strategic management1- manchester united
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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 199899. 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 Beckhams 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 Beckhams transfer. The impressive financial credentials made them the worlds largest club generating 100m pound. In march 2000, the clubs 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 didnt 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 worlds wealthiest club. In 1999 the clubs 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. MANUs 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 Fergusons 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 Caf 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
Are the various aspects of Corporate Governance appropriate for a football club?
Director Club Secretary Global Ambassador
Co-chairman Chief Executive Officer Chief Operating Officer Commercial Director Chief of Staff Non-Executive Directors
Manchester United Ltd
Manchester United Football Club
Coaching & Medical Staff
Manager Assistant manager First team coach Goalkeeping coach Fitness coach Reserve team manager
CORPORATE GOVERNANCESeparate ownership & Management Dual missionPromote sporting success on one hand operate as commercial business on other hand
Create a player Create a team Manage the whole set of possible products and offerings. Merchandising
WHO 8BUYS] 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
Undertake a stakeholder mapping for any strategic development that is likely to be under consideration by the board?
STAKEHOLDER MAPPING: POWERINTEREST 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
TAKE OVER BID BY BSKYB
Board Members (+) Government (-)
PowerMedia Partners(+) Low Supporters (-)
EUROPEAN SUPER LEAGUE
Board Members (+) EPL & UEFA (-)
Media Partners (+)
ALLIANCE WITH NEW YORK YANKEESBoard Members (+) Media Partners (+)
QUESTION 3:ETHICS AGAIN
Which ethical stance best describes Manchester United?
FOUR POSSIBLE ETHICAL STANCESST Benefits to Shareholders, Legal & regulatory responsibility for government LT Benefits to Shareholders, Legal & regulatory responsibility for government Relationship with Stakeholders
1 Short-term shareholder interest Ethical Stances 3 Multiple stakeholder obligationBenefits to Stakeholders, Explicitly incorporated in Cos. Purpose & strategy.
2 Longer-Term shareholder interest
Extent to which an organisation will exceed its minimum obligations to stakeholders and society
4 Shaper of Society
Ideological, Society Responsibility
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
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 en