- The Washington Times - Saturday, April 6, 2002

A soccer team in an old textile town in northwest England has but one goal: global domination.
Manchester United has used its stunning success in the world's most popular sport to build a fan base of 50 million in more than 100 countries and a business empire that peddles everything from jerseys to cell phones to home loans.
And it wants more.
Already, Man U, as the team is affectionately known, boasts a revenue base nearing $200 million per year, trailing only the Washington Redskins and New York Yankees among sports teams worldwide. International exhibition tours routinely fill 85,000-seat stadiums, souvenir shops across Southeast Asia register annual sales in the millions and pubs around the world fill at off-hours to watch their games on satellite TV.
But the United States is the next big prize on Manchester United's horizon, and a campaign to start the latest British invasion has begun. The club signed a deal last month with YankeeNets LLC the parent group of the Yankees and New Jersey Nets and already a Manchester United marketing partner to air tape-delayed games on the new YES network. A 2003 exhibition tour against Major League Soccer clubs is being planned. And Oregon-based Nike later this year begins a 13-year, $430 million marketing and licensing contract with the club to make it even more of a household name.
"We've enjoyed quite a lot of success here in England, and England is still very important to us," said Peter Kenyon, club president. "But we knew to grow and keep moving forward, we absolutely had to look beyond our borders. So a lot of our strategy now is figuring out ways to bring the experience of Old Trafford [Manchester United's famed home stadium] to the rest of the world."
Much like the Yankees, the primary fuel for Manchester United's explosive growth has been its dominance on the field. The team has won seven titles, including the last three, in England's Premier League since 1993.
Another championship this season is possible, as the team stands two points out of first with five games to play. Add to that nine other league titles since 1908, 10 FA Challenge Cup titles, two European Champions Club Cup titles and one World Club Championship, and you have by far the most successful European soccer team ever.
"They simply are a massive, massive global brand, one of the most powerful brands out there," said Major League Soccer Commissioner Don Garber. "Their name signifies winning."
Mr. Garber is in a position to know. As the former head of the NFL's international division, he has seen Manchester United leap ahead of each of the major American sports leagues in the race to globalize. Major League Baseball is wildly popular in the Far East and the Caribbean. The NBA, NFL and NHL have strong footholds in Europe. But none can compare to the singular and universal reach of Manchester United.
"What they have done is simply awesome," Mr. Garber said.
The legend of Manchester United began in earnest in 1968, when the team, just 10 years after a plane crash in Germany killed nearly half the roster, became the first English club to win the prestigious European Cup. But the club ascended to a new level during the 1990s when team executives systematically sought out areas of the world where native professional sports were not widespread.
In an almost militarylike procession, Manchester United built up its Web site, www.manutd.com, advanced its television distribution and played a key role in getting the entire Premier League to do the same, helped start fan clubs and greatly expanded its merchandising.
"When the winning started, we saw attention to us was building in some remote corners of the globe," Mr. Kenyon said. "So we made a specific point of catering to them, getting them our matches, getting them information, making the trips. In many areas, particularly Asia, there are no established pro sports teams of their own. In many ways, we are their hometown team.
"The exciting thing is that 98 percent of our revenue is what we still consider [Britain] based, so we think we're just at the tip of the iceberg," he said.
The attention to its fans overseas has not only leapfrogged Manchester United past its Premier League rivals and the American sports leagues in the race to globalize, but also helped create a strikingly even revenue base. In the United States, many teams derive more than 75 percent of their revenue from ticket sales and broadcast-rights fees.
Manchester United, conversely, in 2001 generated 35 percent of its revenue from ticket sales, 24 percent from broadcasting, 17 percent each from sponsorship sales and merchandise, and 6 percent from a fast-growing conference and catering business.
The merchandise sales, also growing, are particularly important to the team because it is not required to share those royalties with the rest of the Premier League. Each of the major American sports leagues distributes merchandise revenues equally among teams.
"Unlike a lot of its peers, Man U has multiple sources of revenue to weather any storms that may come," said Graham Ashby, manager of Deutsche Asset Management's British equity income trust, which owns Manchester United shares. "Better yet, there are pieces of their business, such as this new deal with Nike, that have not yet been fully realized."
The club holds two other key similarities to the Yankees: being the object of competitive-balance complaints and setting the de facto standards on salary scales. Manchester United has a few Premier League rivals who can consistently compete with them, most notably Arsenal and Liverpool. But the balance of the 20-team league, not to mention the three lower divisions, has little realistic hope of ever displacing United, and that's causing considerable handwringing within English soccer.
"There's what I call a healthy tension between us and the rest of the Premier League," Mr. Kenyon said. "You can't just do your own thing at the expense of everyone else. But at the same time, leading clubs have to lead the development of the sport. That's what leaders do."
The salary expenses, meanwhile, are causing strain as well and are expected to eat up half of club revenue this year. Leading the spending spree was a British record $27.3 million in transfer fees to acquire Dutch star Ruud van Nilstelrooy. David Beckham, Manchester United's leading star and one of the most popular celebrities in England, is also nearing a new contract that will likely pay him more than $7 million a year.
"It looks fairly inevitable that the Premiership will at some point need to implement a salary cap," said Peter Holland, branch leader for the Manchester United Supporters Club USA. The club has 1,500 active members and is quickly adding new ones thanks to the new YES TV deal. "We have seen such an incredible escalation in salaries."
Manchester United is undergoing a significant leadership change in which chairman Sir Roland Smith, the lead executive since 1991, is retiring and making way for Roy Gardner, a prominent English energy executive and one of the newer members of the club's board of directors.
But Mr. Kenyon will remain in charge of day-to-day operations, and the club's international push will continue undeterred.
"We're still kind of developing our own boundaries," Mr. Kenyon said. "But one of our key issues that remains is building a sense of community with all this energy around us. Our is a passion-based brand, a loyalty-based brand. If we don't continue to stoke that passion, reward that loyalty, we still haven't done what we've set out to accomplish."

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