Glazer's secret goal
Ten years ago, English football was a different game. Fans could pay at the gate, grounds were often only two-thirds full, average attendance was 26 000 and not every Premiership stadium was all-seat. Sky Sports showed 40 live matches per season, and only on Sunday afternoons and Monday nights.
Fast-forward a decade.
You must buy your ticket in advance, the average crowd is over 35 000, across the season’s 380 Premier league games, grounds are 95% full and the top players earn Â£80 000 to Â£100 000 a week.
There have been similarly radical changes in the communications industry. Britain’s 60-million citizens own 56,2-million cellphones; in 1994 it was just a few million. Sky had 3,6-million subscribers in 1994, fewer than half the number this year.
It is in this context of dramatic change in football, lifestyle and technology that Malcolm Glazer’s bid to buy Manchester United makes sense, especially given the dizzying upheaval still to come in those areas.
When the takeover approach was confirmed last week, most business analysts were sceptical. How, they asked, could the 76-year-old American hope to make a serious profit on an investment of about Â£800-million? Nobody seemed to know.
The answer lies in what football and telecommunications might be like in 2014. If the changes over the next 10 years are as significant as they have been since 1994, Glazer’s move might make him a fortune.
The booming popularity of broadband Internet — which lets fans watch TV-quality pictures on a personal computer, and allows every club to act as its own TV station — is the key. United’s best opportunity to make huge profits is to get control of their own broadcasting rights and then use the ongoing revolution in broadband Internet access to fully exploit the club’s global popularity by persuading fans to pay to watch matches live on a United website.
The resulting revenue could reach Â£100-million a year or more, and would destroy the competitiveness of not just the Premier league but the Champions League too — unless, of course, other super-clubs were doing the same.
For United, broadband offers the chance to create a massive worldwide network of fans who pay a monthly or annual subscription to watch action from Old Trafford on personal computers or computer-fed TV including, crucially, live Premiership games. And if they can pull off that trick, then Liverpool, Juventus, Real Madrid and other clubs will quickly follow.
Initially, TV cameras will provide the pictures seen by broadband, but ultimately broadband could replace television altogether. Technological advances will soon end the inferior quality of pictures seen on the Internet compared with TV.
“If Malcolm Glazer got control of United and put exclusive club content on broadband, he could charge people to watch goals, highlights, archive games, player interviews, training sessions and, if things changed in the future, live Premier league games. Any club with a decent following abroad could monetise those people that way,” explains Dan Markham of Octagon, the sports marketing group.
“Being American, and given the fact that America already has 30-million homes with broadband, Glazer could start a United subscription broadband service there first,” says Markham. “You have a potential market of tens of millions there and United are already a powerful brand there.”
They could then seek to repeat the trick in China, Japan and beyond.
Kevin Roberts, editorial director of Sport Business, says: “United are one of the few clubs that have the global fan base you need to make this a serious business proposition.
“Once broadband really takes off, United could cash in on their status as the only truly established international superbrand in English football and eventually make maybe Â£2-million or Â£3-million a match, adding as much as Â£70-million a season to their income.”
If all this sounds fanciful, consider that in the United States, a million baseball fans now pay $2,95 a day, $14,95 a month or $80 a season to watch up to 15 Major League Baseball matches live every day on a broadband website. Last year it was 500 000.
During Euro 2004, fans wanting to see 10-minute highlight packages of games from Portugal soon after the final whistle paid â,¬14,99 to do just that on the euro2004.com action broadband service. The site had more than two million visits during the tournament, but Uefa will not reveal how many people subscribed.
In all these ventures, what industry experts call “displaced fans” — a Liverpool supporter living in Thailand, a New York Yankees follower on a trip to Seattle, an English cricket enthusiast on work placement in Australia — are the main target.
A recent survey by sports sponsorship agency Sport + Markt calculated that Spanish club Real Madrid had 490-million fans or potential fans around the world, with United second on 350-million.
The problem for United, whoever owns the club, is that the Premier league controls their, and the other 19 clubs’, broadcasting rights. In Italy and Spain, clubs sell their rights individually; but in the United Kingdom the league does it collectively.
The only rights which United control are those to friendlies, testimonials, tours, Uefa Cup games and matches they play in the final qualifying round of the Champions League. The value of those is nothing compared to being able to show live Premiership games. United have long been frustrated at earning far less from the Premier league’s collective TV deals at home and abroad than they arguably deserve, given the large number of viewers they deliver.
Last season, the league distributed to its 20 clubs Â£457,7-million from the domestic broadcasting contract with Sky, of which United got 6,8%.
It was the same with the share-out of the Â£65-million from foreign television companies. United, despite being English football’s undisputed big attraction, got the same Â£2,83-million as the other 19 clubs. Yet they provide, by common agreement, at least 25% of all fans who tune in.
When the new three-year broadcasting contracts were being discussed by the clubs early last year, Peter Kenyon, then still United’s chief executive, tried to get United more money. He requested the introduction of a “weighting system” for the distribution of revenue generated from selling live Premier league games abroad, with payments linked to popularity. Unsurprisingly, the club chairmen rejected the proposal 19-1. If the Glazers get control of Old Trafford, United are unlikely to accept the rejection of such demands.
The defining trends of European football in the past decade have been globalisation, commercialisation, broadcasting and elitism.
Harnessing the worldwide popularity of football’s lucky few clubs through broadband technology draws all those together perfectly.
The Glazer family knows that, even if most others don’t yet. — Â