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How is the Manchester United Red’s Five-Year Business Plan Impacted by Recently Becoming Publicly Traded?
Jarred D. RiccadonnaApril 27, 2015
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Overview and Thesis
Thesis Question: How is the Manchester United Red’s Five-Year Business Plan Impacted by Recently Becoming Publicly Traded?
Passion for sports marketing More teams that are NOT publicly
traded Short-run and long-run effects of all
important business categories (financials, management, marketing, etc.)
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Benefits of the Research
Better understand the complexities of becoming a publicly traded entity
Understand the guidelines necessary in becoming a publicly traded company, regardless of the business owned
Professional sports team owner considering becoming publicly traded
One considering acquiring ownership of a professional sports team via the stock market.
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Background – History1878-1909
Club formed in 1878, playing against other individuals in railway industry
John Henry Davies saved organization from bankruptcy, which led to the name change of Manchester United Reds in 1902
Won first Football League title in the 1907-1908 season
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Lost 12 league matches in a row, leading to a dissipation of fan support
James Gibson, a manufacturer of Army uniforms, invested equivalent of30,000 Euros (32441 U.S. Dollars) to help avoid bankruptcy
Background – History1930-1939
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Became publicly traded onAugust 10, 2012
All-time great Sir Alex Ferguson retired Succeeding Ferguson, David Moyes had
a dismal 2013-2014 season coaching the Reds, resulting in his termination
Background – History2010 – Present Day
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History – Championships
39 Total Trophies, second highest ever (Liverpool FC)
20 Premier League English titles (Best) Ranked top 3 or better 21 out of the
past 22 seasons (7th in Moyes’ season)
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Becoming a PubliclyTraded Entity*
Two concepts:› Firm must sell its securities on public
markets; › All business and financial information must
be reported on a regular basis Initial Public Offering (IPO):
› Allow investors to acquire a specified size, which enforces reporting requirements;
› Voluntarily register with the SEC*New businesses: investors should look at historical data on financial trends/ratios to be enticed into entering the market
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Financial Analysis – Stocks
Began IPO on August 10, 2012 at $14 a shareconsisting of an even split ofClass A and Class B sharestotaling 16,666,667 shares
Class A: One vote per share Class B: Ten votes per share $16.35 per share (February 5, 2015)
› 16.78% increase Minor growth trend, not as appealing for
the risk taker
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Financial Analysis – Market (Micro)
Stock from August 31, 2012 – February 5, 2015
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Hiring of David Moyes› Initial volatility of stock (uncertainty of
outcome)› 7th place finish: stock dropped back to $14
Stock rose 6.5% after Moyes was fired Assuming Laissez Faire, the impact of a
coaching change and team performance can effect stock price
Financial Analysis – Market (Micro)
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As of the 2012-2013 season, the entire Premier League lost 291 million Euros ($314,934,750 USD)
Second highest on wage bill (181 million Euros)
First in team income: 363 million Euros Provides investors a level of confidence
being successful financially
Financial Analysis – Market (Macro)
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Financial Analysis – Finances
June 30th annual fiscal year 13.38% increase revenue (2012-2013) 19.26% increase revenue (2013-2014)
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Financial Analysis – Finances
Effect of the IPO, before and after:
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Financial Analysis – Profits
2012 – 2013 (000) 2013 – 2014 (000) Tax Credit (000)
From 23,313 to 146,419
From 146,419 to 23,835
155,212
123,106 (122,584)
The heavy volatility shows the immediate impact becoming publicly
traded with respect to short-run profitability
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Financial Analysis – Ratios
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Financial Analysis Forecasts and
Predictions Profit and Margin trends almost
stagnant Investors be uninterested if looking for
a dividend No huge spike (positively or negatively)
in stock prices Will remain an
influential factorwithin thePremier League
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Marketing – Revenue Generators and
Customers Top five customers:
› Premier League› Nike› UEFA (Union of European Football Associations)› Aon› General Motors (Chevrolet)
Accounted for 51.1% revenue in 2014, 45.5% in 2013, and 50.1% in 2012
New 10-year agreement with Adidas
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Marketing – Sponsorships
Accounts for 189.3 million Euros Sponsorship deals are typically 2-5
year terms Stock potential maximized with
constant revenue drivers and expansion of renewed or new sponsors
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Marketing – Other Influences
Retailing/Merch
Mobile and Content
Broadcasting
Matchday
303M Euros; Nike
16M Euros;58M Facebook;
3.4M Twitter followers
55-60% increase predictions
MUTV – 85 countries
108.1M Euros (2014) Ticketing (4.4% growth)
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Porter’s Five Forces
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Bargaining Power› Favors MAN U – High revenues› Global recognition› Consistent success and sponsorships
New Entrants› Favors MAN U – Revered team› Strong fan base vs. new team’s base› Capital to start: 100M USD› Threat is nearly nonexistent
Porter’s Five Forces
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Buyer Power› Favors MAN U – Global Popularity› Success of the team› Renewing sponsors at higher amounts
Threat of Substitutes› Favors the market – Tastes/preferences
(Fans)› Successes of other organizations› Enforces urgency to be successful
Porter’s Five Forces
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Rivalry› Overall, Favors MAN U – Powerhouse
enforcer› Role model for Premier League due to
financial successes and revenue leader› Strategic foundation for prices, commercial
and consumer sales› Allows for potential to grow stock
Porter’s Five Forces
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SWOT AnalysisSafe investment/Slippery Slope?
Strengths:› Prestige and Global Community
62 total trophies 659M total followers 37M records in CRM database
› Sponsorships/Contracts Big five customers Renewing contracts
› Growth/Profitability Minor yet consistent growth rate Key contributor to cash flow and revenues
of the Premier League
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Weaknesses:› Stalemating growth
No promise of long-term financial gain› No dividends
No payouts as stated in Prospectus Stock for bragging or decision making
purposes only
SWOT AnalysisSafe investment/Slippery Slope?
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Opportunities:› Portfolio of Sponsors
Expanding the portfolio, increase revenue› Reaching Global Audiences
Expand broadcast rights – reach more of659 million fans
› Mobile and Content Lowest revenue driver
Employ a digital media strategy to target customer base
Convert 37M fans and 58M Facebook connections to increased sales
SWOT AnalysisSafe investment/Slippery Slope?
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Threats:› Conflicts of Interest
Nike contract expiring; signing Adidas?› Current/Previous Standings
Currently in 4th; bad performance loses fan loyalty and bonus revenues paid out
SWOT AnalysisSafe investment/Slippery Slope?
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Conclusion
Continual success after the IPO Stock, revenues and transactions
strongly dependent on success of team Continue to be the market driver,
exploit opportunities and overcome weakness
IPO influenced short- and long-run business decisions (players, fans, mkt)
Continuous small growth pattern
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Personal Analysis
I would NOT purchase MAN U stock› Risk taker; not for bragging rights
Successfully hypothesized positive impact of IPO for short-run and potentially long-run
Five-year plan is successful insofar
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Limitations of the Research
The bulk of the research was performed only on one team› Compare to other teams for more accurate
prediction; Lack of scholarly articles
› Challenge of finding credible sources and anticipated lack of scholarly articles; and
Timeliness of the research› Uncontrollable. Data from FY12 – FY14. As
time goes on, can refer back and check predictions
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References LLP, PricewaterhouseCoopers (2012, July 23). Manchester United PLC. Retrieved February 6, 2015,
from http://www.sec.gov/Archives/edgar/data/1549107/000104746912008161/a2210672z424b4.htm#cm71301_dividend_policy
Manager Profile - Alex Ferguson. (2015). Retrieved February 6, 2015, from http://www.premierleague.com/en-gb/clubs/managers/profile.overview.html/alex-ferguson
Manchester United Ltd. Cl A. (2015). Retrieved February 6, 2015, from http://www.marketwatch.com/investing/stock/manu/financials
Manchester United PLC. (2015). Retrieved February 6, 2015, from http://www.google.com/finance?q=NYSE:MANU&fstype=ii
Nasdaq (2015, February 5). MANU Key Financial Ratios. Retrieved February 5, 2015, from http://www.nasdaq.com/symbol/manu/financials?query=ratios
Public Companies. (n.d.). U.S. Securities and Exchange Commission. Retrieved February 12, 2015, from http://investor.gov/introduction-markets/how-markets-work/public-companies#.VN1RYuajOm4
Sedghi, A., & Wills, T. (Eds.). (2014, May 1). Premier League finances: Turnover, wages, debt and performance. Retrieved February 12, 2015, from http://www.theguardian.com/news/datablog/2014/may/01/premier-league-club-accounts-debt-wages
United history: 1878 to 1909. (n.d.). Retrieved February 6, 2015, from http://www.manutd.com/en/History/History-By-Decade/History-By-Decade/2014/Oct/manchester-united-history-1878-to-1909.aspx
United history: 1930 to 1939. (n.d.). Retrieved February 6, 2015, from http://www.manutd.com/en/History/History-By-Decade/History-By-Decade/2014/Oct/manchester-united-history-1930-to-1939.aspx
United history: 2010 onwards. (n.d.). Retrieved February 6, 2015, from http://www.manutd.com/en/History/History-By-Decade/History-By-Decade/2014/Oct/manchester-united-history-2010-onwards.aspx
Woodward, E. (2014, October 27). Manchester United PLC, Form 20-F. Retrieved February 6, 2015, from http://ir.manutd.com/~/media/Files/M/Manutd-IR/Annual Reports/manchester-united-plc-20f-20141027.pdf
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Questions?