With the Manchester United board recommending acceptance of Malcolm Glazer’s offer of £3.00 per share it looks as the first chapter in this remarkable story is drawing to a close.
The second should be even more interesting as Glazer and his crew tries to find ways of meeting debt repayments which are estimated at around £45 million a year.
This week saw the publication of a set of trading figures which helps put that – and the financial gap in English football – into some sort of perspective. Premier League club Birmingham City on Wednesday announced an operating profit of £8.6million for the six months to February.
Birmingham’s turnover increase by 7.85 per cent to £24.4million, with match receipts up 22 per cent to £10.9million. But media revenue fell 7.3 per cent to £9.1million due, we are told, due to reduced television income.
The point here is that United’s debt repayment will about twice the turnover of not just one but many of their Premier League rivals. By any measure, they are , financially, in a league of their own.
Last year United recorded a profit, but it wouldn’t have been enough to meet the anticipated debt. And unless they manage to perform better in domestic and European competition, it's unlikely the overall income trend will improve any time soon without an almost seismic change in the way that media rights are sold.
To date, all we’ve learned is that United will look to new avenues of sponsorship, starting perhaps with the ‘Presenting Rights’ to Old Trafford.
Presenting rights are a pretty canny idea in as much as they represent a new sponsorship category in an area which is already as crowded as a Japanese commuter carriage. But there is a wider point here and it is the impact that these deals have on sponsorship as a marketing tool.
Go to any football game today and everything is sponsored…from the teams’ shirts and shorts to the balls and ball boys. The big screens have sponsors and at least one ground I go to extra time is sponsored…’these added four minutes are brought to you by Michelle’s Hairdressing of Crouch End’ or some such nonsense.
Sponsorship is a key revenue stream but by selling the rights to everything they can get their hands on, clubs are doing themselves and sponsorship a disservice. Research is already showing a level of cynicism about sponsorship – apparently too many kids don’t believe many sponsorships are credible - and the constant invention and re-invention of sponsorship categories isn’t about to help that situation. Indeed, in the long term it may well impact on the efficacy of the efforts of the major players who use sponsorship professionally as a central plank of integrated, multi-million dollar marketing communications strategies.
Sponsorship clutter inevitably impacts on existing sponsors and, in the case of United, might tend to undermine the commitment of Vodafone who are already making nervous noises about attempts by groups opposed to the take-over to get Vodafone subscribers to switch to rival networks in protest. Vodafone would be innocent victims, caught in a commercial double whammy which, in many respects, highlights both the best and the worst of sponsorship as a marketing tool. The passion which makes sponsorship powerful can, under certain circumstances, be turned against you, and there is always a chance that you can be screwed by an over-stretched rights owner.
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Despite hand wringing about the amount of football on TV and the dominance of the Premier League in terms of media coverage, the Football League this week announced its highest attendance since 1959.
The 1,656 matches of the 2004/05 season were watched by 16.4 million people - the highest since 1959/60 (18 million) and up three per cent on the previous season.
It reflects a sustained period of attendance growth over the last 19 years, with crowds steadily rising from a low of 7.4 million for the league’s three divisions in 1985/86.
The Coca-Cola Championship saw crowds rise 10 per cent to 9.6 million in the first season since re-branding, the most since the 1952/53 season.
Championship crowds now average 17,410 per match. That, we are told, is about the same as Italy’s Serie A.
This is all good news for Coca-Cola whose first season as Football League sponsors looks to have been a tremendous success. Their focus on identifying with individual clubs led to the ground-braking move to allow their cherished and tightly protected logo to be executed in club colours while TV spots create a warm and fuzzy link with the ‘real fans’ who spend their hard earned money traveling thousands of miles to watch the likes of Hartlepool and Rushden and Diamonds. Real fans indeed.
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UEFA’s stance over Liverpool’s claim for an additional place in next year’s Champions League is interesting because it highlights a complete lack of foresight on their part.
Thinking the unthinkable has always been one of the keys to running a successful enterprise of any sort so it really shouldn’t have taken much for UEFA to have imagined a scenario in which their Champions might not qualify to defend their title by other methods.
It’s a fundamental tenet of sport that champions should defend their trophy and every Champions League sponsor and broadcaster would support that in this case because of the bigger audiences which games against Liverpool would generate.
It’s not Liverpool’s fault they’ve won the Champions League and it shouldn’t be made the (English) FA’s problem. It's up to the men in suits at Nyon to admit they didn’t think all of the possibilities through properly and take appropriate action to address an obvious injustice.
But rules is rules tends to be the abiding attitude among governing bodies.
FIFA’s regulation on the availability of players for next year’s World Cup is another . FIFA has decreed that players must be released for their national squads by a date which falls ahead of The Championship play-off. This is the richest club game in world football and determines the final team to be promoted to the FA premier League. Given the standard of clubs in The Championships, and their comparative wealth, many of the top teams are studded with international players who represent countries which may well qualify for Germany 2006.
On the face of it, this means that clubs could run out for the biggest game in their history without their most important players. Surely this is another oversight. Nobody had thought it through sufficiently and, according to FIFA’s communications chief, speaking at the Soccerex Forum in London a couple of weeks ago, they’re not about to reconsider. You see, rules is rules, irrespective of logic.
