Manchester United sponsors unaffected by the on-field crisis
Manchester United grabbed the footballing headlines on Tuesday, after they fired their manager, David Moyes whose contract was terminated only after 10 months of his appointment
After replacing Sir Alex Ferguson as the manager, ‘The Chosen One’ failed to match his predecessor’s expectations. Under Moyes, the team has lost 11 of its 34 league games and is in seventh place, just a year after winning a record 20th English title.
The Red Devils suffered a disastrous campaign under the Scot with poor displays and inconsistent performances on the pitch which ultimately led to his dismissal.
However, off the pitch, United’s business still stands tall as there are only a handful of clubs who can match up to the popularity of their brand, as the sacking of David Moyes hasn’t had any impact on the sponsorship profits of the club.
According to international accounting company Deloitte LLP, United still have the highest match-day ticket sales in the world. Sponsorship sales were boosted by 39 percent in the quarter that ended Dec. 31.
The Old Trafford outfit made a profit of 19.8 million pounds ($33.3 million) in three months by the end of Dec 31, compared to 19 million pounds in the earlier year. That suggests that United make the same profit as Real Madrid and Barcelona make in an entire year.
United accumulated a gross debt of 356 million pounds last year according to its most recent earnings report. The team was debt-free before the Glazers’ purchase, and it has paid about 600 million pounds in interest and other financing costs since then.
South Korean food company Ottogi Corp. and Thai confectionery maker European Food Public Co. were some of the newest sponsors in United’s 35-company portfolio announced this month.
“It’s a very robust business,” said Dominic Curran, managing director of London-based sponsorship consultancy Synergy.
“They’ve always been slightly ahead of the crowd. One poor season won’t affect that,” he added.
Randal Konik, a Jefferies Group LLC analyst, said in an e-mailed note he would keep his “buy” rating, with a $21 price target.
Dave Chattaway, who helps compile an annual soccer club brand ranking for London-based Brand Finance Ltd., said by telephone,“It’s an unsettling time for the team but sales aren’t going to drop off a cliff.”
“Most other teams are still playing catchup,” he added.
United have set up commercial offices in London and Hong Kong since the Glazers took over in 2005.
— ReutersBreakingviews (@Breakingviews) April 22, 2014