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Red Devils, red ink

Manchester United is a hugely valuable sports brand, but comes up empty for investors


 

Jin Lee/AP Photo

With star players like Wayne Rooney, Manchester United may be one of the best-known soccer clubs on the planet, but it’s proving to be a curse for businesses trying to cash in on its popularity.

The 134-year-old club’s American owners, led by businessman Malcolm Glazer, were disappointed last week when an IPO of the team failed to thrill investors. Shares barely budged above the offering price of US$14, which itself was well below the US$16 to US$20 that had originally been advertised. The cash would have gone a long way to paying down the debt incurred by the team when the Glazer family purchased it for $1.47 billion in 2005, freeing up money to buy more top-flight talent to play at Old Trafford.

Meanwhile, Dan Akerson, the chief executive of General Motors, is dealing with the fallout of a controversial sponsorship deal the U.S. automaker recently signed with “Man U.” The automaker’s head marketer, Joel Ewanick, was recently fired amid reports he inked a seven-year, $560-million agreement with the team without telling higher-ups the total cost. GM has since renegotiated certain aspects of the deal, which will see GM’s Chevrolet logo splashed on players’ jerseys.

The scandal didn’t end there. Now Akerson is on a witch hunt for those GM insiders who leaked details of the internal flap to the press. “We have to stop leaking in this company. It’s an act of treason—it really is,” Akerson said during a video conference call with employees last week, which itself was leaked to the Detroit News.

To make matters worse for GM, some of the soccer club’s diehard fans are calling for a boycott of the carmaker’s vehicles—though GM seems to be a victim of collateral damage. “The boycott strategy is intended to send a loud and clear message to the Glazer family and club sponsors that without the support and purchasing power of the fans, the global strength of Manchester United brand doesn’t actually exist,” according to an open letter from the fans.

It may be the beautiful game, but as far as the “Red Devils” are concerned, it’s just bad business.


 

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