SBD/April 23, 2014/Franchises

Glazers Look To Fix ManU Following Moyes' Firing, Return To Champions League Play

Moyes was replaced just 10 months after being given a six-year contract
The decision by the Glazer family, which owns EPL club Manchester United, to fire manager David Moyes before the end of his first season suggests that it "doesn't regard United's popularity as unshakable, especially at a time when other Premier League teams are pursuing global sponsors and audiences and spending lavishly on players," according to Sharon Terlep of the WALL STREET JOURNAL. ManU is currently seventh in the EPL standings and could miss out on qualification for both the UEFA Champions League and Europa League competitions, but a "single bad season poses minimal danger" -- financially speaking. Sponsorship deals signed with the likes of Chevy and Aon "boast multiyear contracts." Nonetheless, the team's "poor performance this year bears consequences," as failure to qualify for next year's Champions League could lead to the loss of "tens of millions of dollars in broadcast revenue." Under the Glazers' ownership, the "executive face of the team" has been Exec Vice Chair Ed Woodward. But sources said that ManU co-Chairs Joel and Avi Glazer are "heavily involved" and "speak daily to team officials." A source added, "It's as if the company is led by Joel and Avi is his chairman." Terlep notes the family gained control of the team in '05, and since then, team revenue "has nearly doubled on the strength of licensing deals with corporate giants around the world." Since a '12 IPO that "transferred 10% of the English soccer club to the public, the value of United shares has climbed 34%." That suggests that the franchise is worth $3.1B -- "more than twice what the Glazers paid" (WALL STREET JOURNAL, 4/23).

A BUMP IN THE ROAD: The FINANCIAL TIMES' Roger Blitz writes Moyes' firing "is perhaps the worst moment in the nine-year tenure of the family." The Glazers entrusted former manager Sir Alex Ferguson with the "task of choosing his own successor and gave Moyes a six-year contract, hoping these two acts would soothe worried fans by promising a continuation of the dynastic culture at Old Trafford that has brought the club so much success." The "most pressing task for Moyes’ successor" is to ensure that ManU, which will likely fail to qualify for next season’s Champions League, "does not suffer the same indignity two seasons in a row." Missing out on Champions League qualification "will probably cost" ManU $16.8-20.2M (all figures U.S.). However, that is "comfortably manageable" for a club that is projecting EBITDA for the year to June of $215-223.4M and revenues of $705.4-722.2M. The club "may be a robust enough machine to navigate a bump in the road -- but it will not want too many more bumps ahead." A source said, "They can’t afford to be out of the Champions League beyond a year; it is just plain rubbish to pretend not. No sponsor would commit to that" (FINANCIAL TIMES, 4/23).
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