Thirteen months after the Glazer family initiated a “strategic review” of Manchester United, a significant shift has occurred with the completion of a deal. INEOS, the company owned by Sir Jim Ratcliffe, has acquired a 25% stake in United, gaining control over sports-related matters and injecting $300 million into the club.
While this falls short of the complete buyout that many fans had hoped for during the discussions of a “full sale” under the Glazers’ strategic review, the intricate deal is expected to bring renewed momentum to the football side. Additionally, it marks the first instance of external investment under the Glazers’ ownership.
In recent weeks, legal experts have meticulously examined the final details of the agreement to ensure its contractual soundness. United’s non-executive board members, obligated to act in the interests of shareholders, are confident in their ability to address any potential legal challenges. Sir Jim Ratcliffe’s offer encompasses the acquisition of Class A shares, traded on the New York Stock Exchange, as well as the Glazers’ Class B shares, valued at 10 times the voting rights, a crucial step in finalizing the deal.
As part of this transaction, Sir Dave Brailsford, the former architect behind cycling’s Team Sky, and INEOS Sport CEO Jean-Claude Blanc are set to join the board.
United staff received an invitation to a call with interim CEO Patrick Stewart on Christmas Eve afternoon, with no specified subject. Stewart convened in his office at Old Trafford to apprise United staff of the investment details and introduce the new additions to the United club and PLC board.
While the formal approval process for the deal, in which all Glazer siblings will retain their positions at the club, is anticipated to take six to eight weeks, INEOS currently lacks official control over sporting decisions. This implies that Erik ten Hag’s role as the manager should remain secure for the time being.
Here is everything you need to know.
Explaining the Deal
INEOS, Sir Jim Ratcliffe’s company, has acquired a 25% stake in Manchester United, securing control over the club’s sporting operations. The deal, valued at approximately £1.3 billion ($1.6 billion), designates INEOS to oversee the football aspects, while the Glazer family, United’s owners since 2005, retains overall control. Both the Glazer family and Class A shareholders will receive $33 per share, maintaining parity in the purchase price.
The infusion of $300 million in cash will be directed towards enhancing Old Trafford and other infrastructure projects. Notably, INEOS will hold the decisive vote on football-related decisions, such as transfer policies or the future of manager Ten Hag.
Manchester United’s shares are categorized into Class A and Class B. The Glazers exclusively own the Class B shares, possessing 10 times the voting rights of their publicly traded Class A counterparts on the New York Stock Exchange (NYSE). Importantly, if Class B shares are sold, they automatically convert to Class A. Historically, members of the Glazer family have divested their Class B shares.
Aside from the Glazers, other shareholders, such as Lindsell Train, a British investment management company, own over 20% of the Class A shares. Notable investors also include Ariel Investments, Eminence Capital, and Pentwater Capital Management.
The announcement of the United-INEOS deal unveiled Ratcliffe’s acquisition of 25% of both Class A and Class B shares. INEOS aims to mitigate the risk of legal action from minority stakeholders by extending the offer equally to Class A shareholders, aligning with the opportunities presented to the Glazers.
Does This Mean The End of Glazer Era?
No, it certainly doesn’t.
The Glazers previously held about 69% of the club, with the remaining 31% owned by non-family members, mostly institutional investors.
Originally, Ratcliffe aimed to acquire only the Glazer family’s shares. However, in the third round of bids, he proposed a deal to secure slightly over 50%, allowing Joel and Avram Glazer to remain as minority shareholders.
The dynamics changed when Sheikh Jassim’s Qatari group withdrew its bid, and INEOS expressed interest in purchasing a 25% stake in United.
A significant portion of United’s fan base has opposed the Glazers’ ownership since their leveraged buyout in 2005, which plunged the club into £660 million of debt. Despite this, the Glazers have chosen to stay on. The intriguing aspect now is how Ratcliffe and INEOS will navigate the situation after failing to negotiate a clean break.
What commitments has INEOS made to Manchester United?
When INEOS, operating under the covert moniker “Project Trawler,” unveiled its bid for Manchester United in February, the primary objective was to “put Manchester back into Manchester United.” The company articulated a vision of becoming the long-term custodians of the club on behalf of fans and the broader community, aiming to reposition Manchester United as the premier club globally.
Expressing ambition and competitiveness, INEOS pledged to invest substantially in Manchester United to restore its former glory. The company acknowledged the pivotal juncture in English football governance and aspired to lead the next chapter by fostering a modern, progressive, and fan-centric ownership approach. The overarching goal was to revive Manchester United’s proud history, emphasizing its roots in the north-west of England and a clear focus on winning the Champions League.
However, the question arises: What do these statements actually translate to in terms of Sir Jim Ratcliffe’s plans for United? Notably, at Nice, the club owned by INEOS in France’s Ligue 1, there was criticism that the existing structures were overly relied upon, with the belief that increased investment alone would suffice for improvement. Such an approach is unlikely to be replicated at Old Trafford.
Erik ten Hag’s position as manager faced scrutiny after defeats and Champions League elimination, prompting speculation about his future under new ownership. INEOS will evaluate Ten Hag’s suitability through an assessment of United’s football operations, recognizing the positive work he has done at the club.
In terms of leadership changes, United’s chief executive, Richard Arnold, is set to depart at the end of the year, with interim CEO Patrick Stewart stepping in. Jean-Claude Blanc, former Juventus chief executive and part of the INEOS Sport portfolio, is being considered for the CEO role at United. Sir Dave Brailsford, renowned for elevating Britain’s cycling teams, is expected to play a significant role, potentially conducting a review of existing operations and implementing changes.
The future of football director John Murtough is uncertain, with indications that Brailsford aims to appoint a sporting director and a transfer specialist. While some speculate Murtough’s eventual departure, sources insist no decision has been made.
INEOS, under Ratcliffe’s bid, emphasizes the importance of enhancing infrastructure at Old Trafford and the Carrington training ground. Ratcliffe’s proposal includes a commitment to invest in the women’s team at United. Before the deal, Ratcliffe expressed readiness to allocate $300 million for infrastructure upgrades, addressing some of the club’s financial challenges.
Crucially, Ratcliffe’s bid involves acquiring a minority stake rather than a complete buyout, differing from Sheikh Jassim’s rival bid. INEOS has not explicitly stated its intention to erase United’s existing debt, but behind the scenes, assurances have been made that any borrowed funds for the acquisition will not burden the club’s balance sheet but will be borne by INEOS. Ratcliffe, however, is cautious about continuously pouring money into United without discernible need.
Should There be Excitement Among United Fans Regarding Future Investments?
Let’s assess the situation.
Despite Manchester United now having partial ownership by one of the wealthiest individuals in Britain, considerations of financial fair play (FFP) rules are still in play.
The Premier League’s FFP regulations permit clubs to incur losses of up to £105 million over a rolling three-year period, provided that the owners cover these losses through cash injections. Crossing this limit could lead to penalties, exemplified by Everton’s recent points deduction. Fortunately, Manchester United appears to be on solid ground in this regard.
While they participated in this season’s Champions League, even if they didn’t progress beyond the group stage, the new investors may find UEFA’s new ‘squad cost rule’ worth noting. This rule aims to ensure cost control by eventually restricting clubs to spend 70% of their revenues on player and coach wages, as well as transfer fees and agents’ expenses—excluding non-playing staff.
This aspect is crucial to consider, especially for a club with a track record that falls short in terms of selling players for profit.
