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Wednesday, 7 February, 2001, 12:55 GMT
City view: Utd's Yankee tie-up
The deal that Manchester United signed with Vodafone broke sponsorship records
The Vodafone deal broke sponsorship records
By BBC News Online's Orla Ryan

Manchester United's decision to agree a joint marketing deal with the New York Yankees has provided a welcome boost to the football club's stock market value.

Shares in Manchester United rose 5% to 225p, having earlier reached 233.5p, as news of the deal first emerged.

However, this is still a long way from the high of more than 400p seen last year, which saw the club valued at 1bn.

What you are observing is the first step in the opening of the US market to soccer

Virginie Lannevere, equity analyst, HSBC

On London's Stock Exchange on Wednesday lunchtime the value of the North West of England club remained below 600m.

Analysts say that US revenues may revitalise club finances in the longer term - but in the near future, the share price is likely to remain depressed by the rising cost of getting the best football players.

Stunning

Some analysts can barely contain their enthusiasm for the deal, details of which emerged on Wednesday afternoon.

"Can you get better than the New York Yankees? Where can you go after that? This is an absolutely stunning deal," Stan Lock, football analyst at stockbroker Brewer Dolphin said.
Joe DiMaggio
Some of America's greatest baseball players have played for the New York Yankees

As two of the world's top sporting brands, most people know who Manchester United and the New York Yankees are.

Under the joint agreement, the two companies will create a SuperClub.

The two clubs will sell themselves to potential sponsors and TV networks as well as selling each other's souvenirs and kits.

Both clubs hope that they can boost their profile in countries where they currently have little presence - ie Manchester United in the US and the Yankees in Europe.

Over-optimistic?

Together they may be able to launch a join offensive on the sports mechandising market in the rest of the world - a road Manchester United has gone down alone so far.

However there was considerable scepticism about when the deal would translate into more cash for the club.

"I can't really see when the benefits would accrue... Maybe the market is a little over optimistic on this. It has got to be positive but may not have any immediate effect," one analyst said.

"Manchester United don't have any appreciable following in the US, although I presume that if any Americans or New Yorkers knew about soccer, they would know more about Manchester United than any other UK soccer club," he added.

US football fans?

The chances for cross selling between baseball and soccer fans is not obvious, Virginie Lannevere, an equity research analyst at HSBC, agreed.

"What are you observing is the first step in the opening of the US market to soccer," she said.

The rising Hispanic population - traditionally big football fans - in the US has served as a wake-up call to the media there, who now want to boost their football coverage.

Long term, this could be very good news for European clubs.

Football revenues are derived largely from the European media market.

Broaden that to include US and it could "trigger a lot more money", Ms Lannevere said.

But she pointed out: "It is a long term long shot."

Too long term for it to resolve the real problem that football clubs face at the moment.

This is that no matter how impressive their sponsorship deals, the cost of getting players and winning championships is threatening to outweigh the amount of money coming in to clubs' coffers, she said.

Manchester profits

Its huge global fan base has already seen Manchester United become very profitable.

It isn't just success on the pitch that has boosted profits.

It set a new standard for sponsorship in February last year when it sealed a 30m deal with Vodafone.

Then that deal was dwarfed when it was reported to have signed a 300m shirt manufacture deal with Nike, which will take effect next year.

But last year, its overall pre-tax profits figure was 16.8m, down from 22.4m the previous year.

The high cost of transfer and salary packages has weighed heavily on the club's share price.

It isn't the only football club to suffer.

Aston Villa has seen its share price more than halve, from about 562p last February.

Shares in Tottenham Hotspur have also fallen from about 63p to 49p in the same period.

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See also:

08 Feb 01 | Business
Man Utd 'in share probe'
02 Oct 00 | Business
Player costs hit Man Utd profits
04 Jan 01 | SOL
Sport's sponsorship success
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