Manchester United have what is probably the most successful commercial operation in world football. But could it withstand a sustained period of less successful performances on the pitch? This is the question that is tackled in the Financial Times today in an article by Murad Ahmed.
United offer a textbook example of how to build and sustain a brand. Nigel Currie, a sports consultant, told the Pink 'Un: 'I think they are one of a handful of teams in world football that have such a strong brand and glorious appeal they will be able to withstand dips in form from time to time. But, obviously, not forever.
If poor performance became endemic this could undermine the club's attractiveness to a future generation of supporters and decrease the value of future commercial deals.'
United believes it is less reliant on European success than its continental rivals. However, the club's deal with Adidas contains a penalty clause which means that failure to reach the Champions League for two successive seasons would see it being paid £21m less for each year outside the tournament.
Annual revenues have grown from £363m in 2013 to £590m last year. The club's biggest strength lies in its commercial deals which represent about half of revenues. The club has around 100 on its sponsorship team, far more than any other club. Many of them are analysts who gather industry data to help salespeople clinch a deal.
For a long time this was based on a sell anything anywhere approach. These deals remain so that it has an official soft drinks partner in Nigeria, an isotonic drinks partner in Indonesia and a nutritional supplements partner in Japan. However, the emphasis is switching to fewer but bigger global sponsorship deals, presumably offering a better balance between transaction costs and returns.
Other recent moves are designed to target millennials. Last August the club launched an official app. The plan is to build a direct relationship with supporters online, each a potential customer, gathering data on their preferences.
Of course, the untethering of the sports business from performance on the pitch may not be an issue as there is every sign that performances are recovering under Ole Gunnar Solksjaer, increasing the impetus to giving him the job on a permanent basis.
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