Manchester United makes its fans a powerful offer
UK football giant Manchester United plans to launch electricity and gas supply services for its supporters. Datamonitor's utilities analyst Salman Wasti has said that while the connection between football and the utilities may appear tenuous, Manchester United's move could be a success, and may be a pointer to how the second-tier utilities providers can compete with the industry's giants.
Manchester United has said the company will launch branded utilities within the next 12 months as part of an ongoing drive to supply additional services to its many fans. It has a 'supporters club' membership base of 130,000 in the UK. Rugby league side St. Helens also recently announced it would sell gas and electricity to fans, possibly due to the influence of its CEO, Brian Kelly (formerly the managing director of Norweb Gas). Manchester United already operates a branded mobile phone service with its main sponsor, Vodafone. It also has deals with Zurich, Bank of Scotland, Britannia Building Society and MBNA to offer finance products (including personal loans, credit cards, investments, mortgages and general insurance).
Loyal fans may be the key Some in the industry may believe that the leap from sports to utilities is stretching too far, but the fans' loyalty and trust may bring enough uptake to make the new offering profitable. Customer retention rates could prove higher than across the industry as a whole. For the utility partner, an alliance under the Manchester United brand has clear and tangible benefits:
- With switching levels at 37% for energy supply in the UK, the acquisition of new customers is very likely.
- With over Eur.12 billion of the overall energy market still to play for, even a small share of the market would provide valuable revenues.
The way ahead Salman Wasti comments: "The UK utility market is moving towards a two-tier 'league', as Centrica (British Gas), Innogy (nPower) and TXU increase the gap between themselves and mid-sized suppliers such as Powergen and ScottishPower. Mid-sized players may well need to build affinity alliances with household names, such as the Sainsbury's/ScottishPower venture, to remain profitable and achieve customer acquisition and retention rates that can keep them in touch with the league leaders".