Chichonomics



Could Manchester United’s acquisition of Mexican striker Javier Hernandez provide a financial boost to the debt-ridden club, with million’s of Hispanics turning away from Barcelona and Real Madrid to proffer their football love (and money) on Sir Alex Ferguson’s team? Perhaps, although probably not in the way it is often reported.

It has long-been the critical refrain of United’s detractors – both internal and external – that the club has sought a marketing benefit from player purchases as much, if not more, than performances on the pitch.

After all, the law of received wisdom tells us that Chinese player Dong Fangzou was bought not for his ability – it turns out he had little – but for the potential to tap into the spending power of one billion Chinese.

Similar arguments are made about United’s far less hapless but no less loved South Korean midfielder Park Ji-Sung, for whom a legion of millions stay up way beyond bedtime to catch the occasional glimpse of the 28-year-old in action on Korean TV each weekend.

Repeat law for US, Irish, Argentinean, Italian, African and perhaps, although unlikely, Scouse players it is said. The globalisation of football, this received knowledge says, is a gold mine to the club, with new found friends happily parting with Won, Dollar, Kroner, Rupee and Groat to wear the club colours, buy United Callypso on polyphonic ringtone and download a wallpaper.

The effect of Hernandez’ financial magic dust will surely be felt in Mexico and the wider Latin world too?

Indeed, the excitement generated among Mexican supporters – perhaps even more so second generation fans – by Chicharito’s appearance in a United shirt is palpable. The striker’s debut against an MLS All Star Xi in Houston on Wednesday night was met with fervor not experienced on any leg of United’s North American tour to that point.

The baying hordes so associated with the club’s tours of Asia had largely stayed away from United’s trips to Toronto, Philadelphia and Kansas City, via a charity diversion in New York. Not so Houston, with the new striker’s 30 minute cameo and well-taken goal met with a frenzied response in the packed 70,000 capacity Reliant Stadium.

The challenge for United’s management, however, stems from the apparent separation between fandom and revenue generation in overseas markets. It is one the club is slowing beginning to address.

The passion with which United is held in Asia is undoubtedly a boon to the club, although until recently largely unmonetisable. After all, much against common wisdom but a reality nonetheless, there are very few ways in which football clubs – even those as famous as United – can generate cash from its supporters, especially away from the club’s core domestic market.

Firstly, and perhaps most obviously, clubs generate cash from ticket sales. About a third of United’s £279 million revenue in 2009 came from ticket sales. It’s a cash cow the Glazer regime has milked of course, with aggregate ticket prices rising by 48 per cent during the family’s five year tenure at Old Trafford.

Then there are broadcast rights, which United sells collectively to both domestic and overseas markets with the other 19 Premier League clubs. As a successful team, finishing each Premier League season within the top three to date, United garners a larger share of the pot from appearance and success fees than most other teams. It’s a reward for both success on the field and popularity off it, although the disparity between top and bottom earners in England is far less than say in Spain where Barcelona and Real Madrid account for 90 per cent of all broadcast income.

Thirdly, the club makes around another 30 per cent of its annual income from commercial enterprises, including sponsorship and merchandise sales. Within this block Aon, the US-based risk-management firm who paid the club a reported £80 million over four years for shirt sponsorship, and Nike whose £315 million shirt production deal runs to 2015, are the principal partners.

While millions of supporters garnered from overseas markets is a headline-grabber, the percentage contribution to the club’s bottom line is in fact minimal. After all broadcast rights are sold collectively, fans in many markets – more than 90 per cent according to the best guestimates – buy only counterfeit goods if any at all, and the much lauded digital content markets offer almost no incremental revenue streams yet.

In fact the real boon to United’s commercial activity is not from individual fans’ spending per se but the brand association commercial partners garner from the country-specific exclusive partnerships the club has struck over the past 18 months. Ed Woodward’s London-based commercial team has inked a claimed £200 million worth of such deals in the past year – albeit with the benefits spread over many seasons – including sponsorship arrangements with Turkish Airlines, Singha Beer, and Collo y Toro wines.

Hernandez’ acquisition is unlikely to create any significant direct revenue streams though. Shirt sales may well increase in Latin markets, but it’s doubtful that it’ll be at a rate that will herald any relevant increase in turnover. More Mexican supporters may tune into Premier League games, but with broadcast rights fixed for the next three years and sold collectively the other 19 Premier League clubs will benefit just as much as Ferguson’s outfit. United may even benefit from the occasion day-tripping Mexican tourist, although it is unlikely to fill the empty spaces at Old Trafford.

Where the Little Pea’s impact is more likely to be felt by the Old Trafford bean counters – aside from his inevitable sale to Real Madrid cynics might add – is in a new addressable Latin American market for the aforementioned commercial partnerships.

Expect to see Chicharito’s baby-face adorning giant billboards in Mexico City some time soon.

It’s a market unsurprisingly cornered by Real Madrid and Barcelona to date but with the poster boy of Mexican football now firmly on the club’s roster, both Ferguson and the Glazers may have equal reason to hope he hits the ground running come August.

* with sincere apologies to Levitt and Dubner
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  • Alfonso Bedoya

    If he does play well… expect to see Real Madreeed blowing him kisses before long.

  • http://www.unitedrant.co.uk/members/jaff/ Liam

    The idea of signing a player for his marketability has never sat well with me. Call me naive or idealistic if you will but shouldn’t the only concern be performances on the pitch? It is a nice side benefit for clubs if it opens up new markets but imo, should never be a factor in whether or not to sign a player. Sign the right player for the team, not for the potential revenue streams.

  • RedScot

    Fabulous read.
    Jaysus it just show’s in this day and age(Glazer) we have to look at an Angle like this to grasp more money.
    Its a Effing sad state of affairs when we cant just enjoy and revel in watching a fantastic player, prosper and grow.
    Looking forward to see him play tonight, after all thats why we are fans right.
    Sadly not in the current climate at Old Trafford.

  • http://www.redforcerising.net RFR

    I can’t help but feel that Javier Hernandez was bought primarily for marketing reasons. That the scouts got it spot on and he scored two beautiful goals at the World Cup is a bonus. Don’t get me wrong, he has real ability, but there are two or three reasons why I’m a bit cynical of his transfer”

    - Before Jim Lawlor went out to scout Chicharito, he asked an old acquaintance living in Mexico specifically to recommend a Mexican player.

    - United tied up a sponsorship deal with South America’s biggest wine producer shortly after Chicha’s transfer

    - the club launched a Spanish version of the site a week ago http://www.manutd.com/default.sps?pagegid={48C41513-A376-4D1F-981D-660FC5BB193E}&newsid=6650332

    As I said, I think Hernandez is going to turn out to be a gem, so the scouts did well, but I have to wonder if Fergie would have bought him if he hadn’t been given a directive to look for a Mexican player.

    • RedScot

      Jaysus the plot thickens.
      I just did not have the vaguest clue of the sequence of events as you catalogue them RFR.
      It truely makes me feel very sick, and I really dont have a cynical bone in my body or head.
      These people are truely the pits.
      Agree though cynicism aside I think also from what we have seen he is gonna be fantastic.
      Most certainly if we had went shopping for him after the World cup we would not be putting £7 million on the table for him.

      • http://www.redforcerising.net RFR

        What the Glazers have added to the club is a very corporate feel. I resent it, because i work for an American corperation with people who are phony and back-stabbing each other.
        Football and United used to be something sacred. Not anymore.

        To see the time line of events, here are some links and quotes

        “Last September, however, a former Mexican international footballer called Marco Garces returned to his homeland having spent four years studying for a sports science degree at Liverpool John Moores University.

        During his time in England, Garces became friends with United chief scout Jim Lawlor. Garces, who now works for Pachuca’s academy, was asked by Lawlor to recommend Mexican players to him and he suggested coming out to watch Hernandez.

        United sent a scout out to watch him in December before Lawlor himself visited Mexico for three weeks in February and March, to make an in-depth assessment. ”

        United look for Mexican player:
        http://www.telegraph.co.uk/sport/football/leagues/premierleague/manutd/7578217/Javier-Hernandez-aka-El-Chicharito-living-the-Manchester-United-dream.html

        United sign Mexican player:
        http://www.manutd.com/default.sps?pagegid={F9E570E6-407E-44BC-800F-4A3110258114}&newsid=6647972

        United announce Chilean wine sponsors
        http://www.manutd.com/default.sps?pagegid={48C41513-A376-4D1F-981D-660FC5BB193E}&newsid=6649014

        United announce Spanish speaking version of official site:
        http://www.manutd.com/default.sps?pagegid={48C41513-A376-4D1F-981D-660FC5BB193E}&newsid=6650332

        How did the club I love go from being a sacred bastion of football to a slick corporate marketing company?
        The Glazers!

  • El Guapo

    @Alfonso Bedoya – Real Madrid can go fuck themselves. I’m quite sure they will be sniffing around Chicharito after he has bagged 30 goals this season but it’s too bad for them that Manchester United got there first.

    Believe it or not, Chicharito has always liked United and in an interview with the MLS website, he said his favourite United players were Rooney, Ronaldo, van Nistelrooy and Solskjaer.

    Now I know that a long time ago, Real Madrid had the famous Mexican striker Hugo Sanchez and naturally his name will be brought up in the inevitable “Chicharito to Real” fairytales which Marca and in turn the British tabloids will feed us in the coming years. Unfortunately for Real, Chicharito doesn’t give a flying fuck about former Pumas and Club America player Hugo Sanchez. Chicharito is a Chivas man through-and-through and his only hero is his father, Javier “Chicharo” Hernandez.

    Manchester United is a family club, not a Hollywood circus like Madrid. Their garish brand of glitz and glamour might appeal to a limelight-loving narcissist like Cristiano Ronaldo, but Javier Hernandez is a very grounded, family-oriented young man and I’m sure he will repay the faith United have shown in him with undying loyalty to our club.

    That’s right guys, Chicharito is going to be at Manchester United for a very long time. So please let’s not mention those Galactico-hiring, manager-firing, hanky-waving, Franco fascist cunts in the same breath as the club Matt Busby built.

    • Nicorn7

      Amen brother!

  • sidney

    Mexico is an untapped market

    We do it all the time only at least this lad can play, unlike Dong

  • D

    Fong was a gamble as was Tosic and Veron from other world markets. My opinion is, they were brought on with the hopes for ability and where they were from was a bonus. It didnt work so Man Utd. moved on. Park is just a super player who I have never been disappointed in (but i Know he is by some because our standards are high) and I feel Chicharito, with his blend of speed and eye for goal will be a great compliment to Rooney when Wayne has to rest or come on late in matches. Mexicans already respected and admired Man United (I lived there for awhile) and now that respect will grow even more. Man United is a Global entity, I know that frustrates the old supporters but its a reality. Sports Illustrated called Man Utd’s 99 treble winning team a “hated one” because they achieved success!

  • SIR

    I can tell you that Antonio Valencia’s signing last year dramatically increased United’s visibility in Ecuador. When I visited in 2008, a lot of people were walking around the streets of Quito and Guayaquil wearing Ecuadorian national team shirts, and I didn’t see a single Wigan shirt. When I went back last fall, all those shirts magically transformed into United shirts. All of my football-mad relatives were suddenly United followers. Not that Ecuador is a gigantic market, but I guess it does work.

  • kramer

    jesus, what’s the point of this article? we won’t know either way.
    at least the boy looks like he can add some value to our squad, give him the benefit of the doubt.
    he’s just scored against us.

  • El Guapo

    Interesting comment I just read on YouTube:

    “when Man U bought chicharito they bought 100 million mexican fans with him

    Man U is the most popular team in mexico now over barca and real madrid”

    That’s coming from a genuine Mexican!

  • nip

    What?? This site used to be a great place for supporters, its now just a front for the anti Glazer movement. It doesn’t matter what the subject is, your writing is all about business not football

    • http://www.unitedrant.co.uk/members/admin/ Ed

      Patently that is not true. Of the last 50 posts in all categories four are exclusively about football business. But hey, let’s not allow the truth to get in the way.

  • sukhy5

    I love this place!!

  • eddieTheRed

    I’ve spent the last year wondering if the Glazers are going to try and make United the first $1 billion a year football club; if the number of registered suppoters is correct then they wouldn’t have to take too much money from them (average $3.04 per registered supporter).

    Ed is right though when he says there’s a huge difference between being a supporter and being a cash – cow! Most United supporters in emerging nations pay little or nothing directly to the club.

    United will almost certainly try to change this, although they would really need to get exclusive rights to their own EPL image to have anything worthwhile to offer. I can’t help but feel uneasy about a club that seems to be increasingly putting commercialism above all else; surely it can’t last?

  • Alfonso Bedoya

    Unregistered User said:
    What?? This site used to be a great place for supporters, its now just a front for the anti Glazer movement. It doesn’t matter what the subject is, your writing is all about business not football

    Proper supporters ARE anti Glazer numb nuts.