After finally announcing Sir Jim Ratcliffe’s 25 per cent minority investment on Christmas Eve, Manchester United released the granular details of the $1.3bn (£1bn) deal moments after the final whistle sounded on Boxing Day’s 3-2 comeback victory over Aston Villa.
It is fair to say that the 241 pages of the filing with the U.S. Securities and Exchange Commission (SEC) is not as thrilling as Rasmus Hojlund’s 82nd-minute winning goal.
Yet this dense and lengthy deconstruction of one of the more complicated financial transactions in English football history will have longer-lasting implications than any three points.
It details how the initial and future share purchases will be executed, what remaining hoops the deal needs to jump through, and how the Glazer family and Ratcliffe will manage the transitional period before handing over sporting control to INEOS.
Here, The Athletic breaks down what is contained within those 241 pages and the vision of United’s future it sets out…
How will control of football operations work?
It may not be the full sale many United supporters hoped for when the strategic review was announced last year, but Ratcliffe’s minority stake comes with an important benefit: control of football operations at men’s, women’s and academy level.
In that respect, the main takeaway from the SEC filing is that the INEOS era at Old Trafford is essentially underway.
At this stage, due to the deal still requiring regulatory approval, the relationship between United’s existing football department and the incoming regime is one of consultation rather than outright control, but there are already limits to what the club can do.
Under these terms, United will not be able to sack Erik ten Hag or appoint a new director of football without consulting INEOS first, effective from the date of the agreement — that is, Christmas Eve this year.
Ten Hag has come under mounting pressure following United’s inconsistent Premier League form and elimination from the Champions League group stages, but he retains the support of the club’s hierarchy.
Whether that holds under INEOS’ reign remains to be seen, with Ratcliffe committed to a full and comprehensive review of United’s internal structures. In any case, the provision would appear to give the United manager a stay of execution until Ratcliffe’s deal is ratified at the very least.
On transfers, the filing reveals United had to submit a plan to INEOS outlining their intentions regarding signing, selling and offering players new contracts between now and the conclusion of the sale.
Any change to that plan before Ratcliffe’s investment is finalised must also be run past INEOS, including any deviations from it during the upcoming January transfer window.
For example, if a long-term injury to a player forces a sudden rethink in the market — as happened last January when Christian Eriksen’s three-month lay-off with an ankle injury led to Marcel Sabitzer joining on loan — then Ratcliffe’s team would need to be engaged first.
That is despite Ratcliffe’s investment still facing a wait of up to eight weeks for approval under the Premier League’s Owners’ and Directors’ Test. The deal also requires approval from the Football Association, the organisers of the Women’s Super League.
Once approval is granted, Ratcliffe will be able to appoint two directors to the club’s board as well as up to two directors to the club’s supplementary boards.
The filing confirms that Sir Dave Brailsford and Jean-Claude Blanc will be appointed to the football club’s board. John Reece, INEOS co-founder, and Rob Nevin, chairman of INEOS Sport, will join United’s plc board.
Ratcliffe will have the right to appoint two members to the plc board for as long as his stake remains above 15 per cent. If it drops below 15 per cent but remains above 10 per cent, INEOS will only have one member on the plc board.
What will happen with the redevelopment of Old Trafford?
On top of his $1.3bn acquisition of United shares, Ratcliffe will also commit $300million to be used for the redevelopment of Old Trafford.
The filing confirms that this $300million investment will come in two instalments — $200million once Ratcliffe’s minority investment is finalised, then a further $100million before December 31 next year.
And, interestingly, the $300m is not strictly ring-fenced for Old Trafford alone. Although the filing explicitly states that is the money’s intended use, it may still be put towards the club’s “ordinary course of business” if required.
In April 2022, United appointed Populous and Legends International as master planners and consultants for the future of Old Trafford.
Plans involving either the renovation of the existing ground or the construction of a new stadium on an adjacent site were subsequently drawn up, with the cost of the latter estimated between £1.2bn and £1.6bn.
Sources close to Ratcliffe have described the $300m as an initial investment, admitting that more funding will be required to restore Old Trafford to its former status as arguably English football’s leading stadium.
That is to say nothing of other infrastructure projects that Ratcliffe may deem necessary, such as improvements to United’s Carrington training ground.
More importantly, this additional $300m will take the form of equity — i.e. more shares in the club — and raise Ratcliffe’s minority stake to 29 per cent, reducing the Glazer family’s holdings to 49 per cent.
How much power will Ratcliffe have?
United’s shares are split into two categories — Class A and Class B. Class B shares have 10 times as much voting power as Class A shares.
Up until now, only the Glazer siblings have owned super-voting Class B shares and if those shares were sold, they automatically converted to the less powerful Class A.
Ratcliffe has purchased 25 per cent of the Class B shares — around 28 million shares in total — and, crucially, in a change of the rules, these will remain as Class B shares and retain their voting power at board level.
To do this, United will be required to amend their articles of association — the rules by which a company is run and governed. Had this been part of the deal, Ratcliffe would have paid the initial $1.3bn for around just 5 per cent of the voting rights.
By retaining the Class B shares’ power, Ratcliffe will instead hold 29 per cent of voting rights with an increased 29 per cent stake.
Whether Ratcliffe and the Glazers are aligned on major decisions put to a shareholders’ vote will be watched closely, although it is unlikely any differences will play out acrimoniously in public.
As part of the terms, both parties have agreed to mutual non-disparagement clauses. In other words, they will not make any public statement that criticises or disparages the other.
How much will the Glazers earn from this?
When it emerged that Ratcliffe’s offer of 25 per cent minority investment was preferred to the full sale proposed by Sheikh Jassim’s Nine Two Foundation, hopes of the Glazers’ ownership ending once and for all were dashed.
There was still a possibility that Ratcliffe could buy out some of the siblings and not others, though, particularly given suggestions that co-chairman Joel and Avram Glazer were more minded to stay on than their four siblings.
Instead, all six Glazers are staying put and diluting their shareholding equally rather than any one of them selling up entirely. The filing confirms they are each selling approximately 4.6 million Class B shares.
At the trading price of $33 per share, that amounts to $909million in total — or around $152million in each Glazer’s pocket.
That $152m is on top of the substantial amounts the Glazer siblings have earned through past share sales to other minority investors and the regular payment of dividends, which has become one of the most controversial aspects of their ownership.
Since 2012, United have paid out approximately £166m in dividends — the vast majority of which has been paid directly to the Glazers. That is about to change, though, at least temporarily.
Under the terms of this agreement, dividends will not be paid out for the next three years.
This is a policy the Glazers have been informally following over the past 12 months, having not taken a dividend payment since the end of the 2021-22 season, which saw United finish with their lowest points tally of the Premier League era.
That was also the year United posted a staggering £150m pre-tax loss, which has left the club facing an uphill battle to comply with the Premier League’s spending regulations — the Profitability and Sustainability Rules (PSR).
United paid out £33.6m in dividends that year — up from their usual pay-out of around £22m per year since 2016, due to a lower dividend payment during the Covid-affected 2020-21 season.
No dividends for the next three years would allow United more leeway with regards to PSR and UEFA’s Financial Fair Play regulations, with more money to invest in the playing squads and facilities.
What about any future sale? Is there a path for Ratcliffe to take full control?
As expected, there is no formal mechanism through which Ratcliffe can buy out the Glazers entirely included in this agreement.
Any such arrangement would have had to make the same offer to all shareholders — in United’s case, including investors holding Class A shares — and any informal agreement not fully disclosed as part of this deal would be contrary to New York Stock Exchange regulations.
There are, however, provisions that hand Ratcliffe an advantage over other minority shareholders if he wishes to increase his stake.
Under the terms laid out in the filing, the Glazers will not be able to enact a full sale of the club for a year following the finalising of Ratcliffe’s deal. And over that year, Ratcliffe will also have first refusal if the Glazers choose to sell any more Class B shares.
Not all the clauses regarding a future sale are to Ratcliffe’s benefit. After 18 months, if the Glazers receive an offer for a full sale, they will be able to compel Ratcliffe to sell his shares through so-called “drag-along” rights.
Drag-along rights allow a majority shareholder to push through the sale of a company by forcing a minority shareholder to sell up, although the minority shareholder must be able to sell their stake on the same terms.
If that happens within three years of the INEOS deal being finalised, Ratcliffe would receive at least $33 per share for his stake and make all his money back.
What happens if the deal falls through?
Although there is no expectation that Ratcliffe’s deal will collapse, agreements of this nature need to plan for every eventuality.
Should the Glazers have a change of heart and renege on the deal, they will be liable to pay up to $66million to compensate Ratcliffe and cover his costs. Equally, if Ratcliffe does not uphold his end of the bargain, he will have to pay up to $164million in fees.
All being well, however, the only obstacle to the deal being finalised is regulatory approval.
The filing sets out soft deadlines in this regard. If approval is not obtained by April 24 — four months on from the announcement of the deal — then an extension to June 24 will be granted. If approval has not been granted by that point, the agreement can be terminated.
Again, that is not expected to prove to be a barrier to the sale going through. At some point over the next eight weeks, a new era should dawn at Old Trafford, if it has not already begun.
