Business goals

what great players mean for the business goals of clubs like Manchester United

The prodigal son returns. During the last days of a frenzied football transfer window, Manchester United have signed a dream signing when they welcome Cristiano Ronaldo to his former club.

The enthusiasm for his return to the Premier League is high – and for good reason. There are only a handful of sports stars on the planet who can generate this kind of global interest.

But how does a player of Ronaldo’s professional stature affect the business side of a great football club? Where are the main financial gains generated by sports superstars?

In terms of football transfer fees, Ronaldo is coming back to United with a relatively cheap price. He owns signed a two-year contract (with option to extend) for an initial amount of £ 12.86million and the potential for an additional £ 6.85million in performance bonuses.

This is mainly due to his age. At 36, he is nearing the end of his playing career, and the price reflects that, even if his level of performance remains high. This performance factor is reflected in his salary, which should be around £ 385,000 per week

Adding up these figures roughly shows a total cost to Manchester United of around £ 60million. The club have also shown shrewd business tactics in managing to spread the payout over five years.

In return, United are hopeful that Ronaldo’s skills increase the club’s chances on the pitch. But the big picture is the business benefit it can bring.

Certainly the power of his personal brand (he is widely known as “CR7” after his initials and preferred player number) – notwithstanding the ongoing civil lawsuit against him for rape allegations, which he denies (the criminal charges have been dismissed) – instantly expands the club’s international reach and appeal.

Ronaldo currently has half a billion followers on social media, vs. Manchester United 140 million, and the announcement of his signing garnered 12.5 million likes on Instagram. It is essential to convert this litter into cash.

A numbers game

Ronaldo has already increased United shirt sales to an all-time high. But it’s Adidas that will see the initial benefit, with the German kit maker paying a royalty to replicate the famous red shirts. That said, United’s current deal with Adidas is already the biggest of football, and the Ronaldo effect should allow club leaders to drive up the price of renewal.

United’s broader business operations are also expected to see a significant boost. Sponsors are scrambling to team up with United, and club may make additional contribution £ 30million in business arrangements in the next two years.

And while the exact numbers are hard to predict, we can turn to Ronaldo’s latest club, Juventus, for a guide. The Portuguese moved there from Real Madrid in 2018, and the next two years show considerable business growth for the Italian club.

Of course, it’s not all due to Ronaldo, but he certainly helped. While in the squad, Juventus renegotiated deals with Adidas and Jeep, and signed a new one with Konami in Japan who cited the “Ronaldo effect” as one of the main reasons for the partnership.

Graph showing Manchester United and Juventus trading income over the past four years.
Author provided, Author provided

Meanwhile, Manchester United are already generating significant value from trade deals and Ronaldo will help push those numbers up. The team and the player have been described as “match made in paradise”, with the club stock price leaping before Ronaldo even returned a ball to Manchester.

Longer-term gains can be expected over the next two years, and if he helps the club win trophies the numbers could be mind-boggling. These numbers will undoubtedly be studied by top European clubs as they desperately seek out the next Ronaldo and Messi, summed up by Real Madrid. recent failed attempt to land Paris Saint-Germain’s Kylian Mbappe. (Expect it to be the next big move in January 2022.)

The football industry in general is concerned about a changing market where the relationship between football and young people appears to be deteriorating. Recent research found that 40% of respondents in seven countries (including England, Poland and Brazil) aged 16-24 had no interest in football, sparking fears of a ‘missing generation’ of fans .

As a result, clubs are looking for new ways to get involved. Anything that extends reach into younger age groups is of great interest to club owners, so Ronaldo’s social media presence is another ticked box.

The attachment between fans and a favorite player is also increasingly important, especially in emerging markets. In India for example, almost a third of the fans say that a player’s allegiance influences his support for a club.

For Manchester United, there is clearly money to be made with the return of CR7. The club will gain new fans and new business – and if they score goals and win games, maybe even a shiny new trophy.