Man Chester United

Arup Ganguly -6 Ashish Sharma-7 Ashok Mathur-8 Avinash Singh-9 Chander Shekhar-10

MANCHESTER UNITED TRYING TO ESTABLISH A GLOBAL BRAND

Case Background • Manchester United a.k.a. (ManUtd) – Most famous and financially successful football clubs in the world • Originally founded in 1878 as Newton Heath Y and LR Cricket and Football club • Went bankrupt in 1902 and was reformed as ManUtd • Listed on LSE in 1991 with Market capitalization of $466 MM • 200 fan clubs – 151 in UK, 25 in Ireland, 24 in rest of the world • 1999 tour to Australia and China helped raise the brand profile even higher • Fan base of 50 million worldwide – 5 million in US, 30 million in Asia and 15 million in Europe

ManUtd’s recent successes 2002

2001

FA Premier League

3rd

Champions Champions Champions 2nd

FA Challenge Cup

4th round 4th round

n/a

Winners

5th round

European Champions League

Semifinal

Qtr-final

Winners

Qtr-final

Qtr-final

2000

1999

1998

Alliances and Tie-ups • Prior to Asian-Pacific tour, tie-up with Umbro – Sportswear supplier and Australian Woolmark company • FA Premier League TV contracts for season 2001/02 for £1.6 billion • MUTV – TV channel airing ManUtd 7 days a week • On line access to the club through www.manutd.com • Global sponsorship alliance – – Four year sponsorship deal with Vodafone for £30 million – Appointed Japan Sports Vision as its master merchandising licensee partner in Japan in a five year deal – Sponsorship alliance deal with Budweiser from 2002/03 season – £300 million over 13 years deal with Nike as sponsors for their uniform and merchandising partner

Source of Revenue Revenue

2002 – £ MM

2001 – £ MM

Gate Receipts and programme sales

56.3

51.8

Media (mainly TV)

51.9

31.2

Commercial (sponsorships)

26.5

27.4

Merchandising

11.4

19.2

Total Revenue

146.1

129.6

Launched two financial services products in 1998 – “Save and Support” savings account with Britannia and the club Master Card Opened stores in Singapore, Dublin, Kuala Lumpur and Cape Town in 2000 Investment in two hotel projects – The Quality Hotel (25% stake) and Sleep In (31.4% stake)

Questions 1. 2.

3.

Discuss and explain how the different alliances can increase the competitiveness of ManUtd Which environmental factors are most important for ManUtd to monitor in the international environment (political, economic or socio-cultural factors) What are the main threats to retaining ‘Manchester United’ as a global brand

Discuss and explain how the different alliances can increase the competitiveness of ManUtd • Vodafone: Apart from traditional sponsorship, support in launch of first WAP-service to provide • All latest club news, • Live match updates and • Other groundbreaking stories.

Delivering self-produced content to global audience through 3G wireless, the Internet and broadband TV thus giving a competitive edge to Manutd over other clubs by connecting more closely with its global fans Contd…

Discuss and explain how the different alliances can increase the competitiveness of ManUtd • Japan Sports Vision (JSV) – Leading sports retailer with over 25 stores across Japan. Tie-up provides – – 2002 World Cup evoked huge interest in football in Japan and the whole Asian area; – Excellent strategic move by association with JSV, a leading sports retailer of Japan at the same time gave the competitive edge to ManUtd for their merchandise sale – With a five-year deal with JSV which has over 25 stores across Japan, ManUtd ensured the recurring revenue through high thruput outlets of JSV Contd…

Discuss and explain how the different alliances can increase the competitiveness of ManUtd •

Budweiser – World’s best selling beer, available in more than 80 countries– Will have exclusive beer-pouring rights at club’s Old Trafford stadium, – Receive on-field, in-stadium and concourse signage, – Have right to use official marks and logos of the club in advertising, promotions and packaging Resulting in, – Association with Budweiser gives ManUtd a cutting edge advantage in enhancing its brand image; – Direct and in-direct brand communication of ManUtd by usage of its official marks and logos by Budweiser in its media campaign and packaging in more than 80 countries; – Enter the elite club of Budweiser’s sporting association who was official beer of FIFA World Cups in 2002, 2006, Chelsea Football Club, Major League Soccer, NBA, Salt Lake City Olympic Winter Games Contd…

Discuss and explain how the different alliances can increase the competitiveness of ManUtd •

Nike – Deal for 13 years with the arrangement – – ManUtd turning over uniform-replica merchandising business to Nike – Nike will pay royalty for the use of ManUtd’s brand, develop merchandise and sell through its global network Resulting in, Win-win situation for both the brands wherein ManUtd – Readily available global distribution network of Nike Earn royalty for use of its brand Association with Nike, a world leader in sportswear, enhancing its brand image Nike – Ready available 50 millions fans of ManUtd worldwide as customers Association with ManUtd, the most popular and successful soccer club, enhancing its brand image

Which environmental factors are most important for ManUtd to monitor in the international environment (political, economic or socio-cultural factors) •

Most important factors in descending order– Socio-cultural – Awareness and interest in Football critical for ManUtd to enter / expand in a particular market – Political – Having players on board of different nationality, any turmoil in political relationship between UK and the respective country can hamper the association of the player of that country with the club

Socio-Cultural

Political

Economic

– Economic – Per Capita income and spend can also be decisive factor for ManUtd

At times more than one factor can be important for consideration, depending on the respective country

What are the main threats to retaining ‘Manchester United’ as a global brand

• Manutd derives its brand power from its football stars – – Retaining and extending the contracts with star players – – Consistent performance on-field

• Consistency in the reputation of the brand with whom ManUtd has association

Current • Expected to hit gross turnover of £300 million for FY 2008, growth by 20% • Market capitalization at $2 billion • Asia tour scheduled from July 2009 • Ready to enter India thru – – Tie-up with Airtel for sponsorship deal – Seeking a licensing deal for a multi-city rollout of upscale café bars in India – Association with AIFF to spot young talent

Current Issues • AIG confirming non-renewal of sponsorship deal with ManUtd • Retirement of three veterans – Ryan Giggs, Gary Neville and Paul Scholes • Star performer Cristiano Ronaldo expressed his desire to join Real Madrid • Insufficient finances into academics and junior football

SWOT Analysis Strenghts: Global recognition Exceptional reputation Ticket sales

Weakness: Flourishing hence losing its origin

Opportunity: Penetrating US market Research based product development

Threat: Star performers being taken away by rival clubs

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