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Will Manchester United’s Commercial Dominance end with the Retirement of Sir Alex Ferguson
MANCHESTER United shares fell in New York amid concerns over the impact Sir Alex Ferguson’s retirement will have.
The retirement of Manchester United Manager, Sir Alex Ferguson has dominated sporting headlines all over the world. The exit of Sir Alex has been the most happening news, after the Pope’s retirement early this year, both the news have been two of the biggest news across the globe. Sir Alex Ferguson, has been central to the success of the premier league champions on the pitch and his undisputed record has helped draw in hundreds of millions of pounds from sponsorship revenues. The retirement of Fergie, as he is known universally has raised concerns over the club’s dominance over English soccer in general and its financial future in particular. Almost 26 years after he took over the helm of an underperforming club, Sir Alex, has transformed its success phenomenally. The success of the club has also seen a huge increase in its revenues and sponsorships. Manchester United, are now the reigning champions of English Premier League (EPL) and among the highest echelons of elite soccer clubs from Europe and Spain. Manchester United has annual revenue of half a billion dollars and market capitalization of over US $ 3 billion, making it one of the richest sporting franchises in the world. However, these figures will nose dive when he bids adieu to the club on May 19th, when the league ends. The final game between Manchester United and West Bromwich Albion was drawn 5-5, with Manchester United leading 5-2. However, the result seems to be inconsequential as Manchester United has already clinched the premier league title two weeks ago. The news of the retirement of the legendary manager knocked down the share prices of the club. Its share plummeted by 5% in the market. Manchester’s share price settled somewhat at 1.3 % lower at U.S. $ 18.52 in the New York Stock Exchange.
Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York, said the departure of Sir Alex, would definitely jeopardize the club’s success. He also highlighted the “Instability of investments in sports franchises involving specific individuals. “ Everton Manager David Moyes, will be the new manager of Manchester United.
Massive blow to the financial fortunes of the Club
Ferguson has not only changed the fortunes of the underperforming club when he took over as the manager of the club 26 years ago but also seen the performance has resulted in the increase in revenues of the club by way of sponsorship deals. In 1991, the shares in the club were listed in the London Stock Exchange, generating euphoria and cash that helped to end its title drought two years later. The beginning was its supremacy and dominance in English Soccer matched only by Liverpool. Its success continued over the decade and the club also received a takeover bid from Rupert Murdoch. The Manchester United board accepted the bid of 623 million pounds; however the takeover attempt was marred with opposition from its fans and was ruled unlawful by British authorities in 1999. By 2003, the family of Malcolm Glazer had major stake in the club. The club is currently valued at 1.9 billion pounds and has a debt to the extent of 368 million. The revenues of the club last year was 320 million pounds. Half the revenues earned were paid as salaries. Hence at the operating level the profits were at 44.9 million pounds. The entire sum was then set off to the finance costs, which stood at 49.5 million pounds, leading to a pre-tax loss of 4.7 million pounds. The buyout of the club in 2005 by Glaziers at 800 million pounds was seen as huge money, as it was funded by the owners of the club by way of payment-in-kind notes (PIK), which had an interest rate of 14. 25%. However, Sir Alex’s handling of the club and its continued success by winning the championship league, premier league ensured the financial assumptions come true and the money was paid back in 2010. This shows clearly how an individual can transform the finances of the club. The club’s website currently shows 33 sponsors from around the globe.
Ferguson was knighted by Queen Elizabeth II in 1999, following the clubs unprecedented success in the Champion’s league, Premier League and the FA cup. In the political quarters, British Prime Minister, David Cameroon praised Ferguson as “a remarkable man in British football who has had an extraordinary, successful career. “
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