In 2005, Malcolm Glazer bought the Manchester United Football Club for $1.5 billion, creating enormous controversy. Glazer designed his takeover of Man U so as to make himself a majority shareholder (now 75%), ending the team's fourteen-year status as a PLC. Of course, many fans were distressed, interpreting it as a move that would take the team out of the community's hands. They saw the Red Devil nation losing its democratic status. To make matters worse, Glazer's purchase of the club required borrowing a colossal sum of money from investors, dropping the franchise into sizeable debt. As an American business mogul, and owner of the Tampa Bay Buccaneers, Glazer's purchase was unwelcome not only from a business standpoint, but because he was, you guessed it, an outsider. A foreigner. An American. And a rich one at that. Does any of this sound familiar? Some may remember George Michael’s (as I like to call him) takeover of the Bronx Bombers in comparable terms...
Yesterday, Manchester United defeated Chelsea in the championship game of the UEFA Champion's League. 85,000 fans crammed into Luzhniki Stadium in Moscow to watch the match. In the aftermath, some have reported that Moscow's management of the event (high costs, doors closed to non-attendees, bureaucratic inertia, etc) was disappointing, particularly as a business venture. (And for some Americans making history, it was a boring spectacle as well.)
Though the game may have been insipid entertainment for some, for the winner, naturally, it was a huge success. In more ways than one. Man U's win in penalty kicks followed their recent claiming of the Premiere League title, making them arguably the best football team in Europe, if not the world. What’s more, Manchester United was ranked by Forbes this year as the most valuable sports franchise in the world at $1.8 billion, their brand valued at over $351 million. According to The Political Economy of Football's website, after their two most recent Premiere and Champion's League victories, Man U can expect a near $125 million dollar payout. To make matters even more ridiculous, with over 300 million fans worldwide, Man U may be not only the world's best sports team, but also the world's most valuable team-brand.
Which brings me back to George Michael (not the George Michael of Arrested Development fame). Many national and international baseball fans have been known to complain about the unfair advantage the Yankees have, their opposition citing their enormous payroll, the size of New York as a media market, their brand recognition, etc.—even before revenue sharing—as demonstrations of life’s unfairness.
Now a hereditary monarchy with Hank and Hal running the team, the Yankees franchise may truly warrant those dynastic analogies. And for good reason: under their dear-old-dad, the Empire won ten pennants and 6 World Series Championships. Proof in the pudding, as they say. Their garish success making fans of the little-guys, the underdogs, (myself included) hernia-candidates for years. Hating them for the fact that they could afford to be good. But no matter how you slice that pudding, in terms of business, the elder Steinbrenner revolutionized baseball, buying a team worth $10 million, leaving it as a team worth over $1 billion. Though he may have written the charter for the Evil Empire, George Michael Steinbrenner—as the first owner to sell game rights to a broadcasting station—is a savvy boss. He capitalized on New York as a media market and helped to make the Yankees a global brand.
Yet today, with the cost of a new ballpark opening in 2009, astral contracts, and a few tons of debt, the Yankees need to maintain their level of success if they expect a blue-sky-forecast. Leadership, for their future, is essential. Maintaining the team, its players, and the brand will demand savvy of the old Steinbrenner ilk, but whether or not it will come from the Youngers is up in the air.
Manchester United is entering into similar territory. The Steinbrenner circus has put a bull's-eye on the Yankee name; as public enemy number one, their status makes competing teams put in that little extra effort, spend that extra dollar on the free agent, just to beat them. And after looking at the numbers, Manchester United appears to be the New York Yankees on steroids. Their value, and advantage, seems to be astronomical—superlative.
But this just begs the question: Is Glazer off the hook because of Man U's big win? How can the Reds, and the Yankees, both with piles of debt, proceed from here? Should soccer consider revenue-sharing (or some better option)?
And finally, reader, what do both teams' giant payrolls and exorbitant spending mean for the business of sports? I want to know.