Could Chelski be the next Man U?

Poaching Kenyon has opened the commercial field for the London Premier League club

In the quaint old days when Ken Bates used to be the supremo of Chelsea Village before it was taken over by Roman Abramovitch, the irascible 71 year-old was fond of saying: "We are the Manchester United of the south."

In an effort to add insult to injury to Chelsea's northern rivals, he would often continue: "United is based in an industrial estate in Manchester, whereas we are just off the King's Road."

Although Chelsea followers often hoped that Mr Bates might eventually be proved correct in his assertions, the football and bu1siness world largely scoffed at his claims.

United, one of the few consistently profitable football clubs in England, have been winning year after year on and of the field since the launch of the Premier League in 1992.

On the business side United's market capitalisation once reached £1bn at the height of the internet boom (it is currently valued at a more modest £450m) while it was also able to secure lucrative sponsorship deals with the likes of Vodafone and Nike. Chelsea Village, by contrast, was on the verge of being drowned by the weight of its debts when it was rescued by some of Mr Abramovitch's billions earlier this year.

On the playing side, Chelsea won the odd cup and bought the odd great player - none better than Gianfranco Zola, who ironically left Chelsea on the day the takeover went through - but the club has not yet been able to compete with United's star studded and eminently consistent team. Yet, following the boardroom transfer of Manchester United's chief executive Peter Kenyon to Chelsea after a serious summer spending spree on players, even business analysts are beginning to take Chelsea seriously, not just on the field but off it as well.

Vinay Bedi at Wise Speke, part of Brewin Dolphin, and joint brokers to United, says: "Chelsea has really thrown down the gauntlet to Manchester United. They are not just taking on the team on the field, they are also challenging them in the commercial arena.

"When Man U did its deals with Vodafone and Nike there were not really any other competitors. Chelsea are saying 'we're competing now and we've got the man able to do this and you haven't'.

Stan Lock of Brewin Securities agrees with Wise Speke's assessment of Mr Abramovitch's latest signing: "You can not get better than this man [Kenyon]," he said. "This fellow is top quality. Arsenal would love to have done what he has done, especially overseas. When you go to the far east what you see is Man Utd, Man Utd, Man Utd."

Kingsley Wilson, a media analyst at Investec Securities, says Mr Abramovitch's huge investment in Chelsea could well help the club's revenues increase substantially. "They have got good growth potential in almost every area, especially in merchandising and broadcasting and especially overseas."

Of course some things in life, even money (and Mr Abramovitch) cannot buy. Manchester United's history can never be replicated and one tragic chapter - the Munich air crash in 1958 in which many of its best players died - would not be wished on any other team. Many analysts, however, attribute some of United's status as a world class brand to that event. Millions of people around the world discovered an affection for the team that was known as "Busby's babes" (named after the then manager, the late Sir Matt Busby) and United was on its way to becoming a global brand. These days, United's marketing director talks of a club that boasts 50 million supporters worldwide (probably 10 to 20 times the number claimed by Chelsea or most other top football clubs). The task is to convert some of this massive fan base into a revenue earning stream. Hence United toured the US earlier in the summer, and have often visited the Far East. They even have a website written in Chinese.

On this score, Chelsea, and most other top English football clubs, are well behind Man Utd. The Premier League might be one of the most popular television properties in the world but few clubs outside United can claim significant fan bases away from their home territory. Liverpool and Arsenal, for example, enjoy phenomenal support within their local areas and indeed nationally - but overseas they carry little of United's allure.

When he finally arrives at Stamford Bridge (United have put him on "gardening leave" until a start date can be agreed, possibly next February), one of his first tasks will be to identify which overseas markets to go for. Chelsea is relatively well-known in Europe (thanks to its imported host of European stars such as Zola, Gullitt, Vialli and Leboeuf in the Nineties), but is less well known in the Far East. Will Mr Kenyon eventually make a move to sign David Beckham if that is a sure fire way to win over the hearts and minds of a far eastern fan base?

Keith Harris, the chairman of Seymour Pierce and former chairman of the Football League (and a keen United fan), said: "This is a big challenge for Kenyon and that does not mean he's not capable of achieving it but I don't think it's something that can happen overnight. Marketing success tends to be won over a very very long period."

At Chelsea, Mr Kenyon will also have to deal with the fall-out from the former owner's vision of the Chelsea Village concept. Mr Bates designed a business comprising hotels, restaurants, a sports centre and a travel agency, during a period when football was in the doldrums. He envisaged that the non-football activities might be able to subsidise the group's football business but the reality has turned out quite different. As the hotels and restaurants have lost millions of pounds, the popularity (and financial viability) of the football club has taken off. The result is that the Chelsea stadium is now regularly filled close to its 42,500 capacity while its hotels and restaurants remain under-utilised, leaving them vulnerable to a stadium expansion plan that might see its capacity increased to a size not dissimilar to Old Trafford (67,000).

Mr Abramovitch's men have already indicated a willingness to increase the stadium's size and one of Mr Kenyon's early tasks will be to either endorse the plan or argue against it. Having been behind the redevelopment of Old Trafford and being answerable to Mr Abramovitch, there is little doubt which way he will go.

For Manchester United, the future suddenly looks terribly uncertain. Its shares fell 10p yesterday, partly on disappointment over Mr Kenyon's departure but also on fears that the club's dominance of the domestic and overseas football market might be facing a real threat. Sentiment was hardly helped by Merrill Lynch, the company's other joint broker, which chose yesterday to downgrade United's shares from "buy" to "neutral".

Few now think that it will be long before United faces a takeover bid. The Irish entrepreneurs Dermot Desmond, JP McManus and John Magnier between them own 15 per cent of the company's shares. Although David Gill is widely seen as a talented successor to Mr Kenyon, the suddenness of Mr Kenyon's departure and the ambitions of the club he has gone to, can only weaken United's chances of putting up a successful defence should its independence come under threat.

BUSINESS RIVALS: HOME AND AWAY

CHELSEA

Rescued by the Russian entrepreneur Roman Abramovitch earlier this year, when the club was drowning in debt.

Relatively well known in Europe, thanks to its signings in the Nineties but it is less well known in the Far East.

The Chelsea Village concept of hotels, restaurants and a sports centre is a financial drag on the group.

Chelsea's stadium is regularly filled to its 42,500 capacity

MANCHESTER UNITED

Market capitalisation reached £1bn at the height of the internet boom but the club is currently valued at £450m.

The club has sponsorship deals with Vodafone and Nike.

United boasts of some 50 million fans worldwide, many times the numbers claimed by any other club.

Its stadium capacity is 67,000.