Mufc Needs A Wake Up Call, Not An Earnings Call...
There was much fan fare on Thursday, as Manchester United held its quarterly earnings call. Ed Woodward released a bullish statement of intent, promising supporters that Ole Gunnar Solskjaer would be given the resources needed to provide success on the pitch. The club's home kit for next season was released, with an unsubtle nod to history as the twentieth anniversary of the treble triumph rapidly approaches.
But scratch beneath the surface, and it's easy to understand why like United's historical success, the hope of its supporters is rapidly fading away.
Scratching The Surface...
As of last Thursday, Manchester United's share price traded around 10% lower than 12 months ago. It traded approximately 25% lower compared to last August and the season's start. The stock's performance mirrored the team's over the season, tanking during Mourinho's death spiral, bouncing slightly as Ole took the wheel, and is teetering precariously again as the season flat-lined. Investors would be well within their rights to ask whether Woodward is the right man to lead the club given the club's downturn on the pitch and on the stock market.
Two quotes from Woodward during the call will have caught the eyes and ears of United supporters, mostly in disbelief and bewilderment.
"We have the financial resources to continue to provide backing for the manager and creating success on the pitch. This as ever remains our number one goal.".
"Everyone at the club - the board, the manager, the squad and all the staff are resolute in our desire to get United back to the top of English football, we continually look to improve staff on and off the pitch to achieve this.".
This is the same Ed Woodward who refused to pay the three million pounds difference it would have cost to bring Ivan Perisic to the club last summer, a much needed pacey, direct winger.
It's also the Ed Woodward who has presided over the fruitless search for a Director Of Football, a search that has taken over eight months.
And after that eight month search? The lead candidates are former club employees with no experience in the Director Of Football role.
Is it any wonder that United supporters are taking to social media en masse to express their discontent with those charged with running the club?
MUFC share price performance as of last Thursday
Who Needs Players When You Can Sign Sponsors?
Looking at some of the figures from the quarterly results makes for interesting reading. Manchester United these days, prioritise relentless commercial pursuit over footballing success. Emphasis on the recently launched Manchester United app during the earnings call was just another example of the same tired modus operandi.
United supporters will also remember wearily last summer, the "signing" of Chivas, the whisky partner. This being the day before the transfer deadline, when the club should have been working tirelessly to secure the playing staff needed to mount a serious challenge to Manchester City. In a move dripping with a lack of self awareness, it was announced with much pomp by the Manchester United Twitter account. The negative reaction of supporters at the time was an understatement and indicative in the article below.
However, there could be signs in the recent earnings call, that the club's ability to consistently sign new commercial deals may be stuttering. Commercial revenue is unchanged year quarter to year quarter. Zero growth. For a club that depends upon its rampant commercial engine to drive profits, this is a potential problem.
Now, one could argue that existing commercial partnerships are mid term, and that contracts will be renewed with increased revenue. However, current and potential sponsors will ask two very important questions:
1. Do I want my brand to be associated with a failing football club?
2. Is my investment better placed with more successful football clubs?
United's Revenue Doesn't Make For Rosy Reading...
Turn Off Tune Out...
A predictable response from the club's senior management would point to bumper "social media engagements" and "television viewing figures". Broadcasting revenue was up almost 9% over the previous 12 months.
However tellingly, the club explained in its released earnings document, that the increase was largely down to a new Champions League broadcasting agreement.
"Broadcasting revenue for the quarter was £53.8 million, an increase of £4.4 million, or 8.9%, over the prior year quarter, primarily due to the new UEFA Champions League broadcasting rights agreement and playing one additional PL game."
Given that United will not be playing in the Champions League next season, broadcasting exposure at Europe's top table will be diminished. Broadcasting revenue will also reduce. This will surely turn off potential commercial suitors, as well as those partners already in place.
With respect to "social media engagements", the club were recently exposed creating fake Twitter accounts to offset the effect of the #UnfollowUnited Twitter campaign, protesting against the Glazers and the running of the club.
As a current or prospective commercial partner, one would be justified in asking how many of United's Twitter followers are real, and how much exposure they are really getting for their millions of pounds of investment?
Perhaps less alarming to the club, but another indication of the United's malaise; a long standing, prominent United pub in Chorlton did not even bother showing United on the final day. They chose instead to show both City and Liverpool in their hunt for the title. Regardless of the challenge for the title, one would expect United to be on at least one TV in a staunch United pub in red territory. Whilst one pub alone makes no difference, United would be foolish to ignore these kind of sentiment indicators. If the traditional hardcore, local fans who have perhaps been priced out and now watch in the pub aren't tuning in, then how long will the fair weather fan or Twitter follower continue to watch for? How long before those followers begin to drift away?
Ed Woodward's commentary in the earnings report reads: "After a turbulent season, everyone at Manchester United is focussed on building towards the success that this great club expects and our fans deserve.".
It's high time Woodward started reflecting introspectively, and acting on his empty rhetoric. Otherwise, he needs to step aside and allow somebody with competency to run the footballing side of the club.