United They Fall
Manchester United fans are continuing their protests against the Glazers taking over their club, and understandably; I would be pretty unhappy if a similar scheme to buy my club was being undertaken and I was forced to sell my shares in Manchester City.
But I don’t think that many United supporters in general, and the Shareholders United group in particular, are doing themselves any favours. Quite apart from the anti-Americanisms some fans are coming out with, in this report the Shareholders United vice-chairman Sean Bones calls the Glazers “the enemies of Manchester United”; he says they are “disgusting and repulsive” and “the Glazer brand is toxic and tarnished”. Bones actually makes me feel a bit of sympathy for Malcolm and his boys. Later on he says “in the long-term the Glazer brand will be suffocated. The previous Manchester United brand was peerless in terms of sporting brand names.”
Another report, from the Manchester Evening News, states that Shareholders United are demanding government action and are to submit papers to the Office of Fair Trading. The article cites a number of their concerns regarding the takeover of the club; here are few that caught my eye, along with my own knee jerk responses.
“Glazer’s purchase of the club weakens competition and harms the consumer…the initial £265m of debt saddled onto the club – which could more than double in the next five years – will weaken United’s ability to compete with the other top teams.”
Nice of the United fans to be so concerned about the effect on the competitiveness of the League. I don’t remember hearing many concerns when United won the Premiership for three years in succession during the Nineties. If competitiveness is an issue, where were Shareholders United and their ilk when the TV rights were carved up, when the Premier league was formed, and when the decision was taken for home clubs to keep 100% of their league gate receipts, which hugely benefits the larger clubs?
“The intention to hike prices by 52 per cent over the next five years, as revealed in a leaked Glazer business plan, is “an abuse of market power,” as United supporters are a captive audience.”
Mmm. On the one hand, (with my devil’s advocate hat on) there are other football teams to support (such as the newly formed FC United), but even if you cannot contemplate following another football team (and personally, I will be “City ‘til I die”) no-one is forcing you to buy tickets to see United. In business terms, following a football team could be seen as an extreme form of brand loyalty; is it the role of the OFT to defend your right to cheap Levi’s or Coca Cola?
“Revenue raised by increased prices will not go to improving the team but to servicing Glazer’s debt.”
But if Glazer owns the club, surely he can run it as he sees fit.
“Some of the individuals and bodies associated with the takeover are “not fit and proper persons” to be involved with an institution with United’s history and heritage.”
I am not fully acquainted with OFT procedures, but does “history and heritage” fall under their remit? And have United not compromised their “history and heritage” by stretching their “brand” across different products and continents, and by redesigning their
logo club badge so the words “football club” are omitted?
The problem as I see it with Shareholders United complaints is that they are getting drawn into the whole matter of whether football clubs are simply businesses or are something more. By arguing about United’s peerless brand and their captive market they seem to be arguing the business case; but from a business viewpoint surely the Glazers’ actions make perfect sense? As businessmen, they have identified a great global brand, one that they feels they can make money from, and they have obtained it. On the subject of ticket prices; of course United fans don’t want them raised, but from a business point of view tickets for Old Trafford are ridiculously under priced. This is proven by the fact that OT is sold out for every Premiership match weeks in advance; in a perfect business model the last ticket would be sold at 3 o’clock on a Saturday afternoon (assuming United ever played at that time, of course) and so would eke out every available economic efficiency from the market.
By fighting on the battleground of business, Shareholders United seem to be falling into the assumption that in the market the customer (or fan) is king, but this is too simplistic. Have you ever heard anyone say something to the effect that “I am sick of just walking to the top of my road to go to the bank. No, I would much rather it was shut down, and I can ring up a central number, navigate ten recorded menus of information before finally being given the option to speak to an operator, then hanging on the line for a further twenty minutes before eventually speaking to a service adviser, in India”. Nobody says that, nobody wants that, but it still happens because it can be more profitable to piss off your customers a little in order to make savings elsewhere. The customer is not king, he or she is merely a consideration; in business it is profits that are sovereign.
Here is another, real life example from my wife’s work. Recently another company bought her firm; call them venture capitalists, asset strippers, whatever. The result has been that recently the customer service aspect of the firm has been relentlessly squeezed to concentrate on sales; customer service advisers are being forced into selling, regardless of aptitude, so they can wring every last penny out of their existing customers, mithering them with outbound sales calls at all hours resulting in my wife having to deal with numerous complaints from hassled customers. No doubt sales overall are improving as a consequence, but what about the people who haven’t been persuaded by the pestering, and whose good custom has been squandered? That doesn’t show up on the sales figures. Is this a good way to run a company in the long run, and a good way to treat staff and customers? Who cares; in around twelve months the intention is for my wife’s company to be sold on again, no doubt on the basis of a short-term increase in sales and per capita customer spend. If the chickens eventually come home to roost with cancelled and reduced subscriptions it doesn’t matter, because the current owners will have moved on by then. But this is the way business often works.
If Shareholders United really want government action, I think they will have to try a different tack. Perhaps they should argue that football clubs are more than just businesses, that they are historic entities, that they belong to their communities, and that as a result there should be specific regulations amounting to some sort preservation order that restrict what owners can do to their clubs. It may be too late for United, but this may be the only way forward. As it is, Shareholders United seem to be urging the government to step in because a businessmen has bought a business and intends to run it as a business; and I don’t really know what the government could, or should, do about that.