The Glazer family’s takeover of Manchester United in 2005 was met with animosity and protests from many of the club’s staunchest supporters.
The stands at Old Trafford brimmed with embittered fans in green and gold scarves, the original colours of the club at its founding as Newton Heath in 1878. A splinter club was even formed called FC United of Manchester.
Flash forward to 2016 and Manchester United have become the first club in the United Kingdom to report a yearly revenue of over half a billion pounds. Since the take over, Manchester United have won the Premier League five times, the Champions League once and even added an FA Cup victory last season as well. So was all of this anger misplaced? Not necessarily, but it was a rushed conclusion.
Protests surrounding the Manchester United takeover centred on the Glazers borrowing against the club to finance the sale, putting the previously debt-free club £558.9m in the red. The Glazers, however, were unperturbed.
Through a £500million bond scheme, partial flotation on the New York Stock Exchange and a series of corporate partnerships, net debt now sits at £260.9m as of June 2016, and appears to have no impact on the club’s financial capabilities and transfer policy.
Yearly revenue for 2016 numbered at £513.7million, breaking the English club record. Only Barcelona surpassed United in yearly revenue in pound values for 2016, a result of the stronger euro compared to the pound following the United Kingdom’s European Union referendum vote in June.
No one can argue that transfers have been stifled recently under the Glazers, with the club breaking world record transfer fee to secure midfielder Paul Pogba over the summer.
Prior to the takeover, Manchester United’s commercial department employed a total of two staff members. That number immediately rose to 150 after the Glazers took ownership, and other English clubs have attempted to model their own commercial departments in kind. None have come close.
Manchester United’s SEC filing for its Initial Public Offering in 2012 stated that the club has 659 million fans worldwide, and The Times reported in 2011 that United have almost “five times as many overseas supporters as Liverpool and more than twice the figure for the next popular club.”
Consultancy firm Brand Finance thus named Manchester United the most valuable football brand in 2016, adding that, commercially, they “anticipate the 20 times Premier League champions continuing to dominate in years to come.”
The club announced this week an official pillow and mattress partnership with Mlily, adding to a list of over 60 corporate partners that include a formal footwear partner, wine partner, feature film partner and noodle partner, among many others. The United brand is highly attractive to leading multinationals as well, with corporations such as 20th Century Fox, Tag Heuer, Toshiba, Adidas, DHL and Gulf Oil counting themselves among the Red Devils’ global partners.
The Glazers also immediately challenged the undervaluation of Premier League clubs by shirt sponsors when they arrived in Manchester. Vodafone had been Manchester United’s shirt sponsor since 2000, paying the club £9m-per-year, a figure that the Glazers felt severely undervalued the worth of the Manchester United shirt. Vodafone ended their arrangement two years early.
AIG became the new shirt sponsor for a fee of £14m-per-year, but the insurance company was soon succeeded after two years by AoN for payments of £20m-per-year. In 2014, Chevrolet signed on to become United’s shirt sponsor for a world record figure of £53million per year.
At the time of Vodafone’s split with Manchester United, the other top leagues were outpacing the Premier League in terms of shirt sponsorship. Real Madrid had begun a £14million-per-year deal with BenQ Mobile in 2005, and the most lucrative shirt sponsorship in Europe at the time was Juventus’ £15m-per-year deal with Tamoil. The highest value shirt sponsorship deal in England was just £10m-per-year, an agreement signed between Chelsea and Samsung in 2005 just days before Chelsea secured its first league title in 50 years.
Manchester United’s American owners recognised this potential and capitalised, and other clubs followed suite. Last year, Chelsea signed a £40m-per-year shirt sponsorship deal with Yokohama Tires. Arsenal earns £30m-per-year from Fly Emirates, and Standard Charter sends Liverpool £25m- per-year.
Vodafone made the mistake of undervaluing Manchester United, a decision that the company may now regret. The Glazers revolutionised sponsorship, and while their arrival brought unprecedented and sometimes unwanted branding and commercialisation to the Premier League, these increased sponsorship funds can then be allocated for the betterment of the team, stadium and fan experience.
The response to the Glazers was understandable, but an overreaction. Saddling the club with massive debt could have ruined Manchester United, but it is to the credit of the Glazers and arguably even more so Alex Ferguson that the club only improved in results and in commercial value. Other American owners have since followed, such as Stan Kroenke at Arsenal and John Henry at Liverpool.
Under the Glazers, Manchester United became a dominant global footballing brand. Their revenues are unprecedented for an English club; their trophy count unrivalled.
The American owners have also proven to be adaptable. After losing the 2011-12 Premier League title on the last day to rivals Manchester City, the Glazers broke club policy on signing expensive, ageing players to obtain star striker Robin van Persie. Manchester United were the next season’s champions, 11 points clear at the top.
Perhaps the supporters owe them a debt of their own.