#4: Manchester United's ownership woes - PART 1
Why the owners of one of the biggest, most revered clubs are so hated and often accused of ruining the club, by their own fans. How things became so bad and what led to this. Let's dive in.
For something to go bad and ruin, there at least must be something good and solid in the first place. As everyone must have noticed, it is only PART 1. So, this is what it will focus on. To get to the part where things go bad for Manchester United fans, let’s first look at how good were things before and how did they become so good. Here, in PART 1. Also, the focus will be more on the off-the-field and business operations of Manchester United.
First, some basic background:
About Manchester United:
Manchester United (popularly known as Man-U/ United/ Red Devils) is the 4th most valuable football club in the entire world.
United has been very successful on the field. It was one of the most dominant football clubs across all European competitions in the '90s and '00s. Manchester United have won the Premier League title a record 13 times, to go with 3 UEFA Champions League Titles. United have been dwindling ever since the departure of their manager, the great Sir Alex Ferguson in 2013. 2013 was also the year they won their last Premier League Title.
The performance may have been down on the field, but not off the field. United has 1.1 billion fans and followers worldwide. They have also done well financially, being profitable more often than not.
As of 2020:
Valuation: $4.2 billion
Revenue: €509 million (which was down from previous year’s €711 million)
For context, the record for highest-ever revenue in a single year for a football club is €840 million, posted by 2018-19 Barcelona F.C.
Football club alright, but it is worth noting, how powerful the brand Manchester United is. Its logo is one of the most recognizable logos in the sports world. United has followers worldwide - 41.8 million on Instagram, 26 million on Twitter, 73 million on Facebook. United has been consistently bringing in £265 million+ for the last 5 years easily through its brand alone. This includes money through sponsorships, merchandising, product licensing etc. United currently has 23 global partners, they include the likes of DHL, Kohler, Tag Heuer, HCL, Chivas, Apollo Tyres etc. Also, Manchester United is one of the few sports entities who are listed on a Stock Exchange. United’s shares trade on the New York Stock Exchange (NYSE).
HOW DID MANCHESTER UNITED BECOME SO BIG:
SOME BORING HISTORY
Founded in the 1870s by working-class people, like most of the legacy football clubs in Europe, it was at first a local football club for the Carriage and Wagon Department of Lancashire and Yorkshire Railway (LYR). It was called Newton Heath LYR F.C. back then. Locals used to financially support the club by buying shares of the club for £1. Over the years, the club would fall into debt and would be saved by someone or the other who would invest in the club. Like, in 1902, four businessmen saved the club by pouring in £500 each in return for majority ownership. They would also change the name of the club to Manchester United F.C.
Ownership kept changing hands over the next few decades. But, the most significant major owner United had from the 1900s to 1960s was Louis Edwards. Known as “Champagne” for his love of champagne and fine cigars, Louis Edwards was a businessman. He used to track down individual shareholders of Manchester United and buy their shares. By 1964, he had quietly accumulated around 54% of Manchester United. He also took operational control in the club.
NOW, THE INTERESTING HISTORY:
Louis Edwards died of a heart attack in 1980. His son, Martin Edwards then took the reins of the club. And, he would turn Manchester United into a juggernaut for years to come. Martin Edwards was also one of the few men who were instrumental in the formation of English Premier League [EPL] in 1992-93, which marked the start of the Business of Football. Up until then, club football was majorly a matter of glory, but it became about money with the advent of the EPL. With that, football became a commercial and insanely viable operation.
So, Martin Edwards became the chairman of Manchester United in 1980, after the death of his father. Even after becoming the chairman, he tried to acquire all the shares of United that he could, so that he could have maximum control of the club's operations. To fund this takeover of the club, he even mortgaged his own house and also accumulated a lot of debt, of which, by the early 1990s, he would have £950,000.
Edwards then sought new and different ways to generate revenue for the club. For starters, in 1982, he signed a sponsorship deal with Sharp, a Japanese electronics company. Sharp logo would be on the front of United’s jersey. For this, Sharp paid United a not-bad-at-all-for-those-times £500,000 per year (today’s £1.5 million). Jersey sponsorships were not as common back in 1982 as they are today. Also, to make these jerseys, he cut a deal with a company called Admiral (who back then also used to manufacture England’s national team kits). This deal was worth £15000 a year.
In 1991, Edwards decided to go a rather non-conventional way of raising funds for a sports club/organization. He decided to take the club public and float it on The London Stock Exchange. Manchester United Public Limited Company was born. Edwards decided that the money raised would be used for renovation of some of the sections of the stands at The Old Trafford, the club’s home stadium. A lot of investments went into Old Trafford but it was worth it. The Stretford End of Old Trafford was home to the hostile, most vocal United fans during any game, which, in numbers could be as much as 20,000. Stretford End was turned into an all-seater stand by the end of the 1992-93 EPL season. The project cost about £10 million.
To that, add £30 million that was spent on the renovation of The North Stand, which brought the capacity of Old Trafford to 55,000 by 1996. This was the highest in the country for any club back then. Then, another £30 million were spent to further increase the capacity to 67,000 by the year 2000. To top it off, Edwards decided to introduce some luxury boxes and other premium hospitality services. The result? United were making a whopping £1.2 million per match day from gate receipts alone (and there were around 19-22 home games per season). Cut to today, Old Trafford has a capacity of 74,140. And, on average, United has filled 99% of Old Trafford in each match played in front of the crowd for the past 20+ years.
Another £60 million were shelled out to buy a new training facility at Carrington. Manchester United now were on a roll. And so was Martin Edwards who just wouldn’t stop upgrading everything around United. And, why stop, when you are making so much money. United had not incurred a loss now since 1990.
The performance off the pitch translated to one on the pitch as well. With so much money, United could have better chances of getting the best players than other teams. Getting the best players is what they did. Buying the best players might not be the sole reason for their success, but, it certainly helped. United won six of the first eight seasons of the EPL.
Since the popularity of United was soaring in the '90s, Edwards sought to monetize this hype and popularity of the brand Manchester United. Edwards, during his visit to New York, was inspired by how the NFL franchises in the U.S. used to focus on marketing so intensively. He decided to do the same. Edwards started cutting licensing deals with manufacturers of Shirts, Hats, Mugs, etc. Anything that could have Manchester United trademark printed upon was sold as merchandise. Edwards would collect the royalty off the sales of the merchandise sold. By 1994, United were generating £44 million through its branded products alone.
It was madness how a football club, listed on a stock exchange as a Public Limited Company was growing like crazy. The world was now taking notice. One American businessman in particular. He wanted it. But, he didn't want just a piece or a few pieces of the pie, he wanted the whole damn pie. And by god, he did go for it. He made his moves. And he made things a bit ugly.
All about that and more in PART-2.
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