When Manchester United compiled their sales pitch to present to potential investors, it included a bullish projection.
Nestled among the boasting about having more than one billion global followers and being the most successful English football team of all time was a claim to raise a few eyebrows.
Sir Jim Ratcliffe, who is nearing a 25 per cent investment through his petrochemicals firm INEOS, and representatives from Sheikh Jassim bin Hamad Al Thani’s unsuccessful bid for a 100 per cent purchase, were told the club predict they will generate £1billion ($1.2bn) in annual revenue by the end of the 2027 financial year.
This figure excludes any potential upturn from developing their Old Trafford stadium, meaning it would be earned through increased broadcast, commercial and matchday income.
Even the most optimistic person at United would surely admit that projected target is bordering on unachievable.
In October, the club reported record revenues of £648.8million for the year ended June 30, 2023. This was up from £583.2m in 2022 and £491.1m in 2021. Their latest set of accounts projected revenues of between £650m and £680m for the fiscal year ending June 2024.
So, in the next four years, United need to find more than an extra £350million to reach their goal of hitting £1bn. It’ll take some doing.
Ed Woodward, the club’s former executive vice-chairman, once said United’s playing performance does not have a meaningful impact on what they can do on the commercial side of the business. But one person familiar with United likened the situation at Old Trafford to cutting the head off a snake: the head represents football and the body signals commercial success — and the body will only wriggle for so long without a head.
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Are we now at that point with United? How much more wriggling can the body do before it has exhausted every avenue for future success?
This year alone, United have renewed their deal with Adidas, the club’s kit supplier, which is worth £900million over the next 10 years, and U.S. technology company Qualcomm has agreed to become their front-of-shirt sponsor from the start of the 2024-25 season, with the club targeting an agreement worth £60m per year.
While United’s financial results still indicate Woodward was not wrong to make such an assessment, you wonder just how big the numbers would be if they had maintained the level of on-field success they enjoyed under the management of Sir Alex Ferguson, winning 13 Premier League titles in the 21 seasons from 1992-93, plus two Champions Leagues and the FA Cup and League Cup six times each.
“It is very, very ambitious,” says Dr Rob Wilson, a football finance expert at Sheffield Hallam University. “Getting from £650million to £750m will not be too difficult, but getting from £750m to £1bn is a different ball game — particularly when the sporting success is as mediocre as it currently is.
“The relative growth rate will have to be higher over the next four years than it has been over the last five to 10 years. In the last 10 years, they have almost doubled their revenue and they are now expecting to grow it by another 40 per cent over the next four. If they do it, hats off. But it’s really tough, because of the sporting performance.”
United, after all, have not won the Premier League since Ferguson’s final season in 2012-13 and have only a Europa League, one FA Cup and two League Cups to their name under his string of successors.
A return to dominating England’s top flight and competing for Champions League titles seems inconceivable in the next four years, so how can United go about hitting the £1billion jackpot?
Paying greater attention to the global fanbase
United’s sales pitch to potential investors included the prospect of scaling up the merchandise business and the creation of new digitally-enabled propositions as a way to generate additional revenues from their global fanbase.
“Most clubs focus on matchday spend on the matchday itself, so that would be the 74,000 fans walking into Old Trafford,” says Wilson. “They are often the ones being monetised, whether that is selling a programme or replica shirt. What all clubs fail to do, particularly English teams, is recognise the value of non-match attendees.
“Manchester United’s digital footprint in the Middle East, last time we calculated it, was bigger than the sum total of every other Premier League club combined. This was against the backdrop of poor sporting performance, and Manchester City being owned by the Abu Dhabi Group.”
In financial filings made to the United States Securities and Exchange Commission for the year ended June 30, 2022, United broke down the make-up of their 1.1 billion ‘fans and followers’. They stated 74m are from the Americas, 296.1m from EMEA (Europe, Middle East and Africa) and a staggering 731.7m from the APAC (Asia-Pacific) region. The club claimed there are 467m fans and 635m followers.
“If you could engage every one of your one billion fans for the year and you get them to spend £1, then that gets you to £1billion,” says Wilson.
Neil Joyce, chief executive and co-founder of CLV Group, a data and insights company for sports, media and entertainment, has carried out extensive research into the lifetime value of a fan and how clubs can take advantage of missed revenue opportunities.
For the financial year that ended on June 30, CLV Group detailed how United left £86million of potential revenue on the table. It attributed £18m to content streaming, £33m to virtual matchday income and £35m to digital memberships, including fan tokens.
Joyce estimates a United fan or follower will spend, on average, less than £1 on the club during their time supporting them. In comparison, Jones cites how fans of the Dallas Cowboys, a popular NFL franchise, will spend around $60 (£49).
“The Dallas Cowboys do an incredible job of monetising their matchday and ticket prices average at around $300,” Joyce explains. “If you compare a Manchester United season-ticket holder to a Dallas Cowboy one, then what they spend won’t be too different. But what dilutes the Manchester United number is the sheer size and scale of their fanbase.
“If I am selling commercial deals, a lot of the metrics that sponsors have traditionally been interested in is the level of reach and engagement. The 1.1 billion figure will be highly attractive to a sponsor because they are valuing the volume of eyeballs.”
“The golden ticket is fan engagement, and whether they can activate it,” Wilson adds. “If they can, then they will start getting into the ballpark of £1billion.”
Joyce’s research suggests that the average age of a football supporter in the U.S. is between 16 and 34 years, while the average age in the UK is more than 40. Hitting this young American market, he says, will be crucial to United generating £1billion in revenue as it presents an opportunity to sell digital content, such as a streaming service via the club’s app.
“You have seen the success of Formula 1’s Drive To Survive (documentary) series, which has less focus on the race results, but more on the personalities and the teams involved,” says Joyce. “I think there are some good benchmarks of what’s possible.”
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Success on the pitch
Winning is ultimately what will speed up the process of hitting £1billion in revenues.
For United in recent years, it has become normal to finish outside the top two in the Premier League and fail to reach the latter stages of the Champions League. This is not sustainable.
The counterargument — and the motivation behind the failed European Super League — is that the Premier League is unique in terms of competition. Barcelona, Real Madrid, Paris Saint-Germain and Bayern Munich, for example, do not have to deal with the domestic competitiveness of England’s top flight. But United will have little sympathy if that is the reason they don’t manage to break the £1billion barrier.
United have also failed miserably at generating transfer fees by selling players for more than a decade, with only the sales of Dan James (£10million), Chris Smalling (£8.1m) and Dean Henderson (£20m) representing significant profit.
More, more, more
Selling naming rights and other sponsorships, such as a deal for the space on the sleeves of the players’ match shirts, could generate additional income. Another method, which would be universally unpopular, would be raising general ticket prices, while also increasing the cost of hospitality tickets at Old Trafford.
Having frozen them for 11 years, United put adult season tickets up by five per cent ahead of this season.
“From a matchday perspective, they are only going to generate an additional £40million to £50m through better corporate areas and increased ticket sales,” says Wilson. “I think they will continue to grow their commercial revenue because of technology, the global market and different companies emerging in different industries.
“The big recent one has been crypto, and there will be other things that emerge in the coming years that they can monetise. But I don’t think we will see commercial growth on the scale we have seen as a consequence of the sporting element.”
The Premier League’s domestic rights are out for tender, while UEFA — European football’s governing body — agreed a deal in 2022 for the U.S. media rights for its three club tournaments with Paramount Global, the owner of the CBS network. The total package is worth $1.5billion, totalling $250m a season over a six-year period. This will come into effect from next season and is a significant increase on the $100m per season previously paid by Paramount and Univision.
The Champions League format is also changing, which may benefit United as England could receive an additional qualifying spot from the current four. With 36 clubs also involved, instead of the present 32, UEFA is hoping for a rise in revenue of about 33 per cent for its club competitions. The Champions League currently brings in €3.6billion (£3.1bn; $3.8bn) for each of the three seasons between 2021 and 2024. UEFA is projecting €4.6bn-4.8bn from 2024 onwards.
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From those figures alone, you can see why United view qualification for the Champions League as crucial if they are to reach their bullish target. Real Madrid’s Champions League final triumph in 2022 saw them earn a total payment of €133.7million through prize money, their 10-year record in Europe, and TV income.
While the Premier League side can look at that and want a slice of the pie, performances on the pitch suggest United winning Europe’s elite club competition for a fourth time in their history is unlikely — especially as they may not make it out of this season’s group stage having lost three of their first four matches.
If any Premier League team are going to generate £1billion in revenues in a single financial year, you would expect Manchester United to be the first to do it.
But they are relying on making significant strides forward from a footballing success point of view while being able to maximise income from their global fanbase.
All eyes will be on their accounts for the year ending June 30, 2027.
(Top photo: Ash Donelon/Manchester United via Getty Images)