Manchester United: Not a team, but a business

Sports play a role in many different people’s lives. Soccer or Football depending on where you live, takes the cake as far as being the most popular sport in the world. Manchester United happen to be the world’s richest and most popular soccer team. Often criticized for their large amount of spending in order to acquire the world’s greatest talents in the sport, Manchester United has managed to win the most Premier League titles and 3 UEFA Champion’s League titles. Although, Manchester United has had a lot of success on the field, they have had even more when it comes to the business aspect.

Wall Street Valuation
From a financial standpoint, Wall Street has valued Manchester United as being the richest soccer club in the world. Mike Ozanian from Forbes states, “Wall Street now affords United an enterprise value of $3.6 billion. Math: market value ($3.05 billion) + long term debt ($613 million) – cash ($57 million).” This valuation is very impressive due to Manchester United having a poor season due to their shift in management after Sir Alex Ferguson retired last season. 

Manchester United and Adidas:
Recently, Manchester United ended their partnership with Nike and moved on to Adidas. Mike Ozanian from Forbes tells us, “English soccer team Manchester United and German sportswear maker Adidas have agreed to the richest uniform deal in the history of sports. Adidas will pay $1.3 billion over 10 years to United, or $130 million a year, beginning with the 2015-16 season.” You would think that 1.3 billion is enough, right? Not for Manchester United. Mike Ozanian also states, “But the Adidas kit deal, coming comes along with the team’s $559 million, seven-year shirt deal with Chevrolet (also the richest in sports) means it will continue to have the cash flow to turn an operating profit and sign elite players.”


Capacity and Inventory:
Since Manchester United are very popular, there will be a huge demand as soon as the new Adidas uniforms roll out. However, until then Manchester United will still have a lot of the Nike uniforms available. Manchester United will have to decrease their capacity slowly and lower the price of the Nike uniforms as the end of the season approaches. This will result in a decrease of the Nike inventory due to more sales, which is what they want as soon as they can start selling the new and highly anticipated Adidas uniforms.


The Competition:
Manchester United may have the lead but other teams are getting closer. The two most popular teams in Spain would be Real Madrid and FC Barcelona. Forbes put a value of 3.44 billion for Real Madrid and a 3.22 billion valuation for FC Barcelona. Another advantage for these clubs is that they have the two best players in the world, Cristiano Ronaldo (Real Madrid) and Lionel Messi (FC Barcelona).


  • Do you think that sports teams are nothing more than a business?
  • What are some good ways to sell inventory that consists of jerseys with decreasing demand?
  • Do you agree with Manchester United’s valuation?
  • Do you think it is fair to fans to constantly release new jerseys, which causes them to keep repurchasing?




Reflection: A Look at Strategy

            Before starting this class, I was already aware that forecasting was important. However, I didn’t realize the extent to which it was important. Forecasts drive so many decisions that are made within a company. It is hard to know if you are being too conservative or too ambitious because you never can predict the market. Once you get the forecast, all of the other departments work together to make sure that the numbers are realistic and can make a profit in the end.

           I also saw that you can start with one strategy in mind and then you can just end up going in a different direction later on. I was assuming that companies had to stick to the strategy that they intended to start with but that isn’t true. Change is inevitable and you just have to learn to grow with the changing markets.

          Amazon is a company that has maintained its strategy for many years. They aim to make their customers as happy as possible and they have done a good job with that. They didn’t follow the Silicon Valley theory where you focus less on revenue and try to establish a product or service. Amazon doesn’t focus on profits, their profit margins aren’t that great but they still have people willing to invest in them. Amazon isn’t worrying about revenues, they are trying to gain more memberships without changing the price to match inflation. Money just doesn’t seem to be a problem for Amazon. They created Amazon Fresh and it just needs to make enough to finance its self. There strategy is proving to work very well for them because they keep adding more services to their business that they really don’t need to finance very heavy. They are able to charge fairly cheap prices for their Kindles because customers will purchase games and applications from the Amazon Kindle store. Their goal is to have their products widely spread across a large number of the population. So far, they have done an amazing job with that.


       My team’s strategy was to be a differentiator and lead in the high end and low end. As the simulation progressed, we saw that some of our products in those segments just did not do well. They were positioned in the worst spots in some rounds, some stocked out multiple times, and our awareness of the products fluctuated constantly. It was a true learning experience nonetheless. One thing I learned from this course is that you really have to analyze your competitors very closely and constantly do SWOT analysis to keep your company up to date. I also learned that ethics isn’t always a issue of what is good and bad, it can be about what’s in the best interest of the company. Doing nothing is also an option that can be chosen but it will also have implications in some way.




The Science of Relationships in Business

I was going through my normal browsing routine of the Financial Times today and found an interesting article in the management section entitled “The psychiatrist of finance” which was a small story on a man named Peter Solomon. The piece talked about how Mr. Solomon’s career evolved during his career and how he has preferred a way of doing business that involves close relationships and empathy with potential and current customers. I actually felt that the piece was extremely good for any MBA student to read because it reminds us that even in today’s environment of ever more automated relationships that a human connection can be the difference between success and failure as well as necessary to ensure a long relationship with clients.

Balance: a career in banking has enabled Peter J. Solomon to pursue his interest in art


As I sat here pondering the deeper meaning of the moral of this story, I realized that the subject of the article has a point that should be heard. In fact, it can even be seen as a strong strategy that provides a competitive edge. More and more services such as investment banking are becoming a commodity. This causes firms to essentially race each other to the bottom of the profitability ladder. Firms continue to find ways to cut expenses which usually means cutting out the human factor in exchange for higher levels of automation. But the question to ask is, why? Why do firms automatically start assuming that these short term moves will help in the long term? As a product becomes a commodity, it no longer brings about a sense of product loyalty to it. A perfect example of this is how investment banking is becoming cheaper and cheaper for firms and no longer draws the same loyalty that it once did. The relationships that Mr. Solomon has built over the ages are essentially what cause consumers to stay with a company in the long term. Just look at how when a financial advisor moves to another firm, many of this clients will go with him or her.

In the article, Peter Solomon recalls an incident when one of the employees of his firm was so involved on her smartphone that she walked directly between the President and Chairman of her firm without even realizing it. After getting her attention, he says to her “You just walked between the chairman and the president of your company. Are you going to observe the world around you, or ignore it?” This small story really gets to the heart of a disease of mass automation within the entire business community. Firms are so involved in automating out the human capital that they are losing their edge in being able to find hidden gems of opportunity that a computer cannot discover. This really goes beyond the usage of customer loyalty programs that attempt to entice consumers with financial rewards, this goes to the heart of the interaction between two people, regardless of their social positions or status. While CRM systems can only attempt to use algorithms to attempt to discover patterns leading towards better sales and client management, the ultimate tool to that better relationship is the salesperson or service rep themselves and their ability to empathize with clients and their concerns.

Just looking in my industry, I can easily pick out a perfect example of this. If say an asset manager is offering service to their client but they simply are offering a commodity, they may continue to retain that line of business but no growth will be established. If that same asset manager ensured they kept a working relationship with that same firm, they might find other opportunities such as asset based lending, underwriting, etc. All of these further deepen the client’s loyalty to the firm and almost build a feeling of guilt to go elsewhere. Going even closer to home, I easily recall how my Father will go to the same mechanic faithfully for years and years because of the relationship that was established of trust. Loyalty like that is simply unquantifiable to any firm and can be the savior in the worst economic times.

What do you think? Can you name a few examples in your own industries of how such loyalty and relationship building are either being forgotten or used to build stronger ties to the client?




Financial Times: The psychiatrist of finance by David Gelles 5 Ways to Take Customer Loyalty to the Next Level by Jonanna Lord