Manchester United may be struggling to replicate the success of the Alex Ferguson era on the field, but the club’s commercial business is booming on the back of increased sponsorship dollars and merchandise sales.
In November, the club reported another period of commercial revenue growth, which increased 6% to $89.5 million in its 2020 fiscal first quarter. Total revenue also rose marginally to $150.8 million year-over-year.
Recent market activity suggests Manchester United has now identified China as a key growth market to maximize revenue potential by appealing to a growing fan base in the country.
China accounts for roughly one-quarter of Manchester United’s 1.1 billion fans around the world, according to a recent survey commissioned by the club and conducted by London-based consulting company Kantar Media.
The team’s new agreement with e-commerce giant Alibaba this month is just the latest example of Manchester United’s China growth strategy in action. The partnership enables the English club to bring original content to an estimated 700 million consumers through Alibaba’s Youku video-streaming platform.
The new channel – which will feature academy, women’s, and men’s preseason tour games, plus in-season matches on-demand – additionally calls for Manchester United to establish a flagship store on Alibaba’s online marketplace, Tmall. The store will serve as the official online marketplace selling club merchandise to Chinese consumers.
“I want to reiterate that our ability to make the investments we need to be successful on the pitch is underpinned by our continued strong financial performance,” said Ed Woodward, executive vice-chairman of Manchester United, on the team’s earnings call November 18.
Manchester United declined to be interviewed for this story or to disclose numbers associated with the Alibaba deal. However, a company spokesperson said the agreement is “clearly a significant partnership and significant step in our China strategy.”
Manchester United will additionally look to provide brand partners with advertising opportunities to promote their products across Alibaba’s platforms. Manchester United added the likes of Konami, Visit Malta, Yabo Sport, and Lego as partners in the first quarter.
The team’s long-term approach will be to use traffic generated via the Youku platform to push fans to Tmall stores to purchase merchandise, beginning with corporate sponsors, it said.
“What we’re seeing is that the underlying demand for our rights [from sponsors] continues to be strong,” Richard Arnold, the club’s group managing director, told investors last month.
“The pipeline is good, and new categories are constantly being derived as the world evolves, particularly in a digital setting.”
Manchester United first visited China in 1975, following that up with countless preseason tours predominantly over the last decade that has helped grow its fan base in the country over the decades.
Earlier this year, the team partnered with Chinese real-estate firm Harves Entertainment to open three new Manchester United Entertainment and Experience Centres across China over the next two years.
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The proposed locations are Beijing, Shenyang, and Shanghai, with Beijing opening first in November 2020, according to the club. The Shenyang centre will follow in early 2021.
To create buzz around its new offering, Manchester United also opened a “Preview Centre” in July for fans. Reminiscent of a team museum, the centers will include several interactive exhibits, such as a replica of Manchester United’s Old Trafford Stadium. Each location will additionally include house restaurants and a club retail store.