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Man United to ramp up fan base gains
By Roger Blitz
The money Manchester United can make from exploiting its fan base will “dwarf” the income it has been acquiring from sponsorship deals, Richard Arnold, the Premier League champions’ commercial director predicted.
While the Glazer family, which bought the club in 2005, ponders when to advance their $1bn Singapore flotation plans, the club’s executives are working on the next phase of the owners’ long-term goal of maximising income from its fame.
The economic climate is forcing the Glazers to delay a planned initial public offering of about a third of the club’s equity on the Singapore stock exchange. But, as and when it does go to market, United’s commercial potential is bound to be a key part of its sales pitch.
Officials have in recent weeks closed the latest of several deals with credit card companies that will enable United to earn income directly from their fans around the world. The club makes money when the Manchester United branded cards are first activated, during their general use and whenever the user incurrs charges.
Up until now, United has expanded its commercial income from high-profile deals such as the £80m shirt sponsorship with US insurance group Aon, and the £40m training kit deal with logistics company DHL . United last season earned £103.4m in commercial revenues, up 27 per cent on the previous season.
But Mr Arnold said the club had not yet taken its fanbase “and put that into a money-making machine”.
The club’s customer database stands at 11m, he revealed, giving it a quantity of data and knowledge “about the same as a Boots or Tesco’s loyalty card”.
But United has “a very high level of confidence” that the database will continue to grow at an “exponential” rate, and the potential income from direct monetisation of the fan base, such as United-branded credit cards in the Far East, was huge.
“Adding these pieces together, it makes what we do now look like small fry... Even on some of the sponsorship activities and merchandising activities and the licensing activity, our opportunity in the future dwarfs the work that we’re doing currently.”
However, the Manchester United Supporters Trust, the Glazers’ most strident critics, questioned whether the owners really understood the club’s fans. “The problem with their ownership model is the fans don’t feel a sense of ownership,” says Duncan Drasdo of MUST. “They feel a sense of exploitation.”
Trying to persuade the fan base to spend money has proved “an impossible nut to crack”, he added.
Mr Arnold acknowledged that cracking the Chinese market – “a hugely important piece of the puzzle in our commercial success” – was complicated and time-consuming.
The club’s commercial strategy was shifting away from doing global deals with single brands to the more exhaustive task of multiple deals in individual countries. “Have we got the strategies sorted? No, but we’re erecting some phenomenal building-blocks for each and every one of these markets,” he said.
In contrast to United’s manager, Sir Alex Ferguson, who earlier this week complained about the dominance of TV over football clubs, Mr Arnold had nothing but admiration for the way the Premier League and television had turned clubs such as United into “global property”.
United’s matches were ubiquitious pieces of TV content, he said, speaking before Sir Alex’s comments were made public. “There’s nothing else in the world that is shown at least two hours a week on 80 per cent of the world’s televisions. There isn’t.”
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This post has been edited by LA_NY on 1 Oct 2011, 03:14