Manchester United: A True Winner Off the Pitch

A long-term strategic vision and a series of proactive initiatives executed a decade back are paying off now for Manchester United
by Anil Kadiyala   |   Friday, July 18, 2014

#FootyBiz - column on international football business, soccer marketing and finance.

Manchester United had their worst season in over two decades in 2013-14, failed to qualify for the Champions League and yet Adidas have decided to pay the club a staggering £75 million a season in a record breaking kit deal which is more than double of what the current highest paid club acquires from a kit sponsor.

Surprised? You shouldn’t be.

Before looking into why Adidas has decided to invest £750 million over a 10-year period starting 2015-16, lets look at how much other teams earn currently from their official kit partners.

As per the existing kit deals, Real Madrid receive £31 million per season, Arsenal and Chelsea receive £30 million followed by Barcelona with £27 million and Liverpool with £25 million per season. Other clubs are set to renegotiate their existing kit deals inside the next 3-4 years but none of the English clubs are likely to earn the same amount of revenue through their kit deal as Manchester United is doing.

Manchester United currently earns close to £25 million per season plus a share of profit from merchandise sales worldwide. So the deal with Adidas is bound to double at the least and way beyond what the other clubs earn.

Starting this season Chevrolet would be paying £53 million per season to have their logo on the jersey plus AON already pays the club £15 million per season for training ground naming rights and their logo on the training kit. So beginning 2015-16 the club is likely to receive a staggering £143 million per season just through these three deals. This is way beyond what the rest of the clubs earn.

Manchester United are still able to attract a record-breaking deal with Adidas due to their strong business model that stands out from the rest. Commercial boundaries for a football club were redefined by Manchester united a decade or so ago when they were on a long-term mission to expand their global presence. The word ‘long-term’ usually doesn’t go hand in hand with ‘income generated’ as the clubs in the modern era expect instant returns for every penny that is invested.

But Manchester United had other plans. Their effort to take the club a step closer to the potential fans has paid off with the club expanding their presence well beyond Europe. Amongst the regions the club had targeted, Asia was of primary focus and today the club boasts of nearly 50% of its overall fan base to be from Asia.

Manchester United was the first club that opened a chain of café and restaurants in several regions, giving the locals an opportunity to hang out with fellow fans and watch the games. At a time when the fans of every club wanted to own a piece of their club’s merchandise, it was Manchester United who made official merchandise accessible to its fans all across the globe, through their channel partners. Apart from these initiatives, the club also officially recognized the fan clubs and their website was accessible in different other languages.

All such initiatives put together have helped the club take themselves a step closer to its fans and resulted in achieving considerable success off the pitch and this is the reason why Adidas are prepared to pay a staggering amount to associate themselves with the club.

The successful exploitation the Asian market by Manchester United is also evident from their current list of sponsors that boasts 50% of brands from Asia. In a single quarter in 2013, Manchester United had signed new sponsorship deals with 12 different brands, a proof that brands see Manchester United as a strong source of reaching out to their customers.

Manchester United were proactive enough to bank on an untapped market and thus generated very good returns in terms of the fan base they boast of currently and also the commercial revenue they regularly tend to generate from global market. Rest of the clubs followed this model but none of them so far are able to generate same returns that Manchester United as they were the ones to make the first move and club football is not a product where customers change from one brand to other. This is the reason why Manchester United will stand out from the rest unless we see another club being innovative and doing things in a more efficient manner.

The club might not win the premier league in the upcoming season but Manchester United will remain undisputed champions off the pitch.

Anil KADIYALA

Nationality:
India
College:
Robert Gordon Univ.
Club Domestic:
Club Foreign:
Liverpool FC
A sports enthusiast and a soccer freak who previously worked in various sectors outside sports but eventually had to respond to the love of his life and at present working as a sports marketing professional.
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