So there you go then: The man who fans of his Tampa NFL franchise call ’the Leprechaun’ has failed to charm the Irish guards to the gates of Old Trafford into parting with the golden keys, and the Manchester United ownership soap opera is taking a commercial break.
Malcolm Glazer’s proposed takeover of the world’s most successful soccer business has hit the rocks because the Irishmen who control Cubic Expression’s 29.89 per cent stake in the Plc won’t sell to him. Reports suggested that at £3.10 per share they were willing to do business but that, as the offer was £3.00 at best, the Buccaneer was set adrift.
It won’t be the end of the story of course. Much to the chagrin of its true fans, the ownership of Manchester United has become a hot issue in recent years and the Cubic Expression stake has been central to every story written.
Manchester United may not be a massive business but it is a beacon amongst football clubs and, in many ways, something of a role model. Its decision to publish details of payments to agents among its last financial disclosures let a waft of fresh air into a room in which the atmosphere had become particularly fetid.
But despite its prominence in the football sector, there is still some surprise that the club should be such an attractive target for particularly ambitious investors. For while it will produce a tidy return, observers are, in the main, unable to identify where the next big upturn in value is going to come from.
Earlier this week I spoke to a senior figure at another of Europe’s giant football clubs and asked where the significant new revenue streams would come from. To make a point he ran through a list of all the things which had been done at his club in the last four years to generate new revenues – more boxes, improved merchandising, club seats etc etc. Each had made a significant difference to his business. But United already have all these things, and are leaders in these fields. They wrote the blueprint that other clubs have followed.
Sure, United might be able to further increase the capacity of Old Trafford, but the room for expansion is physically limited. With a home match day income in the region of £2million, they might look to ways of playing more matches but the current pressure is to play fewer games.
So if there is to be a major surge in revenues it will have to come from the club’s media operations, particularly overseas. Yet there’s a problem here as well. It’s universally acknowledged that the greatest demand throughout sport is for live events. And under the current set-up, United don’t have the ability to sell their own media rights, except for friendlies and Champions League qualifiers or, God and shareholders forbid, the UEFA Cup.
Premier League rights are sold centrally because it is in the interests of all of its constituents. It’s a principle which recognises the simple fact that you need two teams to play a football match, and that the league is only interesting because of the context provided by each and every one of its members.
These principles seem so evidently just and sensible that it still comes as something of a surprise to remember that they are not universally applied, and that the European Union competitions directorate would like to scrap them altogether.
While a change might, at some time, be imposed, the Turkey/Christmas syndrome means that Premier League clubs are unlikely to vote for a change of their own accord, at least not in relation to domestic rights.
But is there a case for freeing clubs to sell their own rights individually outside the UK? Could that be the catalyst for the next value rush to football’s biggest clubs?
Were United able to screen live games on, say, MUTV Thailand, it could, in theory, operate a subscription or PPV model and sell inventory around the event to third parties, as well as promoting its own merchandise offers. United are probably the only English club with a big enough brand to be able to do this but, were the exercise to be repeated across Asia and the United States, where it has established something of a bridgehead, there is clear potential.
All of which leaves the issue of the remaining clubs. They would, of course, be free to sell the overseas rights to their home games against United back to the Old Trafford club, and club together to sell other rights. The issue here is whether United, and other major clubs, can effectively grow cake to such an extent that while they will benefit the most, others will also be better off than they are right now. Given the job that has been done to enhance the value of the centrally sold Premier League rights, it’s difficult to see how this can be achieved, at least in the short term.
Such a stalemate might lead United and Europe’s other leading clubs to look for other ways to enhance revenues. Inevitably, this leads us back to discussions about a European Super League. UEFA has done a good deal to meet the clubs demands in the way that it structured and re-structured the Champions League, but it remains the case that if a group was to approach the major clubs, waving a mighty big cheque, they would be listened to and listened to seriously.
Yet again there are difficulties. While the major clubs may be attracted by the prospect of additional revenues, they have no intention of leaving their bread-and-butter domestic leagues behind, raising the prospect of a midweek European league competition which demands that clubs effectively operate two teams – one for weekends at home and the other for European Wednesdays. Here is where the swings-and-roundabouts principle comes into play again. Domestic media rights would be unlikely to be renewed at anything like the current levels if the key teams were playing a ‘second’ team rather than the crC(me de la crC(me. This might still produce a net gain for the top clubs but would, inevitably, reduce revenues available for the rest.
The structure of Europe’s major clubs is likely to drive pressure for greater commercial freedom from time to time. But so long as football is run by people who understand sport, and the importance and nature of competition, we can continue to hope that any changes made or concessions gained are within the broad framework of what is good for the whole of the game.
After all, watching Manchester United play Manchester United reserves week-in-week-out would ultimately fail for even the most dedicated fan. But in the nightmare scenario, could that be where we’re heading?
