Manchester United stopped being merely a world famous football club several years ago. Now a multinational with an £88-million turnover, insiders call it an 'oil well'. No wonder Rupert Murdoch wants to enshrine it as the brightest star in his satellite sky. No wonder monopoly authorities are examining his bid. Jim White reports from the sidelines.
If you like money, then Old Trafford, home of Manchester United plc, is a great place to be. On match days, the whiff of it is everywhere, striking nostrils with even greater force than does the traditional Saturday afternoon cocktail of hot dogs and police-horse manure. Once a fortnight, this quarter of a Manchester industrial estate hosts more than just a football match. It is transmogrified into a bazaar, as teeming, colourful and chaotic as any£ in the Middle East. Every inch of pavement within half a mile of the ground seems occupied by commerce. Fast-food wagons churn out cholesterol by the coronary-load; stalls sell souvenir scarves, hats and posters; boys with bin-liners stuffed with T-shirts cry out, 'Get your Yorke, only a fiver.' Other youths off-load stacks of magazines and newspaper supplements. A woman under a golf umbrella paints the names of football players across adolescent complexions (most teenage girls seem to want Giggs on their faces).
But the most extraordinary sight is reserved for when you turn a corner and step into the shadow of the vast concrete and steel bowl that is the Old Trafford stadium. There you will find, snaking round the crash barriers that are cemented permanently into the concourse, the queue for the Manchester United Megastore. It is made up of people already burdened by United apparel - sweatshirts, T-shirts, earrings - lining up, in all the filth the Manchester sky can dump on them, for yet more stuff: David Beckham duvet covers at £25.99; 3-D posters of Ole Gunnar Solksjaer for £5.99; Peter Schmeichel drinking mugs at £9.99. There is a range of 1,500 items of United memorabilia available to empty the pockets of these day-trippers.
As yet, the man who wants to buy the place, Rupert Murdoch, has not been seen at the ground on a match day. But if he does turn up, he need only take one look around his potential new manor and he wouldn't stop smiling at the way people pour money into the brand. Because this is what Manchester United is. Several years ago it stopped being merely a world famous sporting institution. Indeed, this season the words 'football' and 'club' have been removed from the badge the players wear on their shirts. It has become instead a seven-day-a-week, 52-weeks-of-the-year international sporting brand - a money-printing machine.
'It's an oil well,' says Edward Freedman, United's former head of merchandising.
'Up through the ground gurgles this lovely red-and-white gold. No one's quite sure how or why, but it seems to keep on coming.'
To be fair, Rupert Murdoch need never have seen a game at Old Trafford, need never have experienced the frisson of excitement that spills from the stands when Ryan Giggs begins a run down the wing, to know that he was on to a good thing when he bid for the Old Trafford oil well. He would have needed only one look at the accounts, need only to have noted that last year the company posted a £28-million pre-tax profit on an £88-million cash-rich annual turnover, to sanction the £682-million purchase bid which - if cleared by the Monopolies and Mergers Commission - would make United the most expensive football outfit in history.
Indeed, some observers feel that Murdoch might even have been on course for picking up his new toy for less than its potential value - though not as cheaply as he might have done had he acted a bit more quickly.
In September 1989, Manchester United's chairman, Martin Edwards, agreed to sell the family jewel he had inherited from his father, lock, stock and turnstile, for £10 million to a property developer, Michael Knighton.
The deal fell through, Edwards stayed with the company and a decade later finds himself sitting on an asset valued at a cool 68 times what it was worth back then.
How can it have happened? How can an institution built on 11 young men kicking a pig's bladder around an acre of greensward have achieved such phenomenal economic growth? And if there is a secret, perhaps they might like to share it with the rest of us.
Speak to many observers of the football business and the word frequently used about Manchester United is 'luck'. That's the word the pundit Danny Kelly prefers to use to describe their pre-eminence. 'Everything has fallen into place for them,' he says. 'From the favourable economics of the game to the self-destruction of their main rival, Liverpool. I think being in the right place at the right time can be described as lucky, so they're lucky.'
Indeed, United was lucky to have achieved prominence in an era when football has never been so fashionable, when multinational corporations from McDonald's to Microsoft are prepared to pay whatever it takes to tie their flags to its mast.
In the 1970s and '80s, for example, when Liverpool was in its all-conquering heyday, no one wanted to be associated with a game that was notorious for the violent predilections of its followers. But, since the 1990 World Cup, and, more particularly, the arrival of SkyTV on the scene in 1993, the game has changed completely. Throughout the 1990s, it has been packaged relentlessly as the leisure activity of the smart and the prosperous.
By a happy coincidence, since 1990, Manchester United has won four League titles, three FA Cups, a European Cup Winners Cup, a European Super Cup and a League Cup. There is nothing that football supporters are more anxious to buy into than success.
Luck, though, is only part of the story. Exploiting your moment in the sunlit uplands of providence is the mark of a skilful business. And what's the other word that has most frequently been connected with Manchester United these past 10 years? 'Exploit.'
When Michael Knighton attempted to take over United in 1989, part of his pitch involved an expansive vision of football as it moved towards the millennium's end. He foresaw enormous opportunities in developing the club's stadium into a seven-day-a-week entertainment centre, of broadening the business base by encompassing all sorts of activities beyond simply playing the game, businesses which would benefit from being attached to the Manchester United name. This may have seemed an ambitious prescription to offer just a few months after the nadir of the Hillsborough disaster, but Martin Edwards was impressed.
As the Knighton deal fell through, Edwards began to think that he might be able to realise his major ambition in life - to become very rich indeed - not by selling his inheritance but by developing it. His early efforts were piecemeal and ill-starred, particularly a failed venture into basketball and an editorially poor club newspaper. But there is one great strength of Martin Edwards' management strategy, one that is rare in a business traditionally run by hugely inflated egos: delegation.
'United look and behave very much like a traditional business from a corporate point of view,' says Nigel Hawkins, an analyst at Williams de Broe. 'They have a strong brand and they have worked to maximise it by bringing in good people to develop it. Throughout the company, you don't just find football men but businessmen from traditional sectors in key executive positions.'
Rather than abandon his expansionist plans after early disappointment, Edwards brought in other brains, other expertise to help him achieve his targets. Such as Danny McGregor, the commercial manager, poached from the travel industry, who created a whole new way of selling a match-day ticket.
The ticket was incorporated in packages to entice far-flung and corporate fans to the club, knowing they would be more inclined than local lads on a budget to spend money on profit-inducing peripherals, such as the new restaurants that were to be built into the stadium when it was forced into being re-designed as an all-seater after the Taylor Report. McGregor is able, through various value-added extras such as a walk round the pitch and a drink with a former player, to charge up to £400 a throw for an item that would otherwise retail at £14.
Edwards brought in Greg Dyke to add expertise in the world of television which, since the formation of the Premiership and the deal with SkyTV, has produced an ever-bigger contribution to United's turnover: from less than £1 million in 1989 to nearly £20 million 10 years on. Dyke, head of television at Pearson, oversaw the introduction of United's television channel, MUTV, which could become a serious cash-cow in the digital television age. And, in June 1992, Edwards made perhaps his most skilful piece of executive recruitment, poaching Edward Freedman from Tottenham.
Freedman had once noted: 'There are tribes in the Amazon who have never seen a white man but who wear San Francisco 49ers caps'. His ambition was, within five years, to ensure the caps they were wearing carried United logos. If no one appreciated the potential scale of the football souvenir business as well as Freedman, no club had quite the brand to work with.
After the heady years of Law, Best and Charlton, the tragedy of the Munich air crash, the hooligan reputation of the 1970s, United had attracted an international following.
No team appealed, as did United, to the new armchair constituency offered up by television's enormous new interest in the game.
Now, in a new personalised shirt (there would be 15 different styles to buy over the next six years), you could sit at home in Plymouth, watch every goal the boys scored on TV, and call yourself a United fan. And not just in Plymouth. Thanks to the proselytising zeal of satellite TV promoting football into new and uncharted territory, Freedman had within three years opened club merchandise stores in Singapore, Hong Kong and Sydney. Within 10 years of Knighton's bid, after a successful flotation on the stock market in 1991, United had been transformed from a football club into one of the most prominent business brands in Britain.
Not that every aspect of United's approach to management finds universal favour. Alex Fynn, a management consultant specialising in football who has worked inside the Old Trafford operation, says the club still needs to shake off some old-style thinking that remains there. It needs to keep modernising, particularly in the way it sells itself. He says he can think of no other brand which does so little to promote itself and its image. 'A brand is bought by consumers and, as such, is influenced by the company's communications policy,' says Fynn. 'United don't have a communications policy. They don't spend a penny in communicating themselves to their various audiences, apart from belatedly understanding the value of financial PR. They allow others - the press, the television - to do their marketing for them, which means people often misinterpret their message. At the moment they tend to sit back and say, here we are, come and get us. That is no recipe for the long term.'
But all talk of brands, media manipulation and expansion would be as nothing without continued success in what Edwards rather entertainingly referred to recently as the 'core business at Old Trafford': football.
If football was conducted entirely according to the laws of economics, Manchester United would have won every trophy available to them between 1969 and 1989 instead of the three they managed. With the widest support and the biggest stadium, the club had the cashflow to buy success by buying the best players. Fortunately, football isn't dominated solely by market forces; it is more fun than that.
What United's undistinguished period in the 1970s and '80s proved was that money is only half the story in football. Far more important is the shrewd stewardship of that money, of buying the right players at the right time. And United achieved that the moment Edwards made the most vital business decision of his career, recruiting Alex Ferguson as his manager in November 1987.
In truth, what Ferguson brought to the club was not immediately apparent. During the match marking his third anniversary in charge, with United perched on the lip of the first division relegation zone and playing the kind of football a Sunday morning park side would consider disappointing, a banner was unfurled at the scoreboard end at Old Trafford which read: 'Three years of excuses: ta-ra Fergie.'
But if the fans at that time would have liked to have got rid of the man, the boss-class was having none of it. According to Sir Bobby Charlton, the United president, first-team results were not the only performance measure by which the manager should be judged. 'There was never a moment's doubt in the board's mind that Ferguson was the right man for the job,' says Charlton. 'Even when things were not going well, the board never considered sacking him. Because we could see that everywhere else in the club, he was getting things right.'
In the football jargon, what Ferguson was doing was this: taking the club apart from top to bottom. He brought in a new raft of back-room appointees (Brian Kidd was a crucial early signing, who only left Ferguson's side in December after seven years of fruitful partnership); he modernised the training routines of the players; but, more vitally, he re-invigorated the youth system at the club, the conveyor-belt of talent introduced by Sir Matt Busby in the 1950s, which had rusted under his successors.
You can't blame them; those managers preferred to concentrate their energies on the first team. Keeping their jobs in the short term meant there was little time for looking to the future. Under Fergie, however, short-termism was out. But although Ferguson had the respect of his employers for the energy with which he went about his task of re-focusing the club, it is inconceivable that he would have still been in the job to see in his fourth anniversary were it not for one goal.
Scored by Mark Robins in a third-round FA Cup tie, away at Nottingham Forest in January 1990, that goal saw the Reds on their way to their first trophy under the new manager. It was that goal which bought Ferguson time to put his long-term plan into operation; it was the goal that saved his job. And what was Robins' reward for scoring it? Ferguson sold him to Norwich a year later, thus abandoning his saviour to miss out on the biggest trophy-winning glut in English football history.
Robins' fate summed up Ferguson's approach: nothing - not romance, not sentiment, not personal gratitude - was to stand in the way of United being staffed only by the very best. While he might have done a temporary holding job, Robins, as has been shown by his subsequent career, was not up to the standard which Ferguson was beginning to set. Hard, you have to say. But fair.
There is something else about Ferguson. According to his friend Sir Richard Greenbury, chairman of Marks & Spencer, Ferguson is the best man-manager in Britain. Quite simply, Greenbury believes no one gets as much from his employees.
Ferguson is the first to admit he has mellowed in the man-management department. In his early days as a coach in Aberdeen, he was often strident, expecting his players to share his extraordinary dedication, bawling them out when they slipped below his standards. One time, so legend has it, as he administered one of his ferocious half-time bollockings to his team, he started throwing around the contents of a kit skip. An athletic support landed on a player who was too scared to move and take it off. 'What the bloody hell,' said Ferguson, catching sight of the quivering youth, 'are you doing sitting there with a jock-strap on your head?'
When Ferguson arrived at Old Trafford, the players christened him 'the Hairdryer'. 'We called him that,' says former United player Mark Hughes, 'because he used to come right up to your face to bawl you out, so you got a blow-dry into the bargain.'
But with the years, and the confidence that comes with success, Ferguson has relied less and less on intimidation. Instead, what he engenders in his employees is respect. They admire his achievements, they are in awe of his tactical acumen, they appreciate his single-minded dedication, but most of all they trust him. Players, young men thrust into an emotionally challenging limelight by a media voracious for football gossip, need the reassurance of knowing there is one man on whom they can rely.
Look at the fuss caused when Glenn Hoddle chose to make commercial capital out of the secrets he knew about Paul Gascoigne. Ferguson would never trade in gossip about his charges. 'Once you do that, you lose the key to the dressing-room,' he says.
Look at the way, too, he stood by Eric Cantona when the Frenchman was being abandoned by all and sundry after his moment of madness against a heckler at Selhurst Park. Ferguson's reward for that loyalty was two seasons of match-winning performance from Cantona, and never again a hint of problems.
Many younger players treat him like a father, which is not surprising, since a number of them have known him most of their lives. When you see the products of his youth team - players he has worked with for more than 10 years - conducting themselves with dignity in all aspects of their football lives, you see a walking testimony to Alex Ferguson's management philosophy.
So what of the future? At the time of writing, the MMC is still investigating Sky's takeover bid for United. Rupert Murdoch, though, remains determined to buy the lot. Not because he is interested in the game, not even because he thinks he can make money out of United (though that would be nice). He wants the club because of the influence it will bring him in deciding the next stage of football's development, something he is very keen should be of benefit to Sky.
That development is largely television-led, with the lucrative rights to broadcast matches up for auction from 2001. Put simply, Murdoch cannot afford to let the goose that has laid golden eggs for him across the globe fall into someone else's hands. And owning Manchester United would help him avoid that.
But even Murdoch, not a man renowned for his sentimental approach to business, has made it clear that the business he is buying into will only work if it continues to be run by the present team, particularly that red-faced Scottish fellow pacing the touchline in the track-suit, brandishing a stopwatch.
As if it ever needed saying, what United's eight years at the top has proved beyond debate is that success in football - both on the field and off - comes from continuity and long-term planning. Yet, as every club in Britain chases the United formula, following their lead in everything from releasing fourth strips to opening theme restaurants, that one fundamental lesson remains unheeded within the game: if you have a good man in charge, give him time, give him space, trust him.
Perhaps, if they required more proof of this universal truth than just that offered up by Old Trafford, the chairmen of our football clubs should let their envious eyes shift 25 miles south to Gresty Road, Crewe. Here, in Crewe Alexandra, they will find a club that has gone from seeking re-election into the old fourth division to playing in the new first division in just over 10 years. Despite what the new economic theories of football would have you believe, this has been achieved without a range of own-brand leisure wear, without executive dining facilities under new grandstands, even without the open chequebook of a willing sugar-daddy.
In fact, it has been done with very little, except the excellence of team manager Dario Gradi. And what is the one record Dario Gradi holds in football? He is the only manager among 92 league clubs who has been in his position longer than Alex Ferguson.