Man Utd deal is messy substitute at trophy price

Own goal. Jim Ratcliffe has a long way to go before reaching football glory with Manchester United. After 12 months of pressing the Glazer family, the British chemicals tycoon has settled for a minority stake in the Premier League club. His deal values the Red Devils at a hefty $6.2 billion including debt, according to a source familiar with the matter. But it also leaves him without a clear path to control, and with an uncertain turnaround ahead.

Ineos-founder Ratcliffe had been competing with Qatari businessman Sheikh Jassim bin Hamad al-Thani after the Glazer family put the club on the block last year. The final deal sees him buy just a 25% stake in the club‘s super-voting Class B shares from the Glazers, and launch a tender for a similar amount of its listed Class A shares. The implied valuation of $6.2 billion including debt is equivalent to nearly 8 times Manchester United’s revenues in the year ending June 2023, more than the 5.7 trailing multiple paid by a consortium led by Todd Boehly last year for Chelsea FC.

Ratcliffe is getting relatively little in return. After factoring in an additional $300 million investment, his stake in the club will rise to 29%, according to a person familiar. But that would still leave the Glazers with a dominant 49% stake. True, they have also given Ratcliffe two board seats and operational control of the club’s football activities. But that arrangement is up to the board, and could lead to tensions if the group’s commercial and on-pitch interests were to clash. The family will also be able to force Ratcliffe to sell out in the event of any other takeover offer that values the club at the same $33 a share price he paid, or more.

The bigger question is whether the deal will help the club’s fortunes on the pitch. The Red Devils have not won the UK Premier League since 2013, and this season were knocked out of the UEFA Champions League, Europe’s major club competition. Ratcliffe will invest an extra $300 million in the club, but the cost of renovating the Old Trafford stadium and upgrading Manchester United’s training academy and facilities is likely to be much higher. The club's shares have barely risen since the deal was announced, and on Tuesday were worth just over $20 a share. For other shareholders, Ratcliffe's investment is unlikely to move the goalposts.