Alex Ferguson

Sir Alex Ferguson: Managing Manchester United

For a player—and for any human being—there is nothing better than hearing ‘well done.’ Those are the two best words ever invented in sports. You don’t need to use superlatives.

— Sir Alex Ferguson

In July 2012, Sir Alex Ferguson, the most successful manager in British football history, stepped out of his office at Manchester United’s Carrington training ground. It was his team’s first day of training for the 2012-2013 season—his record-setting 26th as manager of one of the world’s most decorated professional football clubs (see Exhibit 1) and one of sport’s biggest franchises.

During his time as manager of Manchester United, Ferguson had won almost every honor in the club game. He had taken over at United when the club was at perhaps its lowest point ever, having experienced a startling fall from grace and not won an English league title in nearly twenty years. By prioritizing youth-player development, rebuilding the team, being shrewd on the transfer market, emphasizing attacking football, and bringing the best out of his players, Ferguson turned United’s fortunes around. Now, United was the most successful club in English football with nineteen league titles, and had reclaimed its place among Europe’s elite clubs with two Champions League trophies. Millions of fans around the world idolized former and current United players such as Eric Cantona, Cristiano Ronaldo, and Ryan Giggs. Revenues had soared, too, and by some estimates United had become the world’s most valuable football club in 2012 (see Exhibit 2).

Over the years Ferguson had overcome several major challengers to United: knocking close rival Liverpool FC off its perch as the club holding the most English league titles, successfully battling the fluid style of play which had brought London-based Arsenal FC three titles in the late 1990s and early 2000s, and triumphing over the hundreds of millions of dollars Russian billionaire owner Roman Abramovich had invested in Chelsea FC. The newest challenger could be found closer to home. Ever since Manchester City, the same-town rivals Ferguson once famously referred to as United’s “noisy neighbors,” had switched owners, the club had invested unprecedented amounts of money in new players. The 2011-2012 title race had been closer than ever, with City grabbing the title in the season’s last two minutes, beating United on goal difference. “It is just another chapter in the history of Manchester United,” said Ferguson.

As Ferguson arrived at Carrington that morning, renovation and expansion work was going on all around on him. United was improving on and adding to the already top-notch sports science, medical, and other facilities, and even installing a special viewing area for handicapped fans. “They

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Professor Anita Elberse and Tom Dye (MBA 2012) prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management.

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9-513-051

SEPTEMBER 20, 2012

513-051 Sir Alex Ferguson: Managing Manchester United

will have the best views of the pitch,” Ferguson said, clearly pleased with the construction plans. The now 70-year old manager approached the new challenge with the same determination he had shown throughout his career. How could Ferguson lead his team to another victory, and bring the next chapter in United’s illustrious history to a successful end?

The Game and Business of Football

Football1 was the most popular sport in the world. The International Federation of Association Football (FIFA), the game’s global governing body, estimated that one out of every 25 people on the planet played football regularly. The number of spectators was even higher, with an estimated 2.2 billion people tuning in to watch at least part of the 2010 World Cup, and 620 million watching the tournament’s Final.2 Football was also big business. The European football market recorded revenues of nearly $23 billion during the 2010-2011 season.3 Clubs derived income from three broad sources: stadium-based revenues, broadcast and other media revenues,4 and commercial revenues. They could also make (or lose) money through the buying and selling of players.

The English Premier League

England’s top division, the English Premier League (EPL), consisted of 20 teams. Over the course of one season, they each played each other twice—once at home, and once away. A win yielded three points, and a draw one. At the end of the season, the team with the highest number of points would win the league (or, in case of a tie, the team with the most favorable difference between goals scored and incurred), while the three teams with the lowest total of points were relegated to the lower division (and replaced with the three promoted teams from that division). EPL and lower-division clubs further annually competed, in a knockout system, for the Football League Cup (commonly called the ‘League Cup’) and the more prestigious Football Association Challenge Cup (or ‘FA Cup’).

The EPL had been the first league to capitalize on football’s globalization and continued to generate the highest revenues of all European leagues. It had seen tremendous growth, fuelled by ever-increasing broadcast revenues. The agreement to broadcast the 2010-2013 seasons was worth $5.4 billion—a massive increase over the $480 million five-year deal struck nearly two decades earlier. This growth had enabled EPL clubs to import some of the world’s greatest players and improve on the in-stadium experience. By 2012, the EPL was football’s most popular product with an estimated 1.5 billion fans.5

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