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Manchester United F.C. Presentation

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Jacob Greene

on 22 May 2014

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Transcript of Manchester United F.C. Presentation

Presenters: Conrad Whyte, Marc Sorrentino, Shauna Keesler, Beth LeRoy, Jacob Greene Overview of Manchester United 1) Introduction
2) History
3) Mission/Vision
4) SWOT/TOWS/SFAS
5) Hierarchy of Strategy
6) Goals & Objectives
7) Core & Distinctive Competencies
8) Strategy Outline 9) Porter’s Industrial Forces
10) Financial Analysis
11) Porter’s Value Chain
12) Issues
13) Alternatives/Tradeoffs
14) Recommendations
15) References At Manchester United our mission is to become the most powerful and successful sports team in the world, both on and off the pitch. (3, 7) We are committed to our tradition of excellence by combining best business practices in acquiring and maintaining a championship caliber team in order to build an international brand. (4, 5) Our large passionate community provides Manchester United with a worldwide platform to generate significant revenues from multiple sources, including sponsorships, merchandising, product licensing, new media and mobile, broadcasting, and matchday. (1, 5, 7) The club’s culture aims to be clear about its priorities and aspirations, open and balanced about its position and honest about the challenges it faces. (6) Our success is not limited to the number of trophies we win, but also on the impact we have on our community. Everyone at the club is committed to tackling environmental and social issues by using the brand to leverage support and create awareness of issues facing the planet. (8) Manchester United’s long-term financial success is dependent on the combined efforts of our employees at every level of our organization. (9) Mission Statement United
…committed passion for success
Non-discriminatory
…accessible to all
Innovative
…to be “first to the ball” at all times
Team oriented
…working together with dedication
Excelling
… to be the world-class leader
Determined
…in pursuit of success while being accountable Vision and Values Global Reach
Continuity
Visibility
Recognition
Trust
Respect
Brand Familiarity
Propensity to Buy Vision and Values Vision Statement Opportunities
Integration into American Market
Social responsibility
Focus on fan base
Stadium expansion
Farm team
Increased media coverage Strengths
Fan base
Brand Familiarity
Globally recognized
Distribution channels
Attractive to sponsors SWOT Threats
Top clubs buying out good players
Internal friction of players and management
Off-the-field player issues
Interest rates on the payment-in-kind loans
Governmental Issues Weaknesses
High Level of Debt
Revenue Fluctuation Based on Team Performance
Saturated English Football Market
Products and Product Variety Strengths (S)
Brand familiarity
Globally recognized
Distribution channel
Attractive to sponsors
Fan base weak Weaknesses (W)
Saturated English Football Market
Products and Product Variety
High Level of Debt
Revenue Fluctuation Based on Team Performance Opportunities (O)
Integration into American market
More media coverage
Underdeveloped fan base in Western Hemisphere and beyond
Stadium expansion
Social Responsibility
Farm team SO Strategies
Attract sponsors through being socially responsible (S4, O5)
Increase media coverage through distribution channels (S3, O2)
Increase American fellowship (S2, O1)
Increase revenues through stadium expansion(S5,O4) WO Strategies
Focus on gaining fans in the Americas (W1, O1)
Focus on reaching a larger Audience and increasing digital media and merchandising revenues(O3,W3)
Maintain fan loyalty through participation of social programs (O5, W4) Threats (T)
Top clubs buying out good players
Internal friction of players and management
Interest rates on the payment-in-kind loans
High competition for commercial partnerships ST Strategies
Scout more internationally for top talent (S2, T1)
Expand affinity cards in global markets (S4, T4)
Generate revenue by producing sell able TV content and distribute (S3, T3) WT Strategies
Develop attractive exit strategies to commercial contracts to mitigate risks for sponsors (W4, T4)
Look at debt refinancing given current value of ManU(W3, T3)
Look for commercial partnerships in unique area (W1, T4) External
factors Internal
Factors SFAS Goals and Objectives Pay off debt
Invest in the team
Increase all 3 revenue streams
Leverage brand name to increase commercial revenues
Increase broadcasting revenue through MANUTV
Increase matchday revenues Financial Strategic Pay off debt
Maintain team success
Grow brand familiarity, extend fan base
Leverage brand name to grow all aspects of business
Commercial
Broadcasting
Matchday Able to maintain and manage team competitiveness in Premier League and Champions League
Grow and maintain brand strength and recognition internationally.
Maintain highest average attendance of Premier League games
Historical venue and newly renovated training facilities to support many parts of the business. Core Competencies Ability to leverage brand name to gain commercial sponsors.
Utilize teams consistent success to gain global brand recognition and increase fanbase.
Ability to monetize new media, mobile, and broadcasting outlets cohesively Distinctive Competencies Competencies Expand ManU Portfolio of global and regional sponsors
Diversify revenue and improve margins
Further develop retail, merchandising, apparel & product licensing
Enhance the reach and distribution of ManU broadcasting rights
Exploit new media & mobile opportunities Strategies Secure sponsorships with leading brands

Expanding a regional sponsorship model
Opened Offices in Asia and US
Segment new opportunities by product category or territory Strategy: Expanding ManU Portfolio Growing Business on a global basis
Increasing product range
Improving distribution
Develop wholesale, retail, e-commerce channels
Investment in Product Licensees
Enhance range of product offerings to followers Strategy: Develop Retail, Merchandising, Apparel & Product Licensing Business Digital Media Platforms
Mobile sites, Apps, Social media
3rd Party Media Platforms
Create a source of traffic for digital media
Social Media
Increase followers
Further engage fans and followers Strategy: Exploit New Media & Mobile
Opportunities MUTV
Global Broadcasting platform
Offered to 54 countries

Digital Video Recorder (DVR)

Digital Viewing on Internet and Phones Strategy: Enhance the Reach and
Distribution of Broadcasting Rights Expand into high growth commercial businesses
Sponsorship
Retail
Merchandising
Licensing
New Media & Mobile
Diversify revenue
Generate improved profitability Strategy: Diversify Revenue
and Improve Margins Strategy Industry Competitors
Potential Entrants to Manchester United in terms of product sales would be other teams that outperform within the Premier League or possibly the UEFA cup

Their biggest threat would be Manchester City who one the league last year Porter’s Industrial Forces Buyers
Manchester United’s consumer loyalty when it comes to its products and sales can be broken down between new buyers and repeat buyers

In terms of new customers, their attitude towards being repeat buyers in tied in with the current success of the club’s performance on the field

When it comes to returning customers or buyers, keeping a good record is not all that comes into play Threat of Substitute Products
No real threats of substitutes when it comes to football in England
Potentials could include
Rugby
Cricket
Basketball Other Stakeholders
Sponsors
ManU has been able to get sponsorships from many different global companies, who clamor to be able to be associated with a premiere sports team

Nike
Nike has a stake in Manchester United’s merchandising line Bargaining Power of Suppliers
Envirowise Supply Chain Partnership Programme
Over 54 suppliers connected by program
ManU mentors their business practices
MUML
Subsidiary of NIKE
Encourage suppliers to use recyclable
Manchester United Players Balance Sheet Vertical Analysis Balance Sheet Vertical Analysis Main Takeaway from Balance Sheet Analysis Balance Sheet Horizontal Analysis Balance Sheet Horizontal Analysis Balance Sheet Analysis Horizontal Analysis Vertical Analysis Liquidity Solvency Ratio Analysis Overview of Certain Line Items on Statement

Horizontal Analysis

Vertical Analysis

Main Takeaways Income Statement Analysis Commercial Revenue
£117,611

Broadcasting Revenue
£103,991

Matchday Revenue
£98,718 Breakdown of Revenue (2012) Breakdown of Revenue (2010-2012) Breakdown of Operating Expenses (2010-2012) Income Statement Horizontal Analysis Income Statement Vertical Analysis Total Revenue down 3.36%
Broadcasting and Matchday Revenues declined from previous year
Commercial Revenue only segment that grew from previous year
Operating Profit down 29.06%
Continuation of decrease from previous years
Currently at 14% of net income Income Statement Main Takeaways Statement of Cash Flows Operating Activities Statement of Cash Flows Investing Activities Statement of Cash Flows Financing Activities Main Takeaways Leverage is high and earnings are decreased.

Revenues have declined.
There has been a deduction in free cash flows
Part of this is paying off the debt

Overall the company is still weak but they moving stabilizing its financial standpoint. Cash Flows Analysis Sponsorship PROCUREMENT INFRASTRUCTURE HUMAN RESOURCE MGMT Value Chain Analysis Educational
Hub of the Community
Something to Chew On
Health
Premier League 4 Sport
The Great Manchester Run & Manchester to Blackpool Bike Ride
Premier Men’s Health
Social Inclusion
KICKZ
Girls Centre of Excellence
Disability Centre of Excellence Charities Corporate Strategy
What set of business should we be in?
What should be the emphasis among these businesses?
Primary Focus
Scope of the business
Resource deployments among businesses Hierarchy of Strategy •June 30th
•Vice Chairman of UEFA
•Joined club in 1997
•Became CEO Sept. 2003
•6 major titles during service
•To be replaced by Ed Woodward Current CEO to Step Down Alex Ferguson Theater of Dreams Players and Coaching Staff Recommendations Alternatives and Tradeoffs Thank You! MANCHESTER UNITED F.C. 1. Customers
2. Products/Services
3. Market
4. Technology 5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-Concept
8. Concern for public image
9. Concern for employess Manchester United strives to be the perennial best football club in the world, both on and off the pitch. Alternative Produce sell able high quality programming for MUTV that can be rebroadcast on other stations. Tradeoffs Due to current tough economic conditions increases in ticket prices may start to decrease the average attendance on matchdays
Fans may see this as Manchester United (mainly the Glazer family) only looking to get more money out of them without improving their experience.
Currently each match brings in around 5 Million Pounds Sterling, increasing ticket prices won't increase revenue significantly Alternative Expand international infrastructure to increase foreign commercial revenue Alternative Upgrade stadium to be a world class venue Alternative Increase ticket prices to increase matchday revenues Tradeoffs Costs of expanding too quickly will outweigh the revenue
Fast global expansion may dilute the brand and they may be viewed as sellouts
Off season tours would have include more cities, putting further strain on the players and staff. Tradeoffs Cash spent on top talent cannot be used to pay off debt
Requires more expenditures on scouting in Americas
Can only bring in up to 25% of talent from outside the EU
Requires more staff to carry out effectively Tradeoffs Upfront costs to expand the stadium to hold larger world class events would leave the team cash strapped, and unable to pay our debts which are short term in nature.
Any gains in revenues from this upgrade would not be seen for a few years.
Being able to bring world class events to Manchester could be challenging, event with a premier stadium Tradeoff Currently Manchester United does not have production staff or talent, costs to get this up to par may outweigh any short term revenues
Programming for one team may not translate beyond the hardcore fan base
Digital media alternatives may cannibalize and potential revenue for new content Alternative Scout for top and international talent to increase international fan base, and widen talent pool Focus on paying off debt

Continue to keep the brand strong

Keep growing talent through our farm program Issues Glazer Family Malcom Glazer
84 Years old
Also owns the Tampa Bay Buccaneers
Has no intention of selling the team
Who will replace him in ownership?
How will this affect the business?
Avram Glazer
Executive Co-Chairman
Joel Glazer
Executive Co-Chairman Team Manager Sir Alex Furgeson
Has been with the team for 26 years
Has led the Red Devils to 24 championships
He is 71 years old and is expected to retire in less than 10 years
Who is line line to replace him?
How could this affect the team? Public Dislike of Glazer Family Business Strategy
How do we compete in a particular industry?

Primary Focus
Distinctive competencies and competitive advantages
Product/market segmentation
Stage of Product/market evolution Functional Area Strategy
How do we maximize resource productivity?

Primary focus:
Coordination and integration of activities within a single function Stock Performance Management Performance Takeaways Other Topics Stock Comparison Profitability Takeaways Takeaways Manchester United is not well leveraged compared to their competitors, again this is a result of their significant debt Private vs. Public
Company Once the debt is paid off will the business remain public, or return to a private firm again? Takeaways Current Assets are down
Player registrations are down
Equity of owners is up
Deferred Liabilities are down Manchester United has been using their liquid assets to pay off their debt Love United Hate Glazer campaign Manchester United Supporters Trust The Balance Sheet is weak and poorly leveraged Points of Note Manchester United is not very liquid in comparison to its competitors, this is attributable to their debt Ratios Stock Information Potential Entrants There have not been any significant new entrants into the Premier League in over 20 years 1878-2013
Previously Traded on London Stock Exchange in 1990
Acquired by Glazer family in 2005 and taken private
Taken public on the NYSE on 8/12/2012
Traded under ticker symbol MANU
One of the most recognized sports teams in the world
Estimated value of $3.56 billion GOAL!!!! History of Manchester United #1 Football Club Founded in 1878 Global fan base Superior record of titles Old Trafford Statement of Cash Flows Activities Business Model 3 revenue streams
1) Commercial
Sponsorship
Retail, Merchandising
New Media & Mobile
2) Broadcasting
3) Matchday
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