Losing streak will test Manchester United F.C.'s winning business model

Jan 11 2014, 21:23 IST
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SummaryManchester United F.C. in danger of missing Champions League next season

For all Manchester United F.C.'s commercial clout, a business model built on the English soccer champions' success on the pitch will be tested severely if the team's slump in form extends beyond this season.

Manchester United F.C., owned by the American Glazer family, lie seventh in the English Premier League with more than half the season gone, leaving the club at risk of missing out on the lucrative UEFA Champions League for the first time since 1995.

Though it could withstand the one-off loss of the 35 million euros ($47.6 million) it received from UEFA for last season's campaign in Europe's top club compettiton, a prolonged absence would have serious knock-on effects.

Not least of the problems would be the threat to deals such as its retail partnership with sportswear group Nike, which pays United a minimum of 25 million pounds ($41 million) a year by virtue of the on-pitch success that drives the sale of two million replica shirts around the globe.

Those sales helped to earn United an additional 12.8 million pounds from the agreement last year. And though Nike is expected to renew its deal in the next few months, the team's recent decline could weaken the club's bargaining position.

Manchester United F.C.'s poor start to the season is the talk of offices and bars across Britain and beyond.

With financial forecasts for 2013/14 based on a third-place finish in the Premier League, the club's New York-listed shares have slid to a little more than $15 from more than $18 in May.

That month marked the end of an era for Manchester United F.C. as Alex Ferguson retired as manager after winning 13 Premier League titles over two decades. Then CEO David Gill stepped down in June, opening the club to accusations of poor planning.


New manager David Moyes has failed so far to produce the aura of invincibility that surrounded Ferguson. On Tuesday United suffered their third loss in as many games - the first time since 1932 that the club has begun a year with three straight defeats.

"You were always going to have this transitional period, when it was not clear if United would carry on winning," said Simon Chadwick, sports business professor at Coventry University. "But this is the nightmare scenario, as opposed to the seamless transition."

Under Ferguson, United grew into a global brand that claims more than 650 million followers. Turnover this season is forecast to reach between 420 and

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