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Sports

 SPORTS BUSINESS // THE WORLDS WEALTHIEST SPORTS TEAMS

By Alex Ravski

1/7

What does it take to top Forbes’ “The World’s 50 Most Valuable Sports Teams” list? Well, you don’t have to win leagues or championships to be the wealthiest. Take, for example, English soccer team Manchester United, whose 2011-2012 trophyless season (other than the Community Shield) still allowed them to remain the most valuable sports team multiple years running. Forbes values Manchester United at $2.23 billion and Real Madrid at $1.88 billion. Yet why do first and second place belong to soccer teams? Reasons include lucrative endorsement deals, large international fan base, publically available stocks and excellent brand management.



Despite facing $660 million of debt, Manchester United’s brand value has sky rocketed. Due to their 659 million fans in more than 200 officially recognized branches of the Manchester United Supporters Club, in at least 24 countries who support the team financially: Insurer AON sponsors United’s game jerseys for $31 million per year, DHL Express sponsors the team’s practice jerseys until 2015 in a $62 million contract, Nike manages United’s merchandise sales for $39 million per year, and financial benefits from a broadcasting deal with BSkyB and United’s dedicated television channel MUTV. Just last month, General Motors signed a seven-year deal to replace AON’s name on the jersey. The club furthered its financial strategy in 1991 on the London Stock Exchange. Now, United is looking at a value of $100 million for the public offering of its shares on the New York Stock Exchange.



Historically, Manchester United is one of the oldest teams with consistent success, which is largely due to their long-term business strategy to invest heavily in its youth system, as well as in its staff. Also, many people became fans of United following the Munich air disaster in 1958, which drew worldwide acclaim to a team. United’s recent glory days can be attributed to players who came through the youth system like David Beckham and Cristiano Ronaldo (who attracted the media’s eye), propelling United to new heights. United also signed Asian stars to establish a presence in Asian countries.



Portuguese winger Cristiano Ronaldo came to United in his early youth and eventually rose to stardom. His on and off the field success helped promote United’s appeal globally. Both Beckham and Ronaldo transferred media attention to Real Madrid, causing Madrid’s brand name to expand. Along with Beckham, Madrid’s president at the time signed world-class players known as the ‘galactics’ in early 2000. There was financial success in this strategy as merchandise sales rose, television stations started paying more attention to the team and advertising companies paid big bucks to have their names on the jersey. When Madrid tours the world playing local clubs, citizens of those cities eventually become fans and pass on their affection to their children. At the end of the day, everyone loves a winner, and both teams are true winners.

Lastly, soccer is not restricted geographically, like baseball and American football. The 2010 FIFA World Cup in South Africa reached over 3.2 billion viewers around the world and continues to grow.



Alex Ravski  is a law student in Los Angeles, currently concluding his summer studies in Sports Law in London. Originally from Ukraine, Ravski  enjoys traveling throughout Europe, engaging with the locals and trying their cuisine, as he believes that is the best way of becoming familiar with foreign countries.

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