(Updates with first quarter results in sixth paragraph.)
Nov. 15 (Bloomberg) -- The company that owns the Asian rights to Manchester United restaurants and bars is close to renewing its contract with the English soccer champion for up to another five years.
Manchester United Food & Beverage (Asia) Pte., which has held the rights for 10 years, has sold licenses to 14 outlets operating in seven territories including India, Japan, Indonesia and Hong Kong. Two venues in China are to open next year.
“We are still in the final stages of our negotiations, and it’ll probably be next month when we should be signing the next contract,” Andy Yun, the rights holding company’s chief executive officer said in a telephone interview.
The record 19-time English champion has signed several commercial deals over the past year, including in Asia with Malaysian snack maker Mamee-Double Decker’s Mister Potato and Vietnam telecommunications operator Beeline. Manchester United Food & Beverage (Asia) is owned by Singapore-based billionaire Peter Lim, who tried to buy United’s Premier League rival Liverpool 13 months ago.
Yun said the company will probably have to increase its payments from the existing agreement. It was signed in 2002, three years before the Glazer family bought the club in a 790 million-pound ($1.3 billion) leveraged buyout. United has doubled its commercial revenue to 100 million pounds since then.
The team said today first-quarter commercial revenue rose 22 percent to 29.6 million pounds, with overall sales of 73.8 million pounds. United had a loss of 6.9 million pounds, compared to net income of 2.7 million pounds a year earlier.
The renewal is “going to be 4 or 5 years,” Yun said. “They feel 10 years is too long.”
Manchester United said it wasn’t prepared to discuss negotiations.
Yun’s negotiators have been trying to drive down the price by telling the club that the company and the franchise holders who pay about $700,000 to decorate each restaurant have helped increase United’s fan base in Asia. The club estimates that the majority of its 333 million supporters are in the region.
“The other partners are just leveraging on them but we are actually the physical extension of the club,” Yun said. “We give much more value to the club than any other partners in that sense, much more support.”
The company buys the franchise rights and resells them to operators across Asia. Manchester United Food & Beverage will pass on the price increase to license holders. The contract will also result in better content from the club, including video conferencing between patrons and players, Yun said.
Some licensees may need convincing to pay higher fees. Yun said it takes each venue about three years to see a return on its investment.
Felomina Devaraj Rulloda, who owns the rights to a United- themed restaurant in Singapore where the club wants to float shares, changed the name to Charlie’s Tapas Grill & Bar from Manchester United Cafe because it was deterring fans of other soccer teams.
The Bangkok version was less than half full when Bloomberg News visited on three occasions in October.
In Mumbai, the United-themed bar charges an entry fee of 1,000 rupees ($19.88) that can be redeemed against drinks. A beer costs about 200 rupees and starters cost between 225 rupees and 725 rupees a plate.
“There’s no other place in the city where you can watch the game with other United fans,” said Utkarsh Parasrampuria, 25, who has the club’s Red Devil symbol tattooed on his left arm. “Also, they have the matches with the commentary compared to other bars who screen the match on mute.”
--With assistance from Sanat Vallikappen in Singapore, Siddharth Philip in Mumbai and Tony Jordan in Bangkok. Editors: Christopher Elser, Dan Baynes
To contact the reporter on this story: Tariq Panja in London at email@example.com
To contact the editor responsible for this story: Christopher Elser at firstname.lastname@example.org