Why £89m on Pogba is a bargain

11 Aug

Paul Pogba


Manchester United confirmed they had signed Paul Pogba at 00:35BST on Tuesday morning

Manchester United paid a world record £89m to sign Paul Pogba from Juventus – a player they let go for only £1.5m four years ago.

The deal has been cited as the final example of a sport gone money-mad, and described as former manager Sir Alex Ferguson’s biggest mistake.

But with the Old Trafford club expected to announce annual revenues of £500m next month, paying such a huge sum for a world-class midfielder they used to own could make perfect business sense.

Because as a percentage of turnover, Pogba was a snip compared to the £155,000 purchase of Denis Law in 1962.

Why Pogba deal could make sense

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Manchester United’s major purchases as a percentage of their turnover

United’s commercial success has underpinned a vast growth in income since the Glazer family took over the club in 2005. And with global stars Pogba and Zlatan Ibrahmovic added to a squad managed by Jose Mourinho, that will only increase.

“This is a new era on the field but commercially as well,” said football business expert Kevin Roberts.

Wayne Rooney’s arrival from Everton for £27m in 2004 represented 17.2% of the club’s overall turnover of £157.2m a year before the Glazer family takeover. Twelve years on, the cost of buying Pogba from Juventus is a similar 17.6%.

Relative to the purchase of Law from Torino 54 years ago, and the £1.5m spent on buying Bryan Robson from West Brom in 1981, these percentages are small.

Scotsman Law cost 61.4% of United’s annual turnover of £187,178. In Robson’s case the figures are 56.6% and £2.65m.

A more compelling sponsorship pitch

From £49m in 2005, the club’s commercial revenue rose to £196.9 in 2015, a rise of 301%. In the same period, United’s matchday revenue has increased by 31% and their broadcast income by 123%.

United now operate a three tier system of sponsorship. The biggest deals are for shirt sponsorship and kit manufacturing. The second level are the global agreements with organisations such as EA Sports, who on Wednesday became United’s official football video games partner, the third are regional deals which cover all manner of product areas, from financial services, to tyres and noodles.

“If you are flogging sponsorship to Japanese noodle companies you really need to mean something to fans in a country that is 14 hours away on a plane,” said Roberts, co-founder of Sport Business.

“Manchester United’s digital strategy allows them to collect massive amounts of data which can be used to sell to fans things directly to do with the club. Simplistically, it might be to ask whether people had thought about buying a new shirt for their birthday.

“If you have data about people watching you worldwide, you can put together a more compelling pitch to sponsors and ratchet up the value of deals.”

United’s carefully choreographed and branded announcement of the Pogba deal was as glossy as a multi-million pound advertising campaign, marking a new level in the evolution of the modern-day football transfer.

“The thing we focus on is engagement,” added United’s managing director Richard Arnold. “The content and communication we have with the fans has to resonate, so it causes them to respond. That they like. They share. They comment.

“That is as true of the fans in Stretford as it is in China.”

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