Remember when the Glazers bought Man Utd back in May, 2005? They paid around £800m for it; most of it in loans secured directly on the Club, and most of the rest in PIK loans which were also, indirectly, similarly secured. Apart from the blatancy of the leveraged buy-out, the question that perplexed many at the time was: How do they expect to make real money out of this deal?
Most commentators thought the commercial operation at Old Trafford at the time was one of the most successful and efficient sports businesses on earth. Prior to carrying the huge debt the Glazers laid on it, Man Utd were far and away the most profitable outfit in the football world. If the Club was already pretty much at the top of its game (both on and off the pitch) where did the new owners see additional value coming from?
Some wondered whether the Glazers thought that the Club’s much trumpeted, global fan base (100 to 350 million depending on who you want to believe) could be’ monetised’ more effectively, though it was already becoming clear to all big clubs that extracting significant revenue from these distant fans wasn’t proving easy.
Perhaps the Yanks thought they could withdraw from the Premier League’s collective selling of the overseas TV rights (and that they’d misunderstood the democratic, one-club-one-vote PL constitution)? Maybe they just thought: ‘Man Utd will simply get more valuable as time goes by, and we’ll harvest the cash and fill our boots when the fruit is ripe’.
That latter theory was tested in the autumn of 2009 when, reportedly, the Glazers were offered £1.5billion for the Club – and they turned the bid down. In a world where financial market were crashing all around them, they could have sold up; paid down the £700m debt, and walked into the Florida sunset with a cool £700million in their commodious back pockets.
Not bad for just over four years ‘work’ in the football business. Why didn’t they grab it and run? Instead, they put up a ‘Not for Sale’ sign and sat tight.
Surely, they must think there’s the prospect of a really big prize somewhere in the offing? Man Utd is certainly not any closer to making anything other than small change from the foreign legions of their fans. (Such income is reportedly around 3% of turnover.) Can they grow their commercial operation to new spectacular heights? Probably not.
It must be the media rights area. Could there now be a way of making hundreds of millions more for the Club selling its own live TV rights directly to those fans abroad?
The digital revolution rolls on relentlessly. Though selling mobile phone clips of goals etc. hasn’t exactly floated any financial boats for clubs like Man Utd, the growing excellence of digital broadcast quality, and the technical ability to stream live matches in HD quite cheaply via broadband into TV sets anywhere, could be the game-changer.
If you play the numbers game, starting with the most conservative estimate of 100 million Man Utd fans throughout the world, what sort of money could you make selling directly to them, especially if you offer them something no one else can deliver: guaranteed live coverage of every home game, wherever you live abroad?
If you could persuade a mere 10% of those millions to pay a quid a game – and more or less bet on 25 home matches a season (19 PL games and half a dozen in various Cup competitions) – the £250 million generated would equal around 80% of Man Utd’s entire current turnover.
But how would the big clubs persuade thlye rest of their colleagues in the PL to go along with changing the present system of collective selling overseas TV rights (with the dosh divided equally between all twenty clubs) when any such change would lose them money? The answer may be by showing the lesser clubs more numbers.
What if even the smaller clubs could make more money broadcasting ‘digitally’ than they do currently, via their ownership of their own home matches against the ‘big boys’? Maybe things can – and will – change quite radically as time moves, increasingly rapidly, on its forward march.
That would make sense – at least some sense – of why the Glazers remain at Man Utd.
Dr Rogan Taylor is the Director of the Football Industry Group at the University of Liverpool. He is also a writer and broadcaster, with five football books and numerous radio and TV contributions. He has acted as a special adviser to The FA, The Premier League and Premier League Clubs.
The views of our regular columnists are independent, and as such do not represent those of Leaders in Football.
