Manchester United Football Club plc History

Company History:

Manchester United Football Club plc has earned a reputation as England's most financially successful football team. First in its field to be listed on the London Stock Exchange, Manchester has a long and storied history and is famous for commercial exploits that have brought it both detractors and imitators. Its aggressive style and high profile players consistently draw a robust following at home and abroad.

Origins

By the time the predecessor to Manchester United--Newton Heath--was formed in 1878, football, or soccer, had evolved from a game of kicking around animal heads to a gentleman's pastime adopted and improved by working men. Formed in a northern section of Manchester, Newton Heath was comprised of employees at the Lancashire and Yorkshire Railway. The group entered the Division I Football League in 1892.

Beginning with a tentative meeting in 1898, Manchester United players led the unionization of their newly created trade. The Football Association finally allowed for the formation of such a union in 1908, however it ordered all players to resign from it the following year when the union made overtures to join the Federation of Trades Unions. The players' union eventually relented.

Newton Heath was renamed Manchester United in 1902. By this time, business and football had become inseparable. Local businessmen and newspaper publishers sponsored the games while entrepreneurs organized teams as limited companies. Brewer J.J. Davies invested heavily in the Manchester United when it was threatened by bankruptcy. He provided funds to build playing grounds at Old Trafford, which was completed in 1910. The same year, the club, then known as "moneybags United,' was reprimanded for questionable financial reporting. The team won a couple of First Division championships before World War I and the FA (Football Association) Cup in 1909.

The club's greatest manager, Matt Busby, was born in Orbiston, a mining village near Glasgow, on May 26, 1909. At an early age, Busby saw football as a way to rise out of the poverty and sectarian strife of his birthplace. But when his family considered immigrating to the United States for a better life, Busby persuaded them to let him work in the mines at age 16 to bring in extra money so they could remain near to football.

Busby rose to prominence in youth soccer leagues and in the mining community. He moved to Manchester in 1926 to play professional football for Manchester City. Ten years later, after injuring a hamstring, Busby transferred to the Liverpool Football Club. He found the atmosphere there much more supportive than at City, and this environment became the basis for his philosophy of managing.

Rebuilding After the Wars and the Busby Babes

Matt Busby was being demobilized from the British Army after leading a football team while in uniform. He was assigned management of Manchester United in 1945, an arrangement brought about by his old friend and long time United staffer Louis Rocca. Manchester United had earlier tried to woo Busby away from City as a player, but were unable to find the funds. The situation at Old Trafford was still dire. Although Manchester United had risen into the First Division in 1938, its reputation had deteriorated between the wars and its playing grounds had been bombed in 1941. The club was also in debt.

To economize, Busby retained older players longer. Manchester United meanwhile fostered a youth soccer program. From the beginning, Busby insisted managers were better placed to make decisions regarding the game than directors and so managed to wrest unprecedented autonomy from the board. Busby, who liked to play football with the "lads' himself, had a management approach completely different from his more aloof predecessors.

Football became a £4 million a year industry in the 1940s. Old Trafford was rebuilt and in 1948 Manchester United was valued at £100,000. The team Busby assembled that year cost £7,750 in transfer (signing) fees. Busby was also managing the British Olympic team.

British national pride was at a low ebb in the 1950s, as even the relatively inexperienced Americans defeated Britain in World Cup competition. However, the team Busby created in the 1950s, the "Busby Babes,' has been considered one of the greatest of all time and included legendary players such as Duncan Edwards. The league champion team of 1956-57 cost £79,000 in transfer fees. Manchester United developed a trademark, attacking style as Busby imported European playing techniques. Manchester United players also played on the English national team for the World Cup.

After winning the league championship, Matt Busby turned his sights toward European competition. On February 6, 1958, the plane carrying the Manchester United side home from a European Cup match in Yugoslavia crashed on a snowy Munich runway after a refueling stop. Twenty-three were killed in the accident; the team was decimated. With the deaths of some of its best players, England lost its hopes of winning the World Cup. With the tragic news, however, came unprecedented public recognition and sympathy for Manchester United.

For a time Busby, who was himself seriously injured in the crash, swore off football. When he returned, he had to rebuild the team by buying players. The transfer fees he paid set records. He signed Albert Quixall from Sheffield for £45,000 in September 1958 and made several other £30,000 acquisitions in the next few years.

The maximum wage was abolished in 1961 and transfer fees kept climbing. In 1962 the club paid an Italian team £115,000 for Denis Law, then a staggering amount. The teams Busby assembled in the 1960s were full of exuberant, charismatic individuals that played to the "pop' spirit of the times and drew crowds of 50,000 at Old Trafford. Players like George Best, who picked up the name "El Beatle' abroad, became media stars. The team won the FA Cup in 1963; other championships followed. Manchester United finally won the European Cup, the premier European competition, in May 1968, becoming the first British team to do so. Busby was knighted afterwards.

Along the way, physical violence began to erupt on the field and in the stands, notably at the 1965 FA Cup semifinal against Leeds. At this time, the rival between Manchester United and Liverpool was intense but still good-spirited. Abroad, Manchester United met an alarmingly unsportsmanlike reception at a World Club Championship match in Argentina in 1968.

Sir Matt Busby retired as manager in 1969. Before he did, he bought the lease on the team's souvenir shop. Louis Edwards, a meat trader picked for the board by Busby, had become chairman in 1962. He had also become the owner of Manchester United Ltd.

Wilf McGuinness followed Busby as coach, although Busby retained control of club affairs. McGuinness, who was only 31 years old, did not relate as well to the players as Busby, who returned to coach while searching for a replacement for McGuinness. The next manager, Frank O'Farrell, was himself replaced by Tommy Docherty. As the team's performance faltered, it was difficult for Busby to define his new role as director. The 1970s belonged to Liverpool, not Manchester United, although the Red Devils somehow remained a bigger draw.

Busby was made president in 1980. He resigned a year later after the team gave £2 million contracts to Bryan Robson and Remi Moses. When Busby had started as a player, the maximum wage was £5 a week. Martin Edwards, son of Louis Edwards, was made chairman in 1981.

Ron Atkinson replaced Dave Sexton as manager in 1981. He in turn was dismissed in 1986 and replaced by Alex Ferguson, a successful Scottish manager. Initially, his hands were tied in acquiring expensive players, although in the summer of 1989 Ferguson got approval to spend £8 million on transfer fees. (Martin Edwards had found a buyer for the club in August, Michael Knighton, who was, however, unable to raise the £10 million to complete the purchase.) Despite the spending, the club fared poorly in 1989-90, and Ferguson's job seemed in jeopardy until the next year, when his expensive team started winning.

Red, White, and Gold: The 1990s

In the 1990s, Alex Ferguson's teams managed to recapture some of the glory of the Busby days. Manchester United won the championship of the new Premier League in 1993. (This league was formed by top clubs to give them a larger share of TV revenues.) At the same time, football popularity was at an all-time high worldwide.

When Martin Edwards could not sell the club, he recruited executives who made it the most profitable team in the U.K. It began trading on the London Stock Exchange in 1991. In 1992-93, Manchester United Football Club plc had an operating profit of £7.3 million on a turnover of £25.2 million, thanks largely to merchandising and brand extensions such as Champs Cola, which were worth £5.3 million, up from just £828,000 five years earlier. Besides soda, the club was soon branding lager, wine, even champagne. Selling the brand seemed to observers a more stable source of income than relying on winning games week after week. The club opened a Megastore at Old Trafford in 1994 and spent heavily (£13 million) to upgrade Old Trafford. In July 1993 the club paid a record £3.75 million transfer fee for midfielder Roy Keane.

Sir Matt Busby died on January 20, 1994, after five years with blood cancer. His legacy in Manchester and across Britain was enormous. Many football games across the world observed a minute of silence in his honor, and thousands lined the streets to watch the funeral procession.

By the late 1990s, the club was selling or helping to sell cellular phone service. It was in a 16-year, £24 million deal with electronics maker Sharp and a five-year, £743 million deal with Rupert Murdoch's broadcasting arm BSkyB and the BBC. In 1997 it launched its own television channel, MUTV, in cooperation with BSkyB and Granada Media Group.

BSkyB offered £624 million for the club in September 1998. The bid was upped to £1 billion, but blocked by the Monopolies and Mergers Commission on the grounds that Murdoch was so powerful broadcasting sports worldwide that the deal would be unfair for competition.

Manchester United Football Club plc continued to enter new territory with its commercial exploits. In 1998 the team launched an online store sponsored by Lotus and Sun Microsystems. It also reached out to a large band of supporters in Asia. In the spring of 1999, Manchester United International, a new subsidiary charged with developing the brand abroad, began selling its Manchester United Premium Lager there and opened a huge leisure center in Hong Kong. The club was planning several other complexes in Asia.

Manchester United continued to pay record transfer fees to maintain its winning tradition: £12.6 million for Dwight Yorke in August 1998. Nevertheless, Manchester United Football Club plc seemed like a money-minting machine in the late 1990s. Its very success prompted the keenest criticism from those who felt true football fans were the ones who stayed with their teams through thick and thin. Those with a longer view knew Manchester United had seen plenty of both.

Principal Subsidiaries: Manchester United International Limited; Manchester United Merchandising Limited; Manchester United Catering Limited; MUTV Limited (33.3%); Extramini Limited (25%).

Further Reading:

• Baird, Roger, "Strip Tease,' Marketing Week, February 14, 1997.
• Bose, Mihir, "Floating on a Sea of Fantasies,' Director, July 1996, p. 81.
• Bowden, Adrian, "United Conjure Up Their Own Brand of Profits,' Investor's Chronicle, September 30, 1994, p. 51.
• Gilbert, Nick, "The Manchester United Way,' Financial World, February 14, 1995.
• Glanvill, Rick, Sir Matt Busby: A Tribute, Manchester: Manchester United Football Club plc; London: Virgin Publishing, 1994.
• Gorman, Mike, "Media Choice: Football Programmes,' Marketing, August 3, 1995.
• Green, Geoffrey, There's Only One United: The Official Centenary History of Manchester United, London: Hodder and Stoughton, 1978.
• Hodgson, Derek, The Manchester United Story, London: A. Barker, 1977.
• Kelly, Stephen F., Back Page United: A Century of Newspaper Coverage, London: Macdonald, Queen Anne Press, 1990.
• Miller, David, Father of Football: The Story of Sir Matt Busby, London: Paul, 1970.
• "Professor Sir Roland Smith: Still Running with the Ball,' Director, May 1995, p. 90.
• Santoli, Michael, "Rupert Rallies and Scores,' Barron's, April 19, 1999.
• Szymanski, Stefan, "Why Is Manchester United So Successful?' Business Strategy Review 9, Issue 4 (1998), pp. 47--54.
• Tischler, Stephen, Footballers and Businessmen: The Origins of Professional Soccer in England, New York: Holmes and Meier, 1981.
• Tyrrell, Tom, Manchester United--The Religion, London: Kaye and Ward, 1969.
• "United's Night,' Economist, May 29, 1999, p. 55.
• Walvin, James, The People's Game: A Social History of British Football, London: Allen Lane, 1975.
• White, Jim, "United's Hard Sell,' Management Today, February 1999, pp. 32--38.

Source: International Directory of Company Histories, Vol. 30. St. James Press, 2000.