4.4. Implications & Findings

Basically, the situation and future prospects for Manchester United seem quite reasonable even despite the huge debt. It is notable, that in Manchester United structure profit centers are operating much better than in most of football clubs around the world. Current owners of Manchester United in team with CEO David Gill andcoach Sir Alex Fergusson seem to be acting in the way that would make FC MU not only a successful sport entity, but also a benchmark as a business entity for their competitors. The most serious achievement for the current moment is that Manchester United is one of few top clubs that may be called sustainable in mid- and long- term prospective. Therefore, financial problems seem to be overestimated – with such volume of profit and team ability to show outstanding sport results without spending huge amounts on transfers, FC MU appears to be one of football clubs that are not perceived as “money bags”, but who have a very stable current financial condition and possibilities for further development.

Taking into account rising competition among football clubs from both business and sport perspectives, it should be stated that to show positive dynamics in terms of obtaining new supporters and increasing overall profits, clubs really have to find new cheaper ways for development. Also, clubs have to focus a lot on cost-cutting procedures. Since transfer and salary expenditure seems unavoidable, clubs have to find ways to spend less and at the same time to keep up with competition (but generally to keep up with that it is really sufficient to spend large amounts). Currently, Manchester United has quite a good condition due to their competitive advantages – powerful brand, high-class academy for youth players that provides team with free home-grown players, internal relationships inside the team (a competitive advantage from the sport side), strong management and powerful financial arm. Changes in external environment, particularly introduction of FFP, may seem as a positive change in environment that mostly will have negative effect on their direct competitors. But clearly, the legislation of FFP can be avoided by the competitors (for example money input from club owners may easily be given a shape of a sponsorship or advertising), so sustainable clubs need to be aware.

To face such a harsh competition it is really sufficient to seek new ways of obtaining profit. For example, top teams (as FC Barcelona, FC Real Madrid and FC MU) started going on tours to USA or Asia and earned great profits – from enlarging their customer base (supporters pool) to increase merchandise volumes to match day profits with great stir. Following from that prospective IPO from Manchester United seems a very good option, as such an option will allow FC MU to obtain additional financing to pay off debt and to allow themselves higher expenditure.

Practically, most important thing for Manchester United in the current situation is to maintain high sport results in conditions of insufficient financing. There is a strong pivot for that – MU youth academy. But it is quite obvious that without sufficient financing MU may lose to its competitors in terms of development dynamics in the industry. Therefore, an IPO seems a real solution to be competitive in such conditions. The situation when Chelsea FC or Manchester City FC rapidly became powerful force in the English Premier League brightly depicts that “money bag” development style may be very efficient. Such competitors are most dangerous for Manchester United, as with ability to invest any amount in development they can be much more flexible to the overall market trends, whereas such a big and diverse structure as FC MU may face problems of slow adaptation. Bright example is a booming market for transfers – active participants often benefit much more than conservative players of the market. Before the phase of rapid rise of market prices for players that occurred several years ago, Manchester United had a possibility to sign contracts with star players, but currently they do not have such an opportunity – just because of financial limitations.