eBusiness Weekly
According to Forbes, Manchester United is the fourth most valuable soccer team globally, valued at about US$4,2 billion.
Top 5 most valuable clubs
Barcelona: US$4,76 billion
Real Madrid: US$4,75 billion
Bayern Munich: US$4,21 billion
Manchester United: US$4,2 billion
Liverpool: US$4,1 billion
The interesting part? As one of the world’s few professional sports teams that are publicly traded ($MANU), we get an inside look at how one of the most recognisable global brands monetizes its intellectual property.
Manchester United’s finances can be broken down into three main categories:
Commercial Revenue
Broadcasting Revenue
Matchday Revenue
In a normal year — before the Covid-19 pandemic — commercial revenue would represent about 44 percent of Manchester United’s total revenue, while broadcasting and matchday revenue represented about 38 percent and 18 percent of total revenue, respectively.
Commercial revenue
Within the commercial revenue sector, Manchester United monetizes its global brand through three main ways:
Sponsorships
Retail, merchandising, apparel & product licensing
Mobile & content
Without a doubt, sponsorships represent the largest piece of commercial revenue. Manchester United has 20+ “global partners” at any given time, selling everything from airline & hotel partnerships to wine, spirit, and fuel partnerships.
Point being, whether a category has a direct relation to the world’s most popular sport or not, a global brand like Manchester United will monetise the relationship.
Partnerships include
Adidas — Official kit supplier
DHL — Official logistics partner
Marriott Hotels — Official hotel partner
Aeroflot — Official carrier partner
Apollo Tyres — Official tyre partner
Chivas — Official spirits partner
The most lucrative sponsorship? A new principal shirt sponsorship deal that the club signed with German-based software company TeamViewer earlier this year. The deal officially replaces Chevrolet, which had been in place since 2014, and makes TeamViewer just the sixth shirt sponsor in club history.
The best part: TeamViewer will reportedly pay Manchester United US$325 million over the next 5 years, or US$65 million annually. That represents the second-largest shirt sponsorship deal in the world.
During a typical year, Manchester United brings in about US$240 million in sponsorship money in total — representing slightly over 25 percent of total club revenue.
Sponsorship revenue
2017: US$237 million
2018: US$240 million
2019: US$240 million
In addition to a lucrative revenue stream from sponsorships, Manchester United has also done an exceptional job monetising its globally recognised brand. They sell everything from t-shirts & sandals to coffee mugs & bedspreads, all featuring the Manchester United brand and trademarks.
Retail and merchandise revenue
2017: US$143 million
2018: US$142 million
2019: US$141 million
The good news: Commercial revenue has proven to be resilient throughout the Covid-19 pandemic. For example, despite matches being closed to fans for more than a year now, Manchester United only saw its commercial revenue drop by about 5 percent.
Annual commercial revenue
2017: US$362 million
2018: US$363 million
2019: US$349 million
2020: US$345 million
In total, commercial revenue represented a higher-than-usual 55 percent of Manchester United’s 2020 revenue.
Broadcasting revenue
Outside of indirect global exposure for its commercial partners, Manchester United benefits directly from live content distribution through global media rights deals. They also have a television channel themselves, MUTV, which delivers Manchester United programming to over 56 countries & territories around the world.
Broadcasting revenue
2016: US$184 million
2017: US$255 million
2018: US$168 million
2019: US$306 million
2020: US$173 million
TV-related revenue dropped significantly due to Covid-19 — falling about 44 percent last year — but considering they averaged just north of US$100 million in annual TV revenue a decade ago, the growth has still been impressive.
Remember, Broadcasting revenue varies significantly year-to-year based on the performance of Manchester United’s first team.
Matchday revenue
Here’s an interesting stat: Seating more than 74 000 fans per game, Old Trafford is the largest stadium in the English Premier League. Even better, Manchester United has averaged 99 percent of attendance capacity for its Premier League matches for 21-years-straight.
The result? Matchday revenue accounts for almost US$150 million in a typical year.
Matchday revenue
2017: US$146 million
2018: US$144 million
2019: US$140 million
2020: US$111 million
The absence of fans due to the Covid-19 pandemic crushed expectations. Still, as restrictions are lifted, and fans return to stadiums globally, expectations are that pent-up demand will cause revenue to return to pre-pandemic levels rather quickly.
In conclusion, here’s how the different review streams have added up over the
years.
We all know the stats by now: From 2011 to 2020, the average franchise across the NFL, NBA, NHL, MLB, and Premier League increased in value by over 500 percent.
Manchester United is no different, increasing from a US$1,8 billion valuation in 2010 to US$4,2 billion today.
Professional sports teams and leagues have proven to be premium, scarce assets with a strong record of value appreciation.
But post-pandemic, it will be interesting to see how clubs like Manchester United further maximisze underdeveloped revenue streams to make up for lost profit. — Huddle Up (Online Newsletter).
