Can the red devils tame a beast of their making?

The wrangle between Sir Alex Ferguson and two Man U shareholders has left the club teetering on the brink of crisis. How could this have come about? By George Pitcher

I have long maintained that football is not a real business. Sure, there’s big money to be made, but it’s more like the money to be won at the racetrack or the casino, with a bit of glamorous merchandising and television rights attached. Certainly, it is not the stuff of predictable earnings growth in publicly subscribed equities markets.

So, one season you have Leeds United contending for the Premiership title; the next it is on the verge of bankruptcy. A number of non-Premiership clubs face ruin when lucrative TV rights evaporate. And all this is before you face the prospect that your entire financial destiny may rest on the physical welfare of a pony-tailed young man in his early 20s, whose language you may not speak.

You might believe that the major European clubs are in a class of their own – like Manchester United. But the latest machinations at Man U, as it is now almost universally branded, show that you can take the mud out of the game, but you can’t take the game out of the mud.

The mighty Man U is regularly described as the greatest football club in Europe – and, therefore, the world. It is a global machine, supported worldwide by many millions who will never visit Manchester, or indeed even know where it is.

Only Man U could have created the worldwide, showbiz-branded phenomenon known simply as “Beckham”, from any number of more likely Latin candidates. At close of trading on Friday, Man U was worth &£687m in market capitalisation – beyond the wildest aspirations of even the most optimistic predators; even rumoured suitors with the power of TV rights, such as Rupert Murdoch.

But there comes the occasional reminder that even Man U is just a football club. It may have a theatre that it calls the Theatre of Dreams and an international brand value, but its essential business offer is no different from, say, Stockport County – it just got more lucky.

The same rain falls on Man U as falls on the lower echelons of the Football League. The same is asked every weekend of its players, they just drive bigger cars; the midfield talent is similarly bullet-headed, they just get paid more for their memoirs at Man U.

None of these essential truths is more apparent than now, when the future prosperity of the demi-god of the Man U universe is threatened. Its manager, Sir Alex Ferguson – a man never more revealed than by his resentment of David Beckham’s contribution to his club’s brand value – is under pressure from shareholders over his dealings in horse-flesh and the transfer markets.

Irish tycoons John Magnier and JP McManus, of whom it is probably fairest to say that relatively little is known, together own a little more than 25 per cent of Man U. At closing prices on Friday, this stake would be worth something over &£170m.

Magnier has a beef with Ferguson over his split of breeding rights from champion racehorse Rock of Gibraltar. This has grown as acrimonious as the disputed ownership between Spain and the UK of the real Rock – and Magnier doesn’t look like a man you cross lightly.

With McManus, Magnier is also raising questions about dealings in the player transfer markets and, in particular, commission arrangements. Magnier and McManus want the Man U board to review Ferguson’s contractual arrangements; he is poised to renew for another three years.

There is no indication that the Irish shareholders want Ferguson out. They simply want him on a one-year rolling contract pending investigation of their concerns. They are threatening to go to the Financial Services Authority and to call an extraordinary general meeting if they perceive that Man U’s board isn’t taking its relevant corporate governance responsibilities seriously enough.

Meanwhile, the Man U board has to tread carefully so as not to upset the notoriously volatile Ferguson. Known as “The Hairdryer” because of his tendency to intimidate verbally even the most belligerent of players, Ferguson’s bosses have to tread carefully.

And there is the very absurdity of Man U’s problem. Here is a business, worth more than half a billion pounds, in an industry that routinely hires and fires managers depending on the vagaries of their performance, whose board is entirely beholden to what, in any other industry, would be the shop-floor manager.

Man U chairman Sir Roy Gardner is an executive of considerable skill and experience. I knew him a little when he was finance director of British Gas.

Much of the trouble there in the mid-Nineties related to Cedric Brown’s remuneration as chief executive. That was trouble at the top and there was little Gardner could do about it. But had there been concerns about a blue-collar manager, however talented and valuable to the business, management inquiries and action would have followed immediately. Now Gardner and his chief executive at Man U, David Gill, find themselves in the absurd position where their manager holds the whip-handle. They are, perhaps, victims of Ferguson’s success.

But it is a circumstance that will not best serve shareholders’ interests – and that doesn’t just apply to the Irish ones. If Premiership football clubs are to be taken seriously as an industry, we need to know who is in charge – and whether they’re run from the boardroom or the changing-room.

George Pitcher is a partner at communications management consultancy Luther Pendragon

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