Going public
Manchester United Shares debuted on the New York Stock Exchange almost a year ago in an IPO that though not spectacular is not obscure. The shares debuted at $14 apiece instead of the forecasted $16, rose to $14.05 and then dropped back to close at $14. A little over a year later shares are trading around $18 apiece and Manchester United PLC (NYSE:MANU) is now the most valuable football club in the world as $2.3 billion. If you go down memory lane, you will also discover than Apple’s IPO was less than spectacular, with Massachusetts regulators terming the IPO as “too risky” and prohibiting individual investors from buying Apple IPO shares. Today, Apple Inc. (NASDAQ:AAPL) is currently valued at over $400 billion.
The Midas touch
The current level of success of both Apple and Manchester United PLC (NYSE:MANU) can be attributed largely to Steve Jobs and Alex Ferguson’s charisma, drive and visionary acumen respectively. Jobs returned to Apple Inc. (NASDAQ:AAPL) in 1996 when the company was struggling to define its identity with the Mac and then created a market that revolutionized mobile computing. Interestingly, Ferguson was also appointed manager at Manchester United in 1986 at a time when the club ended the season in the 21st position on the table.
However, a series of decisive management decisions and foresighted innovative practices left Apple with a $350 billion valuation at the time of Steve Jobs’ demise. Ferguson was also able to lift Manchester United from the rut to be rated as one of the wealthiest sports clubs and of course the most valuable sports club in the world.
In fact, a little data crunching shows that Ferguson had 1,498 games in charge, only 267 defeats; 527 Premier League games won – at least 161 more than any other manager. In the last 27 years of managing the club, Sir Alex has led the club to winning 38 trophies, this includes; 13 league titles, 5 FA Cups, 4 League Cups and 2 Champions Leagues.
What happens when the Midas Touch leaves?
Speculations about the state of Steve Jobs’ health had often had a negative effect on the share price of Apple Inc. (NASDAQ:AAPL) when he was alive. Thus, it is not surprising that the market also reacted in a frenzy that saw the share price of Manchester United falling 5.5% in the wake of the announcement of Ferguson’s retirement.
Manchester United PLC (NYSE:MANU) seems to have an understanding that it has a tested and trusted recipe in managers who have the patience to build not just a team but also a club over time. Thus, its choice of David Moyes who has remained consistent at Everton FC in the last 11 years is a good replacement for the 26-year retiring manager. In fact, Moyes is the perfect replacement for the fiery Ferguson just in the same way Tim Cook is the perfect replacement for the charismatic Steve Jobs.
However, this is not to say that Manchester United will not experience some rough spots in the next season. For one, the coach will need to win the trust of the players who seem to believe in the infallibility of Ferguson’s decisions and he will probably need at least the first half of the next season to do that. The club will also need a season of adaptation for the management, coach and players to evolve into the dynamic team that they were under Ferguson.
A Foolish take
However, we should not lose sight of the fact that the success of both Apple Inc. (NASDAQ:AAPL) and Manchester United PLC (NYSE:MANU) lies more in the strength of their core business, competitive advantages, innovative products and market dominance among others and less on the person who is in charge of running the ship. For instance, the post-Steve Jobs era gave us the iBooks Textbooks for iOS and iBook Author for Mac OS X, the 3rd generation iPad with its Retina Display, iPad Mini, iPad 4 and of course the iPhone 5.
Notwithstanding, many critics of Tim Cook will be quick to point out that there has not been a new product line launched at Apple since the demise of Steve Jobs. Yet, the fact remains that Steve Jobs did not give us new products every year. In fact, new products during the reign of Steve Jobs were more like a new product every 3 to 6 years. For instance, the iPod came in 2001, followed by the iPhone in 2007 and the iPad in 2010. Thus, we may need to exercise more patience to see what Tim Cook meant by the “potential of exciting new product categories” that he “can’t wait to introduce this fall and throughout 2014” in Apple Inc. (NASDAQ:AAPL)’s second quarters earnings call.
Now, in driving the point home to Manchester United PLC (NYSE:MANU), it may interest you to know that while Manchester United is a great football club that plays excellent soccer; the club is also a well-calibrated business machine. The club’s core business other than playing football and winning trophies can be roughly divided into:
Ticket and Program Sales (Match-Day Revenues)
This provides the club income through its 75,765-seat stadium (Old Trafford) that is always filled in all home games. The Stadium is also usually rented out for public events such as concerts.
Broadcasting Television Rights (MU TV)
With more than 333 million supporters around the world according to a TNS survey in 2007, it is not surprising that a cumulative audience of 4.2 billion watched Manchester United on TV in 2007 alone.
By-Products & Merchandizing (MU Travel, MU Soccer Schools, Kits)
There is no doubt that Manchester United remains successful in its merchandize sales and that it will continue with that trend because one of its corporate goals is to convert more fans to business customers and enhance customer value through implementation of CRS tools. Interestingly enough, Manchester United is focusing its attention on selling to the Asian market just like most blue chip companies and it is not surprising that almost two-thirds of its 333 million global fan base is from Asia.
Corporate Partnership, Advertising Inventory and Brand Marketing
Those in charge of selling the Manchester United brand are dedicated staffers that have succeeded in helping the club assembly a formidable team of 30 global corporate buyers such as AON, Nike, DHL and Concha Y Toro among others.
I also believe that given the caliber of players in the club, Moyes’ experience, and an ownership that doesn’t shy away from spending money on what can be considered research and development in purchasing key players when the need arises Manchester United does not need more than a season to find its equilibrium and re-establish its dominance in English Football.
Nonetheless, Manchester United PLC (NYSE:MANU) is not the stock to own at the moment if you are a short-term investor looking for a quick fix; you may want to consider horse betting, but it doesn’t have any semblance to investing. The ownership was honest to point out in its IPO prospectus that “Any successor to our current manager may not be as successful as our current manager.” Hence, Manchester United is the stock to own for the long term and you can be sure that you will not be disappointed.
On a personal level, I believe that the first few weeks of next season will be a good entry point to own Manchester United as many investors start selling in a post-Ferguson era that seems to be full of uncertainties. Interestingly, shares of Manchester United will experience a rallying point as the next season draws to an end with the indicator being that Manchester United will end the season with a top-four position on the table.
The article Parallels Between Apple and Manchester United originally appeared on Fool.com and is written by Victor Alagbe.
Victor is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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