximizing the return from investment in

Beckham.• Advertising revenue from signing ceremony raised 2m

pound.• Number 23 Beckham replica shirts was estimated to

earn 2m pound.• Madrid was further looking to increase the returns with

the Brand Beckham

MUFC: The Super club

• Sir Alex Ferguson was responsible for deciding Beckham’s transfer.

• The impressive financial credentials made them the world’s largest club generating 100m pound.

• In march 2000, the club’s share price reached 402p making the market valuation touching 1bn pound figure.

• In 2003 shares hit 200p with a reported 22 percent increase in pre-tax profits,

• Turnover reached 173m pound.• Increasing number of players and pay roll costs didn’t

affect the turnover.• The club clearly aimed at make MANU as a unique

brand which to trade.

MUFC: The Transformation• After the Munich air disaster the club showed

dogged determination to continue.• MANU was among the few first to boast supporters

across countries.• MANU name and history became known in every

football playing country .• In 1989 United value was pegged around 10m

pound.• By 1997 it become the world’s wealthiest club.• In 1999 the club’s board showed interest in

accepting the offer of 623m pound from BskyB.• Uprising of supporters led government to block the

plan of sale.

The united Stratagem

MUFC: The New Ethos• UEFA offered doubling of Champion league to 32 clubs to

avert the idea of European super league.• Clubs benefited from greater revenues by having more

matches.• G14 club formed to press for more concessions from UEFA• MANU CEO became the G14 vice president.• MANU’s 2003 financial account revealed that by competing in

UEFA champion league it earns 28m pound and earns 8.5m pound by participating in domestic FA cup

• Football getting commercialized with United leading the change by tie ups with various brands

• Umbro International sportswear chief Peter Kenyon joined the board in 1997

• To prove that they are running socially responsible business it entered in partnership with UNICEF

• In August 2000, Kenyon succeeded Edwards as chief executive and changed business style to be more communicating and people centered.

MUFC: The Future• Under Sir Alex Ferguson’s management the club achieved huge on

field success.• Merchandising and related activity expanded with over 1500 items.• In 2000, 15000 square-foot and internet related Red Café was

opened in Asia• Using CRM system, they built buying profiles of 1.9m UK members

with a target of reaching 3.5m fan details by 2006• Organizations paid huge amount to associate with Manchester

United.• Future investment plans were made well in advance in new

technology.• Official website was initially launched in 1998, when it was re-

launched in 2002,it was achieving 600,000 unique visitors per month.

• Multi million pound Trafford Training Centre was built spanning 70 acres

• Financial analyst believed that new markets are yet to be explored which will generate huge income.

• China alone has 20m potential customers yet to be tapped.• In Dec 2002 Edwards stepped down as chairman followed by the

surprised resignation of Chief Executive Peter Kenyon in September 2003

Uncomfortable questions

• Would United’s commercial operations suffer as a result of Kenyon’s departure?

• How much longer would an aging Sir Alex continue as manager and would the team be as successful if he retired?

• Would predators eye United’s cash rich position and seek to gain ownership possibly with the intention of diluting the current emphasis on investing on the playing side of the business?

Question 1: governance contention

Question 1

Are the various aspects of Corporate Governance appropriate for a football

club?

CORPORATE GOVERNANCE

Owner

Honorary President

Manchester United Ltd Manchester United Football Club

Coaching & Medical Staff

Co-chairmanChief Executive OfficerChief Operating OfficerCommercial DirectorChief of StaffNon-Executive Directors

DirectorClub SecretaryGlobal Ambassador

ManagerAssistant managerFirst team coachGoalkeeping coachFitness coachReserve team manager

CORPORATE GOVERNANCE

Separate ownership & Management Dual mission

Promote sporting success on one handoperate as commercial business on other hand

Create a playerCreate a teamManage the whole set of possible products and

offerings.Merchandising

WHO ‘BUYS’ FOOTBALL ?

Spectators and Supporters (fan base)

Club Members

Media

Sponsors

Local Communities

The networks of value capturers in professional football

The virtual-physical framework

Question 2:decision autopsy

Question 2

Undertake a stakeholder mapping for any strategic development that is likely to be

under consideration by the board?

STAKEHOLDER MAPPING: Power-Interest matrix

STRATEGIC DEVELOPMENTS

• Take over bid by BskyB, broadcasting company

• Formation of a new European Super League of clubs

• Alliance with New York Yankees, American baseball league team

Power

Interest

Low

High

HighLow

Take over bid by BskyB

Board Members (+)

Supporters (-)

Players (-)

Media Partners(+)

Government (-)

Power

Interest

Low

High

HighLow

European Super League

Board Members (+)

Supporters

Players (Indifferent)

Media Partners (+)

EPL & UEFA (-)

Power

Interest

Low

High

HighLow

Alliance with New York Yankees

Board Members (+)

Supporters (+)

Media Partners (+)

Players (Indifferent)

Question 3:ethics again

Question 3

Which ethical stance best describes Manchester United?

FOUR POSSIBLE ETHICAL STANCES

Ethical Stances

2Longer-Term shareholder

interest

3Multiple

stakeholder obligation

4Shaper of

Society

1Short-term shareholder

interest

Extent to which an organisation will exceed its minimum obligations to stakeholders and societyBenefits to

Stakeholders, Explicitly incorporated in Cos. Purpose & strategy.

ST Benefits to Shareholders, Legal &

regulatory responsibility for government

Ideological, Society Responsibility

LT Benefits to Shareholders, Legal & regulatory responsibility

for governmentRelationship with Stakeholders

MUFC: Multiple Stakeholder Obligations

• Stakeholders include the players, administration, fans, employees, shareholders and society at large

• Performance of MUFC is measured in a much more pluralistic way than just through financial bottom lines.

• Managing the difficult political trade offs between conflicting shareholder expectations is of paramount importance to MUFC to maintain it’s brand image.

• The sale of David Beckham to Real Madrid was only for football related reasons alone.

• The CEO of MUFC made a comment that using players to exploit particular markets would be ‘cheating the fans’.

• Focus on infrastructure development and investment in the club’s future in terms of talent.

• Shareholders taken care of in terms of good performance in the stock market.

• Synergy of the game and the business of football.

Question 4: cultural payoff’s

Question 4

• What were the key cultural characteristics of Manchester United in terms of values, beliefs and taken-for-granted assumptions?

• What are the implications of these changes to current and future strategies?

MUFC: 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

• Maintain the playing success• Developing the value of media rights

• Leveraging the global brand• Converting more fans into customers

MUFC: Vision Statement

• United: committed passion for success

• Non-discriminatory: accessible to all

• Innovative: to be the ‘first to the ball’ at all times

• Team oriented: working together with dedication

• Excelling: to be a world class leader

• Determined: in the pursuit of success while being accountable.

Implications of change for MUFC

• Exploring global markets- Attracted by the huge potential market and their growing fan base in Asia and in the rest of the world.

• Developing a global brand- The fundamental danger of the current commercialization of European football is that the fan will no longer feel any ‘equity’ in the game.

• Focus on profits- Professional football is big business and MUFC management understood that long back and seem to be committed to delivering the best of both the worlds.

• Sustainability- The strategy MUFC has adopted will help them in sustaining themselves in the future against financial stress. The intangible equity in terms of goodwill will help the club to fight the hard times.

THANK YOU