Manchester United (MANU, Financial) announced Friday that it will be changing the guard at the top of its leadership for the third time in as many years as it continues to search for the perfect replacement for retired legendary manager Sir Alex Ferguson.
The company announced that José Mourinho, the former Chelsea and Real Madrid manager, will be taking over from the start of the 2016-2017 season as the club looks to return to the top of the Premier League.
Mourinho has a good track record in the Premier League; it would appear that he has a bigger chance of returning Manchester United to the top than his predecessor Luis van Gaal did.
Following the announcement of the news, the company’s stock rallied slightly to reflect investors' excitement although this has been expected since April.
Since it became apparent that Luis van Gaal was going to be sacked with Mourinho poised to take over, shares of Manchester United have rallied from a price of about $13.79 to about $17.12, thereby representing a 24% increase in stock price.
On his appointment, Mourinho said, "To become Manchester United manager is a special honor in the game. It is a club known and admired throughout the world. There is a mystique and a romance about it which no other club can match.”
On the other hand, Manchester United Vice Executive Chairman Ed Woodward was delighted with Mourinho’s decision to join the club, highlighting his previous success and the desire to win as major positives. “José is quite simply the best manager in the game today. He has won trophies and inspired players in countries across Europe and, of course, he knows the Premier League very well, having won three titles here,” Woodward told the media.
However, Mourinho’s appointment did not lack a few critics. Manchester United legend Erick Cantona said his style of play does not match Manchester United’s historical attacking football while history with youth development also raised eyebrows.
On the contrary, the recently dismissed manager Luis van Gaal demonstrated an undoubted trust on youth after promoting a record 14 players from the club’s academy during his two-year stay. And while he still managed to win United’s first major trophy since Sir Alex retired in 2013 after winning the FA Cup, his failure to finish in a champions league position appeared to have determined his fate.
In addition, Luis van Gaal was highly criticized for playing defensive football, which does not align with Manchester United’s traditions. Manchester United is built on attacking play and youth development. The club’s success over the years has been pegged on these two philosophies and diverting from either of them is bound to spell an end to a manager’s career at Old Trafford.
Mourinho’s biggest challenge now is to bring trophies to the club while adhering to these two principles and unfortunately for him, it might be needed in his first season.
Manchester United is expected to post record revenues and profits in the current fiscal year after last year’s dismal results, which were influenced by the lack of European football.
According to the company’s preliminary results predictions, Manchester United is expected to post revenue of more than GBP 500 million. This is due to the massive deal signed with adidas (ADS, Financial) two years ago, which became effective at the start of last season.
In the next fiscal year, beginning July 2016 and ending June 2017, the company expects to continue posting improved top line and bottom line as the multibillion-pound Premier League broadcasting deal kicks in.
Premier League clubs are expected to receive nearly three times the amount of money they received this past season from TV broadcasting income, which means that, despite United’s lack of champions league next season, it could still post an improvement on the record revenues expected in June.
Conclusion
In summary, investors appear to be impressed with the appointment of Jose Mourinho as the new Manchester United manager. He has demonstrated success in the Premier League and in Europe, which makes him purely the best person for the job.
However, any signs of inability to succeed at the club could be more harmful to Manchester United’s future as a force to reckon with in the world of football, as this would indicate a continuous decline on the pitch. This could lead to a withdrawal or reduction of sponsorship deals.
Most of the company’s revenue comes from sponsors so this would hurt its top line and subsequently its bottom line. As such, Manchester United must be third time lucky, or else everything goes to burst.
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