NEW YORK -- The New York Yankees are adding some Spice.
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Impact could be staggering
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There's no question that this joint-marketing deal between the two
most powerful brands in all of sports is so big that it should be declared
illegal. In the past eight years alone, these two teams have won 10
championships combined and this will only make both of them stronger in many
revenue categories.
If YankeeNets breaks off from MSG and starts some sort of television
network after the 2001 season, the ability for the Yankees to sell worldwide
sports sponsorships will obviously increase with this
deal. Companies who want to expand their presence throughout the globe will
be able to buy ad spots in the United States on Yankees- and eventually Devils- and
Nets-related broadcasts. Those companies can also tap the European market by
running spots on Manchester United broadcasts. Now, all it takes is just one
phone call.
While the Yankees will benefit financially from selling spots on
local television, the increased sales of licensed apparel for the Yankees --
as a result of the team's merchandise presence in the Manchester United
stores worldwide -- will not necessarily benefit the Yankees. That's because
licensing revenue among all Major League Baseball teams are distributed
equally, instead of a team getting a percentage of its revenues that is
proportional to its sales.On the flip side, Manchester United will directly
benefit from merchandise sales in North America, as they are able to hold on
to a percentage from their licensed merchandise sales.
-- Darren Rovell, ESPN.com
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In a deal that links Spice Boy David Beckham with Derek Jeter and Roger Clemens, the parent companies of the New York Yankees and Manchester United announced a strategic alliance Wednesday.
The arrangement unites the world's top baseball and soccer
teams. The teams will share market information, develop sponsorship
and joint promotional programs and sell each other's licensed
goods.
"I believe we have a lot to offer each other in terms of synergy and cross-promotion," YankeeNets chairman Harvey Schiller said at a news conference. "This is a unique alliance in sports and shows that YankeeNets and Manchester United are real pioneers."
YankeeNets will help develop Manchester United's North American
preseason tour in 2003, which could coincide with the FIFA Club
World Championship, which the U.S. Soccer Federation is trying to
bring to the United States that summer.
"It's yet another example of Manchester United, whether it be
on the field or off the field, breaking ground," Manchester United
chief executive Peter Kenyon said.
Manchester United's stock price increased 13 percent to $1.65
during midday trading on the London Stock Exchange before closing
at $1.54, an increase of 5.4 percent.
Manchester United, whose market capitalization is $900 million,
has been increasingly involved with U.S. companies, recently
agreeing to a $440 million, 15-year licensing deal with Nike that
starts in August 2002.
The Yankees are in the fourth season of a $95 million, 10-year
agreement with adidas.
Charlie Stillitano, former general manager of the New York/New
Jersey MetroStars in Major League Soccer, brokered the deal between
Schiller and Kenyon.
Manchester United has won six of the last eight English Premier
League titles, and the Yankees have won four of the last five World
Series.
Manchester United will promote El Duque and Bernie Williams at
Old Trafford, and the Yankees will market French World Cup hero
Fabien Barthez and Beckham -- the husband of Posh Spice (Victoria
Adams) -- at Yankee Stadium. Beckham and Adams even have a son named
Brooklyn.
|  | | Dr. Harvey Schiller, left, chairman and CEO of YankeesNets, and Peter Kenyon, CEO of Manchester United, PLC, broke ground with their new deal. |
The Yankees, who have won the World Series a record 26 times,
are owned by YankeeNets, which also controls the Stanley Cup
champion New Jersey Devils and NBA's New Jersey Nets.
In December, YankeeNets announced a cooperative marketing
agreement with the NFL's New York Giants, who lost to Baltimore in
last month's Super Bowl.
At the start, it involves little more than sponsorships and
licensing.
Manchester United will sell Yankees merchandise in its stories
at the Yankees will sell the soccer team's goods. YankeeNets and
Manchester United also will approach companies attempting to put
together deals that cover all or some of their five teams.
Later, it could involve television. YankeeNets is attempting to
form its own TV network but is bogged down in a lawsuit with
Madison Square Garden Network, a division of Cablevision Systems
Corp., which owns the baseball rights through this season.
Under the new Premier League TV deal that starts in August,
Manchester United will have the right to televise its game on a
delayed basis and will regain rights to its archive
The soccer team already has its own pay cable network, MUTV,
which broadcasts for six hours a day, and it could strike a deal to
televise Yankees games -- but it would have to negotiate with
baseball's commissioner's office, which owns all international
rights of the U.S. teams.
Trans World International, a division of the International Management Group, bought U.S. rights to the Premier League and sold them to Fox Sports World, a division of News Corp. The Football Association Cup is not shown on U.S. television and the European Champions League is televised by ESPN, a division of The Walt Disney Co.
Manchester United has been the richest soccer team in the world for the past three years, according to an annual survey by Deloitte and Touche, an accounting firm that specializes in soccer finances.
Rupert Murdoch's BSkyB tried to buy Manchester United in 1998
for $1 billion, but the bid was blocked by Britain's Monopolies and
Mergers Commission.
The Yankees are estimated to be worth $600 million or more by U.S. financial analysts.
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