A CASE STUDY ON

MANCHESTER UNITED:
THE GLAZER TAKEOVER
 Course: Strategic Management [Mgt489]
Section: 1
Semester: Summer 2016
Prepared for
Mr. Bobby Hajjaj
Date of Submission: 2nd June, 2016

Prepared By
Name ID
Md. Ishtiaqul Alam 1130462030
Md. Iqbal Hossain 1130329030
Shamsur Rahman 1130774030
Md. Rafiqul Islam 1130601030
Sahira Samad Upoma 1130661030
Sumaiya Jamal 1130721030
Mohammad Raihan Uddin 1130923030
History
Founded in 1878, 127 years of history

Prominent in 1950’s and 60’s under Matt Busby

2 European Club Championships, 15 League titles and 11 FA cups

75 million fans

The reign of Alex Ferguson (1986)

Rebuilding the team: training, team

Discipline, war against alcohol

1990: first major success, the FA cup

By 1993: English Premier League

Championship

Youth team

Golden Era: 1996-2001

Vision
At Manchester United, our vision is to be the best football club both on and off the pitch. With
committed and loyal staff, passionate support from our fans, both inside the stadium and
worldwide and our proven financial discipline, we believe we can continue to provide long-term
growth for shareholders and further playing success.

Malcolm Glazer?
Born in 1928 in Rochester, New York

American Businessman

Business interests: real estate, health-care and broadcasting

 Net worth: around $1 billion

Bought the Tampa Bay Buccaneers for $192 million in 1995

One of the most successful owner of professional sports team in US

Current Scenario
On June 14, 2005: Glazer takeover

Bought over 90% of Man United shares at £3 per share

Buyout cost £812 million, financed by debt of £540 million

In debt for the first time

Fans and followers outraged:

“MUFC NOT FOR SALE”

Industry Revenue Analysis (Figures in millions of Pounds)

800 742

700

600
473
500 435 424
400 358 Aggreagat
e turnover
300
223
187 190 176
200 148
109 Aggregate
59 6647 61
100 40.5 48 28 17
net
8
0
transfer
Manc Arsen Chels Liverp Newc Aston Evert Tottefees
Charlt Middl
heste al a ool astle Villa on nham on esorr
rU U ow
Aggreagate turnover 742 435 473 424 358 223 190 66 148 176
Aggregate net transfer fees 109 40.5 187 59 48 28 17 47 8 61
The industry revenue analysis indicated that Manchester United had a good spread in terms of
Aggregate turnover and aggregate net transfer fees compared to other clubs.

Nation Based Comparison based on wages and salaries in top European Leagues

France,
Spain, 450.00, England,
492.00, 12% 1,209.00,
14% 34%
Germany, Italy,
608.00, 845.00,
17% 23%

Nation Based Comparison based on wages and salaries in top European Leagues showed that
the clubs in English had to pay more wages and salaries than other top European leagues which
increased their operating cost.
Profitability Analysis: English league (Based on year 2003/4 (Figures in millions
of pounds)

1400 1326

1200

1000

800
600 440
400
200 149
Premiership
0
Other Leagues
-200
-52 -128-67

Operating Pretax
Revenue
Profit Profit
Premiership 1326 149 -128
Other Leagues 440 -52 -67

The profitability analysis showed that pretax profit is one negative scale on the English
Premiership which suggest the fact that industry is incurring loss.
 Turnover
200000 173001 169080
150000 116005 129569 146062 151171
100000
50000
0 Turnover
2000 2001 2002 2003
2004
2005

2000 2001 2002 2003 2004 2005

Turnover 116005 129569 146062 173001 169080 151171

17.60%
18.00%

16.00% 15.21%
14.53%
14.00% 12.67%
11.63% 11.21%
12.00%
10.21%
10.00%
7.09% 7.36% Profit margin
8.00%
6.05% 5.71% Oprating profit margin
6.00%

4.00%
2.05%
2.00%

0.00%
2000 2001 2002 2003 2004 2005
Profit margin 6.05% 7.09% 11.63% 11.21% 7.36% 2.05%
Oprating profit margin 12.67% 14.53% 10.21% 15.21% 17.60% 5.71%

The profit margin analysis indicated that from 2000 to 2004 the profit margin was in stable
trend but in 2005 it decreased drastically to 2.05% which is bad for the industry.
Cash Flow Analysis
35000

30000 27879

24036
25000
19390
20000 17947
16986
14913 14529
15000 12447 Net profit
10458 OCF
9184
10000 7014

5000 3101

0
2000 2001 2002 2003 2004 2005
Net profit 7014 9184 16986 19390 12447 3101
OCF 14913 17947 14529 24036 27879 10458

The cash flow analysis suggested that in the year 2004 and 2005, the difference between the
Net profit and OCF increased which is not good for the industry.
Leverage Analysis

13.61
2005 0.78
17.52
5.49
2004 0.97
5.68
6.65
2003 1.01
6.57
9.78
2002 1.00
9.79 Combined Leverage

2001 0.96
6.62 Financial levarage
6.88
7.65 Operating levarage
2000 0.97
7.89

0.00 5.00 10.00 15.00 20.00

2000 2001 2002 2003 2004 2005

Combined Leverage 7.65 6.62 9.78 6.65 5.49 13.61
Financial levarage 0.97 0.96 1.00 1.01 0.97 0.78
Operating levarage 7.89 6.88 9.79 6.57 5.68 17.52

In the combined leverage we found out that during 2000 it was 7.65% which decreased in
2001 but increased significantly in 2005 at 13.61%.Financial leverage was more of the same but
operating leverage Increased drastically in 2005 by 17.52% which is a very bad indicator for the
industry.
Manchester United Valuation
SWOT Analysis

Strengths
1. Brand image
2. Most popular football club
3. Quality players & team performance
 4. Excellent coach: Ferguson
5. Massive fan base
6. Collaboration with sponsors
7. MUTV
8. Old Trafford stadium
9. Youth academy

Weaknesses
1. Glazer’s lack of experience
2. High cost of players retention
3. Heavily debt financed
4. Upset fans
5. Deteriorating brand image
6. Inexperienced board of directors
7. Dependence on Ferguson
8. Loss of integrity and independence due to privatization

Opportunities
1. Millions of crazy football fans
2. Talented young footballers
3. Identifying and tapping new businesses: e.g. association with video game industry and
TV shows

Threats
1. Industry demand and overvaluation of players
2. Unprofitable industry
3. Intense competitive rivalry
 4. Privatization trend affecting the game-spirit of football
5. Player productivity in industry is time bound
6. Alcohol and drug addiction affecting performances of players

Strengths/ Opportunities
1. Offer fans special edition products
2. Arrange quizzes and tournaments in educational institutions
3. Make TV programs leveraging the brand image and youth academy promoting quality
football

Weaknesses/ Opportunities
1. Lower the debt
2. Assuring the fan base that the club still represents the football spirit

Strengths/Threats
1. Continuing existing player retention plans leveraging youth team, brand image and
lower the transfer cost
2. To sustain in the unprofitable industry, emphasize on playing good football and winning
titles for the fans leveraging Ferguson’s coaching and good team performance

Weaknesses/ Threats
1. Convince the fans that privatization could enhance the scopes for growth.
Strategy as Process

Strategies

Lower the cost through players’ retention and bringing up new players through the
youth academy.
Reduce debts and ensure sustainable future financial stability.
Regain the trust of fans
 Improving team performance and re-achieving the team glory
 Arrange special tournaments in educational institutions in the presence of
popular players
 Improve seating facilities and ticket management for fans in Old Trafford
 Introducing new special edition products & services

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