Wednesday, November 6, 2013

Strategy from Newton Heath to Manchester United

Manchester United’s ambition to be the most successful team in football will be achieved by developing a successful and sustainable business. To this end, the football and commercial operations of Manchester United work hand-in-hand. There really is “only one United”.
I am a huge fan of soccer (real Football, not the one where men in tights hold an egg shaped object in their hands), and my favorite team is Manchester United. Manchester United used to be known as Newton Heath football club, a team formed by pensioners of Manchester, and staffed with players who are blue collared employees, carpenters, brick layers, masons, plumbers etc. Today, Manchester united is the largest and biggest sports franchise in the world. With a global fan outreach of over 1 billion people, and financial value estimated at almost $3 billion dollars, Manchester united is no longer a football club but a global organization. So what strategies did Manchester United embrace in order to grow from just a football club to a global organization? When question was proposed to their former manager and Chairman, Sir Alex Ferguson and David Gill respectively; the collectively said it all starts from our core mantra “ONE UNITED”. Sir Alex Ferguson explained that the organization had to work together as one group; both the football affairs, Business, operations and even the players have to buy in to this mentality.
Manchester United’s ambition to be the most successful team in football will be achieved by developing a successful and sustainable business. To this end, the football and commercial operations of Manchester United work hand-in-hand. There really is “only one United”. In order to grow revenue streams under our control, the Board has agreed five key strategies for the Company.
1. Maintaining playing success
The first of these, which underpins all our plans, is the need to sustain the playing success of the last 12 years. Like our fans, we were disappointed by our performance in the Premiership and Champions League, but our success in winning the FA Cup for the first time since our treble winning season in 1999 came as a welcome reward at the end of a season that had originally promised so much. Going forward, we will continue to invest in our squad and play our sport in the proper spirit and style for which the Club has become famous. At the same time, we will work to preserve the financial strength of the Club by seeking to structure players’ pay such that it is increasingly dependent on European Champions League qualification, appearances and team success. No individual player can generate the success to which we aspire, but a strong squad is required to secure European qualification and show progress in each season’s Champions League.
2. Treating fans as customers
Our second key strategy is to ensure we treat our fans as customers, offering them a good matchday experience, and a range of additional products and services which meets their interests, while enabling them to demonstrate their affinity with the Club. By working with partners who can promote our membership scheme, our financial services and other products and services, we see good opportunities to grow our relationship with the millions of fans worldwide. During the year our membership scheme, One United, reached 193,000 members (2003 151,000 members).
3. Leveraging the global brand
Thirdly, we continue to work to develop our partnership with our sponsors. Nike for example, has shown its commitment to building our relationship with fans through its subsidiary, Manchester United Merchandising Limited (MUML). They have generated profits in excess of the minimum guarantee over the first two years of our thirteen year deal, staged the worldwide Under-15 Manchester United Premier Cup and launched the Disneyland Paris Soccer School in April.
Vodafone has demonstrated the mutual benefits of our association by the renewal of its four-year relationship with the Club for £36 million. Together we will build our MU Mobile business by offering new services to mobile phone users who want to stay in tune with the latest news and events at the Club.
4. Developing media rights
Fourthly, we must use our media rights more effectively, and so are planning to consolidate the management of our delayed video rights, with our matchday media, publications and use of the internet. The unique content that the Club can generate provides an excellent opportunity to build our relationship with our fans around the world by delivering news and images to them wherever, whenever and however they want.
5. Maximising the use of Old Trafford
Finally, the venue of Old Trafford provides unique opportunities to develop new revenues, not just by the planned stadium expansion, but also by continuing to improve the matchday experience for our customers. The installation of electronic point of sale equipment in our kiosks and suites, together with new recruitment and training initiatives should ensure our customers receive a faster, more satisfying service. In addition, the stadium offers a perfect venue for many conferences and events on non-matchdays. Proactive marketing and servicing of those organisations will grow our venue revenues.
It is inevitable that there is some volatility in our results given that a significant portion of our revenue in any year is a function of both the previous and current season’s performance. However, this five-pronged strategy is designed to drive consistency and growth in revenues not directly related to team performance. This in turn will allow us to continue investing in players and challenging for trophies.
Running a football club as a business
Manchester United has built a sound business on the heritage of a great football club and its unique record of success under Sir Alex Ferguson. This year, once again, our committed and loyal staff have worked tirelessly to deliver on the high expectations of our fans and partners. This, combined with our proven financial discipline and prudent management of the cash generated by the business, should continue to provide long-term growth for shareholders
 and further playing success for our fans.

Recently, Manchester United signed a contract with GM worth almost $500 millions dollars as partners and sponsors. This deal has in turn helped both Manchester United brand awarness in America, and GM's brand awareness in Europe. To maintain their position as a global entity and the largest most profitable sports franchise Manchester united continues to evolve its strategies, by making key partnerships such as the one described above, commercialization of players as brands, global community outreach, continuous success on the pitch. This leads me to ask can Global firms learn from sports franchises like Manchester United for ways they can continue to grow their firm. 

REFERENCE

my Autogragh, Sir Alex fergusion, Nov 5th, 2013, hodder &stroughton


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