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Manchester United paid £7m to unlock £300m deal
Since becoming Man United’s largest individual shareholder in February, Sir Jim Ratcliffe has attempted to streamline the club behind the scenes – both operationally and financially.
Some of his methods, such as moving towards a more incentive-based contract model, have been hailed as long overdue after the Glazers oversaw a bloated wage bill for years.
Others, such as the decision to terminate the contracts of 250 Man United staff, have not been quite so welcome, especially given the rhetoric of returning the club to the community that Sir Jim Ratcliffe has used.
Incidentally, that move itself is set to cost the club £10m in redundancy payments over the next 12 months.
But with the club’s recently released Q4 accounts for 2023/24 rounding off a financial year that saw United lose £113m in total, it is clear that there will be difficult decisions to make.
One area in which many analysts feel the club must improve is commercial income, which again had stagnated somewhat under the Glazers.
The accounts for 2023/24 – a season when United recorded their worst ever Premier League finish – show club-record commercial income of £302.9m.
However, that was only a club record by a four-figure margin on the previous season. And if you zoom out on the graph, United’s annual commercial income has only risen by £23m since 2017.
For context, the likes of Man City and Liverpool have nearly doubled their commercial income in that timeframe.
When Tottenham release their accounts for 2023/24, their commercial income will have more or less quadrupled over the same amount of time.
As the saying goes, elephants don’t gallop, and it is not surprising to see the commercial income of a club like Man United rise slower than some of their peers.
But the rate at which the curve has flattened is alarming.
However, one commercial decision they have made in recent times can only be viewed as a financial success.
The price Man United paid to terminate TeamViewer deal – and the rewards that followed
When Man United partnered with the remote working technology company TeamViewer in 2021, the deal was seen as something of a missed opportunity.
Granted, the pandemic had depressed the commercial market and meant that the club were never likely to get the £65m per year that Chevrolet had paid, but going down to £47m-a-year was a big drop off.
The feeling towards the deal continued to sour as, after just a few months, TeamViewer shareholders began to publicly express doubts over the value they were getting for the deal.
Then, in December 2022, it emerged that United were set to buy back their front-of-shirt rights from TeamViewer, allowing both parties to exit the deal four years early.
United in Focus has now been informed by an industry authority with close connections to United that the fee paid by the club was £7m.
This one-off cash expense has allowed United to move forward with Qualcomm’s Snapdragon brand, which is paying £60m per season and is now committed until 2029.
Naming rights, PSR and bonuses: The future of the Snapdragon deal
In the era of PSR (Profit and Sustainability Rules) and an ever-intensifying arms race in the transfer market, increasing revenue is absolutely vital for United.
That is true in isolation, but the fact that the club is going to have service the debt generated by a £2bn new stadium project makes it even more paramount.
The Snapdragon deal, which was recently expanded to include back-of-shirt rights for certain games and is going far better than the TeamViewer partnership ever was, is central to this.
As one of the two most lucrative items in the club’s sponsorship inventory, it is the closest thing to free money that they can get.
The headline figures suggest £60m per annum, but that figure will likely fluctuate depending on sporting performance – qualification for the Champions League being the main factor for step-up clauses and bonuses.
Snapdragon are also interested in a naming rights deal for the stadium that Ratcliffe is planning to build.
If the branding arrangement covers the whole Old Trafford complex, which could include a reduced-capacity version of the existing stadium alongside the new arena, that could be worth £30m per year.
Coupled with the base fee from the front-of-shirt partnership, we could be talking world-record territory for a commercial deal, not just in football but for a sports franchise in general.
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