Why the Glazers are right to sack David Moyes for the sake of Manchester Utd

The Glazer family upon hearing from their long term manager Sir Alex Ferguson that he wished to retire at the end of the 2012-13 season, having been in charge since 1986 and bringing the club riches greater than any other manager in the UK resulting in financials and global branding opportunities only dreamed about when he joined the club, sought his advice on who his successor should be.

Moyes, David Moyes, was his instant answer. A 50 year old manager from the same Glaswegian heritage as his own and who had been in charge of Everton Football Club  for 11 years and was regarded as a ‘sleeping giant’.

In business terms this decision was like parachuting a CEO of a 3-5 year old startup into a Publicly quoted company with a turnover ten times their previous employers and staffing levels twenty times what they are used to managing.

It was a bold move, but sometimes shareholders need to make bold decisions and also take advice from the person who has steered their ship to waters and destinations they could never have dreamt of previously.

The Glazers, as majority shareholders, may well have looked at safer, more proven options. There were arguably a glut of strong contenders and the list of obvious choices was headed up by Jose Mourinho – the most successful European manager and Pep Guardiola – The hugely successful manager of the world’s largest club Barcelona.

Both of these were overlooked, it appears, out of hand it seems as the owners heeded the advice of the man who had steered their ship for 10 years and brought them 9 awards at the highest level in club football, which had also brought levels of global commercial success never imagined when Sir Alex joined the mancunian club from Abderdeen.

Is the fact that the owners are from the US and have employed a CEO part of the decision making process?

Would this have happened in the real world of business, where even the most senior staff don’t take home a salary of £200,000 per year, let alone per week?

The simply answer is possibly….

Whilst most of the companies that we have investments in are based in the UK and I meet with the management teams on a regular basis, and usually take part in the recruitment process of senior hires, decisions would be made by the whole senior management team collectively.

However for our US investments, which we wholly own, would I take the advice from our senior management team? Of course I would. Would I enforce my own decisions upon them if the outgoing CEO was ‘going upstairs’ to become Deputy Chairman? Absolutely not!

However, with that decision comes the phrase ‘enough rope to hang yourself by’ and also the recommender’s role is also under as much pressure as the person that they have recommended.

Last month, US retailer J.C. Penney Co.ditched Ron Johnson, the CEO it poached from Apple and brought back his predecessor Myron Ullman.

The strategy, in the non-football world, is often a sign of crisis, which can work under the right circumstances, according to corporate governance experts. “It only makes sense if the person coming back has a successful track record,” said Mark Cohen, the former chief executive of Sears Canada, who now teaches at Columbia Business School.

That was the case for Apple and Starbucks Corp which both overcame a rocky period and went on to excel after the return of Steve Jobs and Howard Schultz, their respective founders and CEOs.

Jobs, who returned in 1996 to a computer maker out-innovated by rivals, engineered perhaps the greatest resurgence in corporate history, giving birth to the now-ubiquitous iPhone and other products.

Whilst this case is slightly different from Jobs, David Moyes has lost the faith of his client base. Yes, many, many still attend each home game but that is because they have season long tickets, so have paid already. However those season long ticket holders are due to receive letters this week to renew for next season.

The Glazers have previously had a very difficult relationship with their client (fan) base with many boycotting the club’s merchandise and protesting that the leveraged buyout deal that that brought about their purchase was hampering their player acquisition budget in previous  years.

There is also those highly lucrative commercial contracts which see global brands like Epson, DHL, Chrysler pay £10M’s to be associated  with the club/company.

Whilst I don’t know when they are up for renewal, I am sure that they have ratchet mechanism built into them so as the brand exposure is reduced, and with no European football at all and less air time on some global broadcasters given the on-field quality, that is already happening, these deals could drop by potentially upto 70 per cent.

By sacking David Moyes now, on season ticket renewal week, the owners and the entire board are making a decisive stand. Arguably the first time that they have been able to gain the momentum for on-field or ‘operational’ activity since they purchased the club.

Whilst Sir Alex Ferguson was much loved, like Steve Jobs, sometimes your client base will agree with you both when you decide on your successor but also accept that ‘it hasn’t worked’.

Waiting for the end of the football season, or if a company posting full year accounts, clients, stakeholders and shareholders need to see positive decisions especially when it is clear that the club staff feel that decisions that your manager is making are wrong and if part of fixing the problem is spending £200M+ on acquiring new playing staff would you invest that sum to your R&D department.

So for the sake of Manchester United as a club and institution, accept that Sir Alex had the best of intentions, and yes in his day he needed four seasons to create the world beating team he created, but times have changed and with global TV revenues, global news, merchandising and more immediacy in society that years become months.

Richard Alvin

About Richard Alvin

Richard Alvin is founder of private equity company Audere Capital which has a number of investments across the media and fashion sectors. Entrepreneur of the year in 2014 Richard is also Group MD of Capital Business Media and director of award winning PR company Brighter Comms, he is regarded as one of the UK's leading experts in the SME sector and an active angel investor and advisor to new start companies in addition to being an advisor to Save Our Business the U.S. based business advice television show.