- The Observer, Sunday 22 July 2001
When history repeats itself at Manchester United, usually it is no more than the arrival of yet another Premiership title. Last week, though, witnessed another example of Groundhog Day, Old Trafford-style, which may eventually prove far more significant in United's history.
Businessman JP McManus first tried, and failed, to buy a stake in the world's most famous football club two years ago. Last week he was back, with friend and business partner John Magnier, and this time his luck was in.
Between them the two fabulously wealthy Irish entrepreneurs - McManus is a foreign currency speculator and the Republic's biggest gambler; Magnier the breeder of some of the world's finest racehorses and a keen punter - spent about £28 million on 10 million shares, giving them 6.77 per cent of the club.
The duo's unexpected emergence as Old Trafford shareholders may have delighted United manager Sir Alex Ferguson, who is a friend of both men, but it has unsettled the club hierarchy and many of those who already have stakes. This is due in part to the furtive way in which the pair acquired their holding. When their company, Cubic Expressions, bought an initial 2.9 per cent earlier this year, nobody knew who was behind the purchase. Registered in the British Virgin Islands, the firm hid its owners' identity. Even when Cubic bought 8 million more shares on 12 July and another 1.8 million the next day, the names stayed hidden. United had to issue a Section 212 notice to discover that Cubic was McManus and Magnier.
Despite the duo's understandable desire not to reveal themselves in case that drove up the price of the shares they still sought, their covert operation has left some at Old Trafford unimpressed. 'Manchester United get very nervous about secret shareholdings, which don't look good in a public limited company,' explained one club source. 'The fact that we had to force them to come clean does not bode well for whatever their future relationship is with us.'
More significantly, there is frustration at the fact that while the board was able to block McManus' 1999 attempt, this time they were powerless. There is also a feeling that, despite their huge wealth, Magnier and the former JCB driver are 'not the right sort' to be associated with a club where 70 per cent of the shares are owned by financial institutions such as insurer Clerical Medical.
Where most United investors are conservative, McManus and Magnier are risk-takers extraordinaire. They are thought to have made a staggering £400m-£500m between them in the currency markets during the euro's recent sharp fall against the dollar.
The reasons for the board blocking McManus's first bid do not bode well for the pair's relations with Old Trafford's powers that be, now they are in.
'They are heavy gamblers. Gamblers aren't good at long term planning. Is that good enough to be a big shareholder in Man United?' said another club insider. 'The board discouraged McManus. He wanted a seat on the board, which was unpalatable. His friendship with Alex Ferguson also counted against him. And there was also a feeling that if people like him had a strong shareholding, that would deter institutions from holding shares because they might not want to be in bed with people so different. But mainly it was the feeling that, as heavy gamblers, they weren't suitable.'
Friction is also likely if McManus and Magnier refuse to spell out their intentions. Is their 6.77 per cent merely a timely investment because the share price is so low, as they maintain? Or is it the precursor to a full bid for the whole club? The pair's intention to keep on buying whatever shares become available in the near future may indicate they are building a base from which a takeover could be a realistic possibility.
With millions more United shares apparently up for grabs, Cubic Expressions could soon overtake BSkyB, which owns 9.99 per cent, as the club's largest single shareholder.
Sources at Sky say the broadcaster has no intention of selling any of its stake. But the uncertain economic outlook seems to be persuading some of the insti tutions, which between them own 70 per cent of United, to convert at least some of their holdings into cash. Circumstances favour the pair's mission.
Ironically, the one major shareholder who could significantly assist them - Martin Edwards, chairman of United's football club arm, a non-executive director of its all-important Plc board and owner of a 6 per cent stake - is strongly opposed to their friend, Ferguson. For a while recently it looked as though Edwards would succeed in ensuring that the manager cut all his ties with the club when he retires next summer.
But after anger among fans at the secret manoeuvrings to oust the man who has delivered so many trophies, and fears among shareholders that such a move would damage United's image, Ferguson will now stay as a £1m-a-year consultant and father figure.
A confidant of Edwards admits his 'dismay' at recent events could encourage him to sell his 6 per cent, which is all that remains of the controlling interest he inherited from his father, Louis.
'Ferguson is staying after all, two of his mates are busy buying their way in and Martin himself has found himself increasingly marginalised in club affairs, so I wouldn't be surprised if he had considered selling his last shares,' he says. But would he sell to associates of a man he dislikes? That is unclear.
Edwards may feel a family duty to hang on for now, especially if he could frustrate any attempt by Ferguson to become chairman if McManus and Magnier eventually gain real power. Even if he does sell, it is unlikely to be soon. United shares are worth barely 40 per cent of the £4.10 they hit last year, when the club's valuation broke the billion-pound barrier.
But McManus and Magnier are taking a strategic stake because they are United fans and 'they think it's a good investment', says Oliver Butler, editor of Soccer Investor magazine.
'I'm not sure they know yet whether they want to take over the whole club or just watch their shares rise as the club increasingly exploits its TV and new media rights. Whatever they do, though, it's a win-win situation for them.'
