What does Premier League ratification of INEOS investment mean for Manchester United?
A previous version of this article was published on December 24, 2023
Fifteen months on from the Glazer family launching what they called a “strategic review” of Manchester United, a deal for Sir Jim Ratcliffe’s company INEOS to buy 25 per cent of the club has been ratified by the Premier League. Finally, United have received formal approval of the agreement reached by the Glazers and Ratcliffe on December 24, though completion of the deal is still subject to approval by the Football Association (this is required for the club to be able to participate in the Women’s Super League). There are also some outstanding regulatory requirements to be concluded.
The deal will see a shift in dynamic at the club. INEOS will take sporting control and is also investing $300million (£239m).
It is not the complete buyout the majority of fans had hoped for when the prospect of a “full sale” was mooted by the Glazers under a strategic review that became known inside the club as ‘Project Ruby’. However, the complex deal should bring fresh impetus to the football side, as well as outside investment for the first time under the Glazers.
Ratcliffe has acquired Class A shares, which are traded on the New York Stock Exchange, as well as some of the Glazers’ Class B shares, which are worth 10 times the voting rights.
As part of the deal, Sir Dave Brailsford, the former mastermind of cycling’s Team Sky, and INEOS Sport CEO Jean-Claude Blanc join the board.
Here is everything you need to know.
What’s the deal?
INEOS has bought 25 per cent of Manchester United in exchange for sporting control. The deal, which has cost around £1.3billion, means the club’s football operation will now be overseen by INEOS but the Glazer family, who have owned United since 2005, remain in overall charge. The Glazer family and Class A shareholders receive the same price of $33 per share.
The $300m cash injection will be used to improve Old Trafford and other infrastructure, and INEOS will have the casting vote on any decision related to football — eg, transfer policy or the future of manager Erik ten Hag.
You may be wondering how this is possible given the structure of the club’s shares.
United split their shares into Class A and Class B. The Glazers owned all of the Class B shares and they are worth 10 times the voting rights of their Class A equivalents, which are publicly traded on the New York Stock Exchange (NYSE). Crucially, if Class B shares are sold, they automatically convert to Class A. In the past, members of the Glazer family have sold their Class B shares.
The club has other shareholders not called Glazer, with Lindsell Train, a British investment management company, owning more than 20 per cent of the Class A shares. Other notable investors include Ariel Investments, Eminence Capital and Pentwater Capital Management.
When the United-INEOS deal was announced, it revealed that Ratcliffe had acquired 25 per cent each of the Class A and Class B shares. By offering Class A shareholders just as much opportunity to participate in the offer as the Glazers, INEOS hoped to minimise the risk of legal action from its fellow minority stakeholders.
So this isn’t the end of the Glazer era, then?
No, it certainly isn’t.
The Glazers owned roughly 69 per cent of the club, with about 31 per cent of shares held by non-family members, the vast majority of them by institutional investors.
Ratcliffe’s bid was initially directed solely at the shareholding owned by the Glazer family but, in the third round of bids, he proposed a deal that would see him gain a majority of slightly more than 50 per cent. This would allow Joel and Avram Glazer — the siblings who have taken the most interest in United — to stay on as minority shareholders.
The offer changed again when Sheikh Jassim’s Qatari group withdrew its bid in October and INEOS indicated it wanted to buy a 25 per cent stake in United.
Large sections of United’s fanbase have campaigned against the Glazers’ ownership since the family’s hostile leveraged buyout in 2005. Overnight, Manchester United were placed into £660m of debt, with half of that borrowing placed on the club itself and the other half on the takeover vehicle, Red Football. The split was pretty academic, though, as United were paying the interest and that bill was enormous: £113m in 2006 alone, against annual revenue of £168m.
Yet, the Glazers have opted to stay on. How Ratcliffe and INEOS will navigate the failure to negotiate a clean break will be fascinating.
What has INEOS promised for Manchester United?
When INEOS — whose secret name for the bid was ‘Project Trawler’, named after legendary player Eric Cantona’s famous quote — announced its bid for United in February 2023, its headline was an attempt to “put the Manchester back into Manchester United”.
“We would see our role as the long-term custodians of Manchester United on behalf of the fans and the wider community,” the company said. “We are ambitious and highly competitive and would want to invest in Manchester United to make them the number one club in the world once again.
“We also recognise that football governance in this country is at a crossroads. We would want to help lead this next chapter, deepening the culture of English football by making the club a beacon for a modern, progressive, fan-centred approach to ownership.
Manchester United sale on The Athletic…
“We want a Manchester United anchored in its proud history and roots in the north west of England, putting the Manchester back into Manchester United and clearly focusing on winning the Champions League.”
That all sounds very nice but what does it mean in terms of Ratcliffe’s plans for United?
Well, one criticism of INEOS at Nice (the club they own in France’s Ligue 1) is that Ratcliffe and his staff put too much faith in the figures that were there before them, believing the same structures only needed greater investment to improve results. They are unlikely to repeat the same mistake at Old Trafford.
Ten Hag’s position as manager has come under scrutiny, not helped by elimination from the Champions League in the group stage, and speculation about the Dutchman’s future is inevitable under the new minority owner.
INEOS executives will form a view on his suitability for the role through its assessment of United’s football operations, though figures close to the INEOS bid have previously expressed admiration for the work Ten Hag has done at Old Trafford.
Elsewhere, Patrick Stewart has been filling the role of interim CEO following the departure of Richard Arnold. Omar Berrada will take on that role permanently in the summer, having been recruited from Manchester City. Blanc, the former Juventus chief executive who left a high-ranking role at Paris Saint-Germain to oversee the entire INEOS Sport portfolio, is expected to play an influential role at United and will be offering strategic advice.
Brailsford, knighted after the London 2012 Olympic and Paralympic Games for taking Britain’s cycling teams to new heights, is set to play a significant role. The 59-year-old is undertaking a review of existing operations before implementing changes.
The future of football director John Murtough is unclear. The indications are Brailsford is aiming to appoint a sporting director to oversee operations as well as a transfer specialist to refine recruitment. This has been interpreted by some as terminal for Murtough, and some people at the club anticipate his departure eventually, but sources insist no decision has been made.
Sources close to the INEOS bid, speaking on condition of anonymity when relaying private conversations, have told The Athletic that Ratcliffe sees the improvement of infrastructure at Old Trafford and the club’s Carrington training ground as essential. His proposal also included a statement of intent to invest in the women’s team at United.
Before the deal was announced, it emerged Ratcliffe was prepared to commit $300m of his wealth for infrastructure upgrades at United.
While that would be insufficient to completely fix the myriad issues at Old Trafford and Carrington, it is a step in the right direction. United’s latest set of annual fiscal results, for the year ending June 30, revealed that they now owe more than £1bn through a combination of net debt, their revolving credit facility and outstanding transfer payments.
A key element, however, is that Ratcliffe has bought a minority stake — rather than the complete buyout proposed by Sheikh Jassim’s rival bid — and Ratcliffe has not said he will wipe United’s existing debt.
However, behind the scenes, the INEOS bid has provided assurances that no “fresh debt” (ie, any money borrowed to acquire United) will be landed onto the club’s balance sheet. It will instead be borne by INEOS.
Ratcliffe, though, does not see the need to “keep tipping more money into the bucket” when it comes to United.
Should United fans get excited about future investment?
Even though United will now be part-owned by one of Britain’s richest men, Ratcliffe will still have financial fair play (FFP) rules to keep in mind.
The Premier League’s FFP rules allow clubs to lose £105m over a rolling three-year period, providing those losses are filled by cash injections from the owners. If you breach that limit, you could be looking at a points deduction, as we have seen with Everton. But United have little to worry about there.
They were in this season’s Champions League, even if they did not progress beyond the group stage — and it is here that the new investors may want to pay close attention. Cost control will be ensured by UEFA’s new ‘squad cost rule’, which will (eventually) limit clubs to spending 70 per cent of their revenues on the wages of their players and coaches, but not the non-playing staff, as well as the cost of transfers and agents’ fees.
It’s something to keep in mind — particularly at a club with a less-than-stellar record of selling players for profit.
Who is Sir Jim Ratcliffe?
Ratcliffe, 71, owns the petrochemicals giant INEOS, which says it comprises 36 businesses at 194 sites in 29 countries with more than 26,000 employees.
His net worth, according to the Bloomberg Billionaires Index, is $13.6bn but the Sunday Times Rich List — an annual list compiled by the British newspaper — estimated him to be worth £29.6bn, making him the second-richest man in the UK. How much he is actually worth, however, is open to debate — as The Athletic’s Matt Slater outlined in October.
Ratcliffe describes himself as a boyhood United fan and says his favourite player was Eric Cantona, who contributed to a video for Ratcliffe’s 70th birthday last year, along with David Beckham and Sir Alex Ferguson.
Ratcliffe, however, did attempt to purchase Chelsea when the club was for sale in 2022, as well as offering Barcelona president Joan Laporta “two or three billion” from INEOS for a 50 per cent stake in Barca and a promise to never sell up.
He also told The Times in 2019 that he bought Nice rather than a Premier League club because “INEOS never wants to be the dumb money in town, never, never” and said through a spokesperson in November 2022 that investing in his Ligue 1 side “would represent much better value for our investment than buying one of the top-tier Premier League clubs”. But a year on, here we are.
Ratcliffe is not averse to the occasional change of heart, then; a UK tax exile who backed Brexit, albeit a soft one, moved INEOS’ headquarters out of the UK and then back again, despite thinking the UK government’s stance on fracking is “pathetic”.
He grew up in Failsworth, a few miles from Manchester city centre, and then his family moved across the Pennines to Yorkshire, where he was enrolled at Beverley Grammar School, just north of Hull.
He read chemical engineering at Birmingham University, then worked for Esso after graduation, before moving into private equity at Advent International.
In 1992, he co-founded chemicals firm Inspec, and six years later formed INEOS.
He also already owns two football teams: Lausanne-Sport, since 2017, and Nice, his other ‘local’ club — close to his home in the south of France, 13 miles west of Monaco.
And it’s not just football: Ratcliffe owns one-third of the successful Mercedes F1 organisation; the INEOS Britannia sailing team, helmed by English multi-Olympic gold medallist Sir Ben Ainslie; and the INEOS Tour de France-winning cycling team.
He also has a pub, The Grenadier in London’s Belgravia; Lime Wood, a five-star hotel in the New Forest, Hampshire, near Southampton; Le Portetta, a ski resort in Courchevel, France; and two superyachts, named Hampshire and Hampshire II.
Other assets include Belstaff, the clothing company.
“There are very few things I have done where I have ended up losing,” he said in Grit, Rigour & Humour: The INEOS story, a book released to mark 25 years since the company was founded. “There are things we have tried at INEOS, some investments we have made, where we were not successful and it is not enjoyable.
“Looking at Manchester United, my general view is that if we invest, even if the price tag is quite high, then in 10 years, not two years, we would probably be in a good place. I don’t think I am throwing my money away.”
What is INEOS?
INEOS is the fourth-largest chemical company in the world, and produces chemical and oil products that are used across industry and everyday life.
If you have used a product containing plastic, textiles, medicines or hygienics in recent years, chances are you have used something INEOS has helped to manufacture. It also produces chemicals and compounds used in the sport, including plastic used in artificial grass, stadium construction, seats and goal nets, rubber and PVC used in footballs and plastics in boots.
Ratcliffe has made his fortune out of spotting value in the market. INEOS is basically a conglomerate of businesses he bought between 1998 and 2008, which are still run in a relatively loose, federal style. In this regard, he is similar to Todd Boehly, the investor who ultimately won the Chelsea takeover contest.
At INEOS, he used high-yield debt to finance deals and started hoovering up unwanted operations from British Petroleum (BP).
In 1998, with a young family, Ratcliffe mortgaged his house and put all his money into the deal. ”If it goes wrong, you’ve lost all your money and completely screwed up your career,” he told the Financial Times in 2014. What did his wife think? “She accepted it was a risk.”
INEOS eventually bought Innovene, BP’s refining and petrochemical arm, in 2006, and in its first 10 years, INEOS completed more than 20 acquisitions. Its strategy was relatively simple: take on debt to buy the asset, reduce the outgoings via cost savings and build it back up.
When the global financial crash happened in 2008, INEOS struggled to deal with the sharp decline in oil prices and the company closed some factories. INEOS also broke a covenant and had to renegotiate debts with several banks at a cost of £804m. Ratcliffe asked the UK’s then-Labour government for a short-term deferral of a VAT payment worth £350m, but the request was turned down.
INEOS is also a major consumer of fossil fuels and, therefore, a significant generator of greenhouse gases such as carbon dioxide, and the company’s record on environmental concerns has often been questioned.
On its website, INEOS insists that “sustainability is fundamental to how we do business”.
On the wall of the lift in the company’s headquarters in London, there is a giant compass covered with words and slogans “we like” in its northern half, and ones “we don’t like” in its southern half. In an attempt to explain the company’s DNA, “kids and sport”, “team players” and “work hard, play hard” are all in the northern half, as are “a beer” and “northerners”.
In Grit, Rigour & Humour, the company’s co-founder and chief financial officer John Reece is asked about its recent forays into more consumer-facing products such as building 4x4s, fashion and football.
“The logic was that we were very successful generating a lot of cash,” says Reece. “(But) you need to have a bit of fun — you can’t spend your whole life in chemicals.”
Hang on, can INEOS have stakes in multiple clubs?
‘Yes’ is the short answer. INEOS only has a 25 per cent stake in United and Nice are not playing in Europe this season anyway, so Ratcliffe can delay tricky questions about conflict of interest and multi-club ownership… for the time being.
His side are performing much better domestically in this campaign and are in contention to qualify for next season’s Champions League, even though they have slipped behind Paris Saint-Germain in the title race.
The indications are, however, that Ratcliffe will be looking to sell the Ligue 1 side eventually, with a price of £80m mooted, but that depends on whether INEOS increases its share in United.
Additional contributors: Matt Slater, Adam Crafton, Mark Critchley, Dan Sheldon
(Top photos: Getty Images; design: Sam Richardson)