Can Britain's No. 1 Soccer Club Score in America?

Hugely profitable Manchester United wants to crack the U.S. market

On match day, the devout begin to congregate on Chester Road in Manchester, about a 15-minute walk from their cathedral. The road takes them past many shrines: There is Bishop's Blaize, a local pub where supporters chant from the Manchester United hymnal 30 minutes before game time. At the corner of Chester and Sir Matt Busby Way (so named for an inspirational coach of the past), the faithful take a left and pass a giant mural featuring the faces of legendary team members such as George Best and Eric Cantona. Finally, the processional winds over some railroad tracks to one of the most hallowed grounds in soccer: Old Trafford, home to the 125-year-old Manchester United Red Devils football club.

The veneration of Manchester United is hardly restricted to a gritty British city, however. Man U is the true prophet of football, or soccer, to a devoted worldwide following of 53 million fans, according to polls done for the club by researcher MORI. In fact, it is the most popular team in the world -- making the New York Yankees, Dallas Cowboys, and Los Angeles Lakers seem bush league by comparison. And it has leveraged its hold on its fans into a global business that spreads far beyond soccer.

Maggie English, a 43-year-old customer-services manager in London, is one of them. "I have traveled all over Europe to support them," she says. "I went eight years without missing a game. I went to Turkey three times for the day and Russia once for the day to see them play." Adds Graham May, 39, a building-contracts manager in North Manchester: "I would be a millionaire if I hadn't spent so much on football."

Such true believers help explain how Man U turns such a handsome profit: In fiscal 2002, the publicly traded club kicked out $50.3 million in profits on $230 million in revenues, and it expects to generate revenues this year of $260 million, club officials say.

To spin that much cash, Man U goes far beyond its primary sources -- ticket sales and a lucrative TV deal with Rupert Murdoch's British Sky Broadcasting (BSY ) Group PLC. It sells everything from Man U coffee mugs to bedsheets and scarves. It runs its own subscription-TV service, Manu.TV, that beams game highlights and player interviews to 75,000 subscribers over four channels airing six hours a day, seven days a week. It sells its own credit cards, home mortgages, consumer loans, and insurance policies. It runs an online auction business similar to eBay Inc. and is opening a string of Red Café restaurants from Singapore to Manchester. Says Marketing Director Peter Draper: "We are trying to package loyalty and affinity."

In July, Man U will take another big step to expand its global following when it takes its star-studded show to the U.S. for four largely sold-out exhibition matches in Seattle, Los Angeles, Philadelphia, and New York. The club's aim is twofold: to penetrate America's $15 billion annual professional sports market and to persuade Wall Street to invest in a growing global brand. "This is about the long-term development of the marketplace," says Peter F. Kenyon, CEO of Manchester United PLC.

That may be easier said than done. First, Man U may have to make the trip without its biggest star, golden-haired midfielder and tabloid idol David Beckham, who has led the team to 8 English Premier League championships in the past 11 years. Rumors have swirled for months that Beckham will move to another European club, which would bring Man U a transfer fee in the $50 million range. Indeed, on June 10, the club announced that it had reached agreement with Barcelona -- a deal Beckham promptly vetoed. But some such deal may soon take place, with Real Madrid and A.C. Milan thought to be among the contenders.

Even if Beckham makes the U.S. tour, it's hardly clear that Americans are ready to embrace pro soccer. True, 28 million Americans play the game. The U.S. Men's National Team reached the quarterfinals of the 2002 World Cup, the U.S. Women's National Team continues to dominate competitions and attract crowds, and the U.S. will play host to the Women's World Cup this fall. Americans are even flocking to see Bend It Like Beckham, a film about a young Englishwoman of Indian descent who wants to play professionally.

But beyond those successes, soccer struggles to gain a foothold in the crowded American sports market. Even though Major League Soccer, the top professional league here, has been making steady attendance gains, the 10-team league still loses money and has not yet attracted a broad fan base. Skeptics abound. "I think soccer in the U.S. is a participation sport and not a spectator sport," says Craig Tartasky, president of Vertical Sports Marketing, a Bethesda (Md.) consultancy.

While in the U.S., Man U officials will be trying to capitalize on the curiosity factor. Finance director Nick Humby will head to Wall Street to try to interest investors in the club's business model -- one that combines a winning tradition with shrewd stewardship of the Man U brand. With its U.S. sponsors, Man U will be running soccer clinics in cities where it plays exhibition matches -- and trying to squeeze as much publicity out of the U.S. media as possible.

Wall Street may well listen, because Man U's business acumen is on par with Beckham's uncanny ability to curve a free kick around an opposing wall of players into a corner of the goal. The debt-free club used its own cash to build a 67,700-seat stadium that sells out every match. "We always invest at a level we can afford," says Humby. Management also insists on rigorous financial discipline that limits players' salaries to 50% of revenues, compared with the 70% or even 100% at some other English teams. Man U's willingness to let Beckham go, while it may alienate some fans, reflects the team's iron rule that no player must loom larger than the team as a whole. Coach Sir Alex Ferguson, apparently irritated by Beckham's glamour-boy lifestyle -- his wife, Victoria, is a former Spice Girl -- benched him in several games this spring. And the huge transfer fee would buy Man U other stars; experts say the team has its eye on Brazilian striker Ronaldinho.

Man U also prospers because its popularity has attracted big multinational consumer companies. Nike Inc. last year agreed to pay $450 million over 13 years to design and supply new clothing and equipment and take over Man U's entire merchandising business, giving it more global punch. "The scale that we brought was unattainable for them," says Nike co-President Charlie Denson. Man U is also teaming up with other iconic brands, such as Pepsi and Budweiser.

But will the club's popularity rub off in the U.S.? It counts about 4 million hard-core U.S. fans, according to MORI, but it will need millions more to make that backing financially meaningful. The stakes are high, since Man U is already approaching saturation in Europe and Asia. "No soccer team has penetrated the U.S. market, and Man U needs to do so," says Jeffrey Bliss, president of Javelin Group, a sports-marketing consultant in Alexandria, Va.

Certainly a big U.S. splash could lay the groundwork for more growth. But it may be a long time before Man U generates U.S. adherents like Chris Mann, a 57-year-old English factory worker who plans to catch a pair of the U.S. games. "Man U is my life," he says. "We call it the religion. We call Old Trafford the cathedral. You have to go worship the team." Now, the question is whether the prophet of football can spread the word to those soccer heathens in America.

By Stanley Holmes in Seattle, with Heidi Dawley in London and Gerry Khermouch in New York

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