Man United chasing another ball game: Champions could diversify for long-term security
Sunday 08 May 1994
'If we run out of things to do here,' said Robin Launders, Manchester United's finance director, 'that could be something to put on the agenda for consideration.'
The point is that, at the moment, the company is ultimately entirely dependent on what happens on the football field. While it is riding high this season, Liverpool's recent decline has shown that it is hard to keep winning consistently in the world's toughest league - and in a game that academic studies have suggested contains more luck than most.
'If it were in any other industry, United's advisers would be telling it to diversify,' one City corporate finance expert said. Buying a rugby league, cricket or athletics club would enable the club to spread both its risk and its management skills across a wider range.
A merger with Wigan, for instance, which has won the Rugby League Challenge Cup for the past seven years in succession, could be a dream ticket. But the Football Association would not allow United to buy another English football club, and even taking over a Scottish or Continental club would run the risk of a clash in a European competition.
The first-team squad will bask this afternoon in the adulation of a capacity 45,000 crowd at their Old Trafford home, before they go through the formality of a last league match of the season against Coventry City.
Last Monday, the team clinched the Premiership title for the second year running, when Blackburn Rovers were beaten by Coventry and could no longer catch them.
However, the stock market is a fickle taskmaster. Manchester United shares ran up 5p to 684p on Tuesday, only to be mauled 11p the next day as profit-takers moved in.
That apparently churlish response reflected the classic stock market view that it is better to travel hopefully than to arrive. It always likes to have something to look forward to in a company's prospects. Ironically, the more Manchester United wins, the less room there is for any improvement next season.
If the team beats Chelsea to collect the FA Cup on Saturday and so land the cup and league double - something last accomplished by Liverpool in 1986 - it will have to repeat that feat next year simply to stand still.
An injection of hope can work wonders on a football share price. At the other end of the Premiership, Tottenham Hotspur rose 6p to 93p on Friday in the wake of the team's 2- 0 win over Oldham Athletic the previous night.
That victory ensured Spurs' survival in the elite 22 of the Premiership, with all that brings in prestige and, more to the financial point, shares of sponsorship and television royalties.
United's share price hit an all-time high of 702p in March, when it looked as though the club was heading for a historic treble of league championship, FA Cup and Coca-Cola Cup.
That hope was dashed on March 27, when Manchester United was beaten 3-1 by Aston Villa in the Coca-Cola Cup final. The share price plunged below 650p. It then recovered cautiously as the team fought a nail-biting race with Blackburn and edged its way to the showdown with Chelsea.
Next season, the club again has the glamorous prospect of a cash-generating run in the European Cup.
Mr Launders pointed out: 'We are hoping this time to be seeded so that we go straight to the league section with three home and three away games guaranteed.'
A trip to the European final, emulating Arsenal in the Cup Winners' Cup last week, could be worth pounds 2m to the club. But, unseeded this season, Manchester United was knocked out in the second round last November by Galatasaray of Turkey. That sparked a sharp fall in the club's share price, beginning on October 21 after the Turks drew the first leg 3-3 at Old Trafford.
The club is trying to reduce its dependence on the soccer team's performance by building commercial revenues. Currently about half its likely pounds 30m annual turnover comes from sources other than the bread- and-butter of gate receipts and match programme sales.
But, even though gate receipts have been swollen by completely rebuilding the ground, turning it into an all- seater stadium this summer, commercial sales are expected to grow even faster.
'I think there's quite a lot we can look to in the way of growth prospects,' Mr Launders said.
The latest wheeze is Fred the Red, a furry animal designed to squeeze yet more money from the parents of young United fans.
Replica team shirts cost up to pounds 55, a duvet and pillowcase in club colours pounds 29.99, slippers are pounds 9.99 and there is even a baby romper suit at pounds 14.99. But this is small beer compared to revenue from the hospitality and conference facilities that have been built into the Old Trafford complex and are available all year round.
'We're exploring the boundaries of what a football club can do without losing its heart and soul,' Mr Launders said.
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