The business of football from the best – Sir Alex
The second instalment of the football series from Hannah of Hoyland Marketing
How does a football team makes money?
1. TV deals – each club in the league gets a share of the deal. 2016 PL £560m 3-year deal for TV rights in China.
2. Transfers – obvious one
3. Sponsorships – logo on shirts, billboards Adidas 2014 £75M 10-year deal, Chevrolet £53 7 year deal with Man U
4. Ticket Sales – many clubs moving to larger premises, so they can boost sales
6. Owners – inject a large amount of money when they arrive. Malcolm Glazer £790m in 2005.
7. Prize money – Winning the FA Cup in 2016 was worth 1.8 million.
Every single one of these depends upon winning!
When he arrived at Manchester United, only one player was under 24. So, the shift to playing “the class of 92” was ground breaking. He didn’t just do this because he thought all the younger players were better than the older ones. He was a great business strategist.
Younger players are cheaper than older players. If you are training the younger players already, and they are training together already, you’ve already got a team. You have to put less money and effort into creating it.
The earlier you sell a player the more they are worth. Because Manchester United was playing younger players it could afford to sell players younger too.
“the cycle of a successful team lasts maybe four years…so we tried to visualise the team three or four years ahead”
United was spending less on incoming players and making more on selling players, it was working as a business financially as well as a team emotionally.
The figures speak for themselves
During his last season (2012-13) at Manchester United, Forbes top footballing rich list looked like this:
1. Manchester United - $2.235bn (£1.396bn)
2. Real Madrid - $1.877bn (£1.17bn)
3. Barcelona - $1.307bn (£816m)
4. Arsenal - $1.292bn (£807m)
5. Bayern Munich - $1.235bn (£770m)
6. AC Milan - $989m (£615m)
7. Chelsea - $761m (£473m)
8. Liverpool - $619m (£385m)
9. Juventus - $591m (£367m)
10. Schalke 04 - $587m (£365m)
When Manchester United floated in 1991, it was valued at $74m, 3 times revenue. In 2005, when Glazer invested it had risen to 5.6 times the revenue. From the beginning of the Barclays Premier League in 1992, revenues rose from $39m to $502m in 2012 (Source: Forbes).
You can’t argue with that!