When he arrived at Manchester United, only one player was under 24. The shift to playing “the class of 92” was ground breaking.
He didn’t just do this because he thought all the younger players were better than the older ones. He was a great business strategist.
How a football team makes money
1 TV deals – each club in the league gets a share of the deal
2 Transfers – for those of you uninitiated: selling a player to another team!
3 Sponsorships – in 2014 Adidas struck a 10-year deal for £75m, Chevrolet 7-years for £53m
4 Ticket Sales – to increase sales many clubs are moving to larger stadiums
5 Merchandise – anything from kit to duvets!
6 Owners – injecting money when they arrive e.g Malcolm Glazer's £790m in 2005
7 Prize money – winning the FA Cup in 2016 was worth 1.8 million
Every single one of these depends on the team being a winning one!
Sir Alex segmented players into the youth team, 23-30 and 30 plus. Younger players are cheaper than older players. Because if you're training the younger players, you're training them together, they're forming a solid bond, you’ve already got a team (read the first blog: Sir Alex Ferguson's management tips). You have to put less money and effort into creating it.
Because Manchester United was playing younger players it could afford to sell players younger too. The earlier you sell a player the more they are worth.
The cycle of a successful team lasts maybe four years…so we tried to visualise the team three or four years ahead
- Sir Alex Ferguson
United was spending less on incoming players and making more on selling players, it was working as a business financially as well as a team emotionally.
The figures speak for themselves
This was the Forbes top footballing rich list during his last season (2012-13) at Man U:
- Manchester United - $2.235bn (£1.396bn)
- Real Madrid - $1.877bn (£1.17bn)
- Barcelona - $1.307bn (£816m)
- Arsenal - $1.292bn (£807m)
- Bayern Munich - $1.235bn (£770m)
- AC Milan - $989m (£615m)
- Chelsea - $761m (£473m)
- Liverpool - $619m (£385m)
- Juventus - $591m (£367m)
- Schalke 04 - $587m (£365m)
When Manchester United floated in 1991, it was valued at $74m, 3 times revenue. In 2005, when Glazer invested it had risen to 5.6 times the revenue. From the beginning of the Barclays Premier League in 1992, revenues rose from $39m to $502m in 2012 (Source: Forbes).
You can’t argue with that!