Manchester United are resisting the Premier League’s overtures to introduce a league-wide sponsorship system that they believe could be worth an extra £750m to clubs annually.
In the latest recorded financial year, the combined commercial income (sponsorship, retail, events and so on) of all 20 Premier League clubs was £2.2bn, up from £978m just a decade ago. Even accounting for inflation, that is a remarkable boom.
In the last five years or so, however, United’s growth in isolation has been anaemic. Last season, commercial revenue was £333m, of which £188m was from sponsors. That was just £33m higher than a decade earlier. Yes, United are a titan and, as the old saying goes, elephants don’t gallop, but adjusting for inflation again, United have actually gone backwards in that period.
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What went wrong? For many years, the Red Devils were hailed as football’s commercial gurus. They pioneered a segmented approach to sponsorship, licensed their badge with discipline and smarts, and there was even a commercial angle to many new signings. Infamously, Ed Woodward, the club’s de-facto CEO between 2012 and 2021 said that United don’t need to win trophies to sell shirts and commercial partnerships. But that was then; and this is now.
In the age of PSR, petrostate-owned clubs and trillion-dollar private equity funds looking to become superpowers in football through little more than brute force, selling shirts and commercial partnerships is – bleakly – the very thing that wins trophies.
United have dined out on their global brand for years, but their lack of success on the pitch is catching up with them. This season, they risk falling out of the list of the top 10 revenue generating clubs worldwide for the very first time. With the Glazers unwilling and Sir Jim Ratcliffe seemingly unable to put any more money into the club for the time being, that will have a material effect on the playing budget.
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While the resurgence under Michael Carrick could yet deliver lucrative Champions League football next term, the club still needs open-heart surgery financially.
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So why are they resisting the Premier League’s proposal to create £750m of new advertising revenue?
Last week, the Daily Mail reported that United are highly sceptical of a new Premier League plan to sell more advertising board space centrally.
Currently, United and their peers in the top flight are allowed to sell 94.5 per cent of in-game perimeter advertising themselves, with the remaining space given to the Premier League and broadcasters. That means more value for their sponsors – Adidas, Snapdragon, DXC Technology and so on.
But Richard Masters’ team believes it can generate nearly a billion pounds annually from reversing the dynamic and giving 60 per cent of advertising space to the Premier League.
United, it said, are willing to listen to the proposal but are ‘thoroughly unconvinced’ of the merits in its current form. Several other members of the so-called ‘Big Six’ are on the same page.
Asked by United in Focus to explain the protestations, University of Liverpool football finance lecturer Kieran Maguire said: “The Big Six have tiered sponsorship with sponsors. Those sponsors are organised into specific industries – tech, soft drinks, finance and so on.
“That can be a global arrangement or a regional arrangement. The likes of Man United have been very successful with this model. They have a factor of five or six times the amount generated by the rest.
“One of United’s concerns is that the Premier League’s central sponsorship could clash with their own. Whilst the Premier League has indicated that these deals won’t be split evenly between all 20 clubs, it could give away more revenue proportionately than United are getting now.
“That’s a sore point. Presently, the central commercial income is split 20 ways. Man United, with some justification, are only concerned with their own interests. They think they are the drivers of interest within the Premier League and therefore they should have the lion’s share. I think there will be a negotiated solution to that. It’s part of the broader politics of the Premier League. The likes of United want to increase the already seismic gaps between the Big Six and the rest.
“United already have partnerships with the vast majority of industries, so therefore they don’t need a Premier League equivalent. But it’s all about distribution, and United want a bigger slice of the pie.”
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There is no escaping that United’s barren spell on the pitch in recent years has bled into the commercial department. In Formula One, there is an old business adage: win on Sunday, sell on Monday. Broadly, it’s the same in the Premier League. Adidas, for example, withhold £10m every season United fail to qualify for the Champions League. Inversely, winning trophies invariably leads to a retail boom and makes it much easier to attract blue-chip sponsors.
But notwithstanding that fact, the Red Devils are still underperforming. Just look at Tottenham, who until that star-crossed night in Bilbao hadn’t won a trophy for nearly 20 years. Yet their commercial income has quadrupled in the time that United’s has grown by about 25 per cent.
There are a couple of relatively straightforward solutions. For one, United have vacancies for a training kit sponsor and a training ground naming rights deal. Together, those rights are likely to fetch north of £40m. In the future, a naming rights deal for Ratcliffe’s new stadium could probably reach the same fee, though that would clearly be a difficult sell for fans.
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There is no doubt that Old Trafford 2.0 would light a fire under United commercially. As Brand Finance director Hugo Hensley recently said in exclusive conversation with United in Focus: “It shows they’re still progressing, still ambitious, still have that desire to always be at the top. It also secures revenue streams and maintains Manchester as a destination sporting location. It continues to bring revenue and excitement, new fans, old fans back to the city to drive strong positive engagement.
“You’ve seen how an amazing flagship stadium like the Allianz in Munich gets attention just because it’s flashy and different. That’s what they’ve said they have to go for to remain at that very top part.”
The dance of modern football, as ever, is getting these nakedly commercial deals over the line without alienating the bedrock United fans who make the club great.
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