Sir Alex Ferguson: “They gave me the confidence and time to build a football club, rather than just a football team”. Alex Ferguson’s managerial lessons stretch far beyond football; Despite his success, Sir Alex never kidded himself that he knew everything; He knew his players’ pre-match toilet habits (and checked if they were going more than usual).

May 8, 2013 8:33 pm

Manchester United’s global brand reaches crossroads

By Roger Blitz, Leisure Industries Correspondent

Like Margaret Thatcher’s death, the announcement that Sir Alex Ferguson wasretiring after 26 years as Manchester United manager had the capacity to shock.

Supporters of both knew their respective departures had been coming, had even braced themselves for the moment, yet still could not quite believe it when it came.

Where they differed was that Lady Thatcher’s death did not move the markets, whereas the retirement of Sir Alex, a life-long supporter of the left, did. Shares inManchester United fell 4.1 per cent when New York opened for business.

It is a mark of Sir Alex’s longevity and success, with an accumulation of 13 Premier League titles and 2 Champions League trophies, that his departure should strike at the core of a club as financially strong and dominant on the pitch as Manchester United.

As Emmanuel Hembert of consultancy AT Kearney said: “It’s like Apple losing Steve Jobs. What’s next is the big question.”Runaway winners of this season’s Premier League and with revenues heading for £360m this year, the US-based Glazer family, owners of the club since 2005 and sitting on a global brand worth $3bn, will be hoping for the smoothest of transitions to a new manager.

They have given him a boardroom seat to help the new man – widely tipped to be David Moyes of Everton – bed down. But whatever wisdom he can impart, fans fear the managerial skills he brought to bear over a period of huge upheaval in football were unique and impossible to replicate.

Talent development

For a club as steeped as United in the tradition of developing raw young ability into the finest talent, the emergence of David Beckham, Ryan Giggs and Paul Scholes under Sir Alex’s tutelage was one of the most satisfying passages of his reign. That came from the manager’s immersion in the club’s culture from the very beginning. “He had a special chemistry with Manchester United,” said ex-England defender Sol Campbell, an adversary on the pitch in the colours of Spurs, Arsenal and Newcastle.

“He was like the DNA of the club. He would look after everybody, remember people’s birthdays, go round to parents’ houses. It’s the little bits behind the scenes that make the difference.”

Talent management

Over more than a quarter of a century, Sir Alex reshuffled his pack countless times – bringing in new untried players, dumping fans’ favourites, changing the style of play. “He reminds me of the best traders and investors,” said Jim O’Neill, friend, United fan and chairman of Goldman Sachs Asset Management. “He’s not scared of taking a risk and changing his mind, whether it’s player purchases, tactics, or employing very different sorts of assistant managers. He is not really bothered about getting it wrong.”

That discipline required a mind not distracted by history and emotion, said Mr Hembert. “He learned a lot about his mistakes and was part of his recalculation of his team and himself,” he said.

One of his more glaring errors was the purchase in 2001 of Argentine midfielder Juan Sebastián Verón for a record £28m. He flopped and was sold two years later for around half the price.

Sir Alex merely changed tack, and reverted to the recruitment of young talent or players who had established themselves in the Premier League, like Antonio Valencia and Robin van Persie.

Competitive advantage

While it was the players’ jobs to demonstrate United’s superiority on the pitch, it was always Sir Alex seeking to extract any advantage off it. Rows with referees, rivals and rulemaking body the Football Association became legendary – and none more so than with opposing managers.

“The best way of knocking a war on its head is to go for the general at the top,” said Campbell. “He didn’t go for players, he always tried to outwit the manager.”

They gave me the confidence and time to build a football club, rather than just a footballteam

– Sir Alex Ferguson

This he achieved in spectacular fashion while battling for the 1995-96 Premier League title, when United trailed Kevin Keegan’s Newcastle. Riled by criticism from Sir Alex, Keegan launched a heated outburst on TV at his adversary. The psychological blow had been inflicted, Sir Alex had won the “mind games”, and United went on to win the league.

“He sees himself as a protector of a brand and a concept,” said Mr O’Neill. “When situations put themselves up, he would defend the club and use it to the side’s advantage.”

Boardroom relations

Such has been the power of Sir Alex at United that criticism of the unloved Glazers could have spelt the end of the Americans’ ownership. Instead, he chose the path of loyalty, despite the wrath of fans furious at the debt pile loaded on the club by the Glazers’ 2005 leveraged buyout.

In return, he got a virtual free hand on the playing side and made it difficult for the Glazers to knock back his demands for new players. “He’s been extremely canny,” said Mr O’Neill, who launched a failed attempt to persuade the Glazers to sell out to a consortium of wealthy fans.

Legacy building

Alex Ferguson inherited a sleeping giant, a club poorly run, playing badly. Four years later, and with fitful progress on the pitch, he was said to have been one defeat from the sack.

In his statement announcing his retirement, Sir Alex recalled receiving the backing of the United director and legend Sir Bobby Charlton in those early years. They “gave me the confidence and time to build a football club, rather than just a football team”, he said.

The pressure will now be on his successor to preserve the empire. Mr Hembert says that, by taking over a team at the top, the new man will not be afforded the luxury of time that Sir Alex had. “He will need immediate results.”

May 8, 2013 3:02 pm

Alex Ferguson’s managerial lessons stretch far beyond football

By Simon Kuper

Despite his success, Sir Alex never kidded himself that he knew everything

When Sir Alex Ferguson arrived atManchester United in 1986, the club was a bit of a drunken mess. It had not won a league title in 19 years. Its players enjoyed long, liquid pub “lunches” at which hardly a bread roll ever got eaten. Sir Alex, a former publican who like many ambitious Scots had come to regard alcohol as the enemy, was appalled.

After his managerial triumphs in Scotland, he could have decided that Man Utd’s club culture was rotten and in need of uprooting. He could have stormed in like a bullying egomaniac chief executive. But he didn’t. Instead he spent his early months at Old Trafford interviewing people, from window cleaners and supporters to legendary former players, trying to understand the club’s values.

He then set out to personify those values, such as: “United plays attacking football”, and “The world is against United”. Sir Alex always managed with the grain of a football club’s culture. The Scot, explained Jorge Valdano, the Argentine player-turned-football thinker, “bleeds the club’s history, can interpret the sentiment of the support”.

Sir Alex retires from Man Utd this month aged 71, as the most trophy-laden manager in English football history. His career contains lessons for managers in all sectors. But despite his reputation as an irascible dictator, many of those lessons have to do with humility, calm and learning from others.

Despite his success, Sir Alex never kidded himself that he knew everything. He always kept learning. From the French player Eric Cantona, who joined the club in 1992, Sir Alex learnt that British footballers did not take their jobs seriously enough. From Doris Kearns Goodwin’s 900-page biography of Abraham Lincoln, Team of Rivals, he learnt how to manage clashing personalities within an organisation.

Sir Alex spent hours each day on the phone, sucking information from ex-players and fellow managers. His enormous network extended far beyond football. Each contact was nurtured till death. (Possibly nobody attended more funerals, wrote his biographer Patrick Barclay.) When the UK’s minister of sport offended him in a meeting, Sir Alex simply picked up the phone and rang then-prime minister Tony Blair on his direct line to complain.

For Sir Alex, knowledge was power. Nothing moved inside Old Trafford without his knowing it. He knew his players’ pre-match toilet habits (and checked if they were going more than usual). He had long phone calls with fan leaders.

In 2004, one of them told him about a group of Iraqi Kurd refugees living around Manchester. Fans, who kept match tickets and photographs of the stadium as souvenirs, they had been wrongly arrested by police on suspicion of plotting to blow up Old Trafford. Sir Alex quietly arranged for the Kurds to attend a closed team practice. After all, they were club stakeholders, and stakeholders had to be kept happy (or in this case ecstatic).

He was a calm manager, too. Even when a crisis transfixed the nation – Cantona’s Kung Fu kick at a Crystal Palace fan’s head, the boot Sir Alex kicked into the face of his star player David Beckham – he never changed policy. Sir Alex knew that fusses blow over. His eye was on the long term.

While nurturing the Rooney-Ronaldo team, Sir Alex went three seasons without winning the league. He knew he was unsackable

He often sold players in their prime, looking ahead. In 2003, for instance, he sold Beckham for £24.5m and bought the unknown Portuguese teenager Cristiano Ronaldo for half that sum. The exchange looked risky; it proved brilliant. Ronaldo, now at Real Madrid, has matured into one of the world’s best players.

In 2004, Sir Alex blew two years’ of transfer budget on the teenaged Wayne Rooney, despite knowing the striker was not yet ready. While nurturing the Rooney-Ronaldo team, Sir Alex went three seasons without winning the league. He knew he was unsackable. His prior success had bought him freedom to think long term.

Being a long-termist, he will have planned his succession. It is no coincidence thatEverton’s David Moyes, bookmakers’ favourite to get the job, is a fellow Glaswegian. Sir Alex was born in Glasgow’s Govan district on the last day of 1941, when most Govan men were building warships.

A working-class childhood in the west of Scotland is almost the norm for great British football managers. The three considered the holy trinity before Sir Alex – Sir Matt Busby, Bill Shankly and Sir Alex’s hero Jock Stein – shared it too. “Any success I have had in handling men . . . owes much to my upbringing among the working men of Clydeside,” Sir Alex has written. Industrial Glasgow provided Sir Alex with his core values: group solidarity and macho leadership. To Sir Alex as to Moyes, these values translate into leftwing politics: both men are active Labour party supporters.

But nobody can replace Sir Alex. Stefan Szymanski, economics professor at the University of Michigan, has compiled a “Soccernomics index” of overachieving managers in England: the men who reached the highest league positions relative to their clubs’ wage budgets from 1974 to 2010. Sir Alex ranks second in the index, after Liverpool’s Bob Paisley.

In short, the Scot adds exceptional value to his teams. This became most apparent from 2003, when first Chelsea and then Manchester City began outspending Man Utd on wages. Sir Alex’s team have still won five of the past seven Premier League titles. No successor is likely to match that. Man Utd must now expect decline.

May 8, 2013, 7:51 p.m. ET

Replacing the Superstar Boss

Manchester United Manager Built Powerful Sports Brand; Who Will Take Charge Now?

By MATTHEW FUTTERMAN

The Glazer family, the majority owners of soccer’s Manchester UnitedMANU -1.76%began to confront a unique challenge Wednesday when Alex Ferguson announced his retirement after 27 years as manager of one of the most powerful brands in sports.

During the past two decades, as Mr. Ferguson built United into the world’s most successful club on and off the field, the 71-year-old Scot came to embody his franchise as few managers in sports or any other industries ever do. Under Mr. Ferguson’s taut guidance of superstars like David Beckham and Cristiano Ronaldo, the club won 13 English Premier League titles and two European championships. Off the field, the Manchester United jersey became nearly as ubiquitous in the soccer pubs of Hong Kong and New York as it was in central England.

A club that nearly sold for just $30 million in 1989 is now valued at some $3 billion. Revenue at Manchester United reached $498.5 million last season, according to Deloitte, compared with $39.2 million in 1992-93. But in recent years, the Glazers, the American family that controls the club, have received relentless criticism for driving up the team’s debt to more than $650 million.

 

To help pay off a portion of that debt, the club pursued an initial public offering that raised more than $234 million last August. The stock price has risen by roughly a third since then as Manchester has recorded strong gains in revenue and income. In the most recent three months ended March 31, each of its three revenue categories—commercial, broadcasting and match day—rose, led by its global sponsorship and merchandising business.

But in the idiosyncratic world of sports, where growth can sometimes turn off essential core fans, such success has had a downside.

“The whole structure of Manchester United represents the modern complexities of globalization,” says Jim O’Neill, a former Goldman SachsGS +0.63% executive and United supporter who knows Mr. Ferguson well. “It’s not quite that passionate thing it was. It’s become such a commercial beast.”

Throughout United’s evolution from the favorite club of industrial Manchester into world soccer’s version of the New York Yankees, Mr. Ferguson remained the team’s one constant. He continued to be revered by the local, hard-core fans, even as hob-nobbing with the leaders of the massive multinational corporations whose eight-figure sponsorships fueled United’s spectacular growth became as much a part of his job as developing the next generation of stars. “Among Alex’s capabilities was his ability to connect on an emotional level,” Mr. O’Neill says.

In a sign of just how important Mr. Ferguson is to the club, Manchester United officially announced his retirement in a 6-K filing with the U.S. Securities and Exchange Commission.

With Mr. Ferguson leaving, there are questions about whether the Glazers will become more active in the management of the team, filling an inevitable vacuum that exists because no obvious successor has been groomed within the club.

A spokesman for Manchester United said Wednesday, “The relationship between the club’s manager and owners, which has produced significant success, will remain the same.”

However, comparisons between following Mr. Ferguson and some of the top corporate leaders of his era may not be apt.

Mr. Ferguson wasn’t regarded as a creative or innovative thinker like Steve Jobs of Apple or Andy Grove at Intel. He never espoused a signature form of management or style of play, like Jack Welch at General Electric Co.GE +1.46% Rather, he is one of the greatest motivators in sports and a master of building a team from a mixture of homegrown players, established superstars and relative unknowns.

“Initially it was very much the iron fist—his way or the highway,” said Warren Barton, the former England international, who is an analyst on Fox Soccer. “Then he brought in other players, including the likes of Ronaldo and Beckham, and managed to deal with their star status and celebrity.”

Mr. O’Neill said Mr. Ferguson is “very reminiscent of the most successful investors and traders I’ve dealt with. He’s not scared of making a mistake or of changing his mind in an instant.”

The question now is whether Manchester United can remain what it has become with someone else stalking its sidelines. The market cast its initial vote Wednesday, as Manchester United’s stock fell just 1.8% on the New York Stock Exchange to $18.44.

Yet replacing a superstar manager, even in the corporate world, is often a difficult task that requires years of preparation, said Peter Crist, chairman of Crist|Kolder, an executive-search firm based in Hinsdale, Ill. Ideally, companies should begin grooming a replacement two to five years ahead of time.

Years before Mr. Welch retired, for example, GE began the process of lining up a successor. Three final candidates were eventually identified, including Jeff Immelt, who ultimately won the horse race.

By all accounts Manchester United hasn’t pursued a similar approach. Wednesday evening in London, Everton coach David Moyes was the favorite among British bookmakers to win the job.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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