We put brand in inverted commas because brands and their valuation in football are even more difficult to compute than in other areas of business – and, indeed, sport.
Manchester United turns over about £350m and makes an operating profit of about £90m; nice work (and a nice margin) if you can get it but one that is dependent on broadcast deals and player trading.
Man U is also exceptionally good at negotiating sponsorship/partner deals with about half a billion dollars on the way from General Motors’ Chevrolet to sponsor its shirts and a lucrative secondary deal with insurer Aon (rather rudely dumped as shirt sponsor in favour of GM) to sponsor the Carrington training ground and other bits of kit. Quite what the benefit of this is to Aon is (as opposed to Man U) is unclear.
And it’s this kind of deal that creates the supposed brand valuation of £3bn; it’s like valuing a tech company that seems to have lots of earnings down the line.
Man U shares fell in New York the other day when news emerged that long-time manager Sir Alex Ferguson was retiring and it’s unlikely that they rose much when it was announced shortly after that Everton manager David Moyes (both pictured below, enjoying a touchline disagreement) was taking over with an unusually long six-year contract. Man U shares are quoted in New York because the owning Glazer family floated some stock to cut debts; which had, at one time, reached a rather worrying £700m.
In broad football terms Moyes is probably a good choice: a fellow Glaswegian, he’s right out of the Fergie mould; knowledgeable, fiercely committed and straight. In terms of results, though, his 11-year reign at Everton failed to produce any trophies (although the far-from-wealthy club did regularly secure a place in the Premier League’s top eight, no mean achievement) whereas Sir Alex has won 13 Premier League titles and two European Cups, admittedly with a far bigger budget. Moyes had to sell his best player, Wayne Rooney, to Man U for £25m to balance the books.
Neither has Moyes very much European experience (Everton qualified for the Champion’s League once under Moyes but fell at the first qualifying hurdle, rather embarrassingly). Nor has he experience of bidding for the world’s biggest football stars, although his more modest buys have mostly performed very well. The latter is important: a big bad buy, like Chelsea shelling out £50m for Fernando Torres or, way back, Fergie investing £28m in Juan Veron, can cast a big shadow (and loss) over even the biggest club for a period.
And Fergie is a character. Famously loyal to his players (and chums) he is also quick to take up the cudgels against absolutely anyone when they annoy him or encroach on his territory.
Usually he wins but not always. He famously took on Irish horse breeders John Magnier and JP McManus over the ownership of a racehorse called Rock of Gibraltar and lost spectacularly. Magnier and McManus went out and bought 25 per cent of Man U, then a quoted company on the London Stock Exchange, a move that eventually tipped the proudly independent club into the hands of the Glazer family from Florida. How Fergie survived this debacle only he knows.
But he’s probably the most famous football manager in the world ahead of even Jose Mourinho and Pep Guardiola (both of whom were rather more obvious choices to head Manchester United). And that’s a big part of the Man U brand and its supposed £3bn valuation.
So Moyes, as they say in the game, has it all to do.