Market dominant firms often find themselves knocked off their perch if they become complacent, their offer becomes tired and they are challenged by new entrants. Yesterday Tesco issued another profit warning and slashed their dividend as they struggled to maintain their market share.
There might seem to be an analogy with Manchester United. Certainly for lazy journalists writing off United is an easy way to generate some copy. However, there are some significant differences between the retail and football giants.
Market dominant firms often find themselves knocked off their perch if they become complacent, their offer becomes tired and they are challenged by new entrants. Yesterday Tesco issued another profit warning and slashed their dividend as they struggled to maintain their market share.
There might seem to be an analogy with Manchester United. Certainly for lazy journalists writing off United is an easy way to generate some copy. However, there are some significant differences between the retail and football giants.
Tesco face a competitive market where the entry costs are not prohibitive. Manchester United are in effect part of a cartel of super clubs that has been paradoxically reinforced by financial fair play. When the need arises they can splash the cash, as they did with Angel di Maria this week.
However, they have probably sacrificed the fear factor associated with Old Trafford and the benefits of ‘Fergie time’. I remember Charlton drawing 0-0 with United at The Valley and the referee adding as much time as was needed for the visitors to score in the last minute.
There couldn’t be a bigger contrast between the two Lancashire clubs meeting today, Burnley and Manchester United. It’s a city versus a town, a global brand versus a traditional club. United spent more on di Maria than Burnley have spent on players in their history.
Burnley manager Sean Dyche makes the contrast between the two clubs, noting that the financial gap is huge. His directors appear to have been scared by some of the prices for players that the market is demanding.
Sometimes, however, I think that Burnley, like Blackpool before them, have been too reluctant to spend. It’s tempting just to take the big prize money for being relegated, no wooden spoon for sure. But would a bit more spending give them a chance of staying up?