Business With Blain: Controversial Ratcliffe At A Crossroads
Jim Ratcliffe has made some controversial decisions at Manchester United, and they need to start paying off on the pitch.
By JohnB
Sir Jim Ratcliffe, through his company INEOS, took a significant (27.7%) but minority stake in Manchester United in February 2024, in a deal that allowed the Glazer Family to retain overall control of the business, with INEOS taking control of the club's sporting operations, including transfers and board appointments.
Ratcliffe, with his founding partners, has made INEOS the fourth largest chemical company in the world and with interests across operations in fuel, packaging and food, construction, automotive, pharmaceuticals, textiles, and professional sports it has also made Ratcliffe one of the UK’s wealthiest individuals with a net worth of £17billion, according to the Sunday Times Rich List.
“It is the greatest club in the world so it should be playing the greatest football in the world. But it is not a light switch. We cannot just switch a switch and, all of a sudden, United are going to be playing football at the level of Real Madrid because they have not been for the last 11 years. That takes time and it takes a bit of patience.”
-Jim Ratcliffe
Fans of the Red Devils were excited by Ratcliffe’s arrival, a lifelong United fan, one of their own, and now in control of what they held as most important, on-field performances. The average United fan has no time at all for the Glazer Family and so the expectation inevitably increased that such a successful businessman could turn around one of the world’s biggest football clubs. It is likely that they never considered the pain that may flow from running the business properly.
Ratcliffe, who now owns 28.94% of United following an increase in his stake late last year, set about asserting his authority and repeating the process that most people of his ilk do when they acquire [control of] a business namely getting costs under control, improving the quality of decision making and placing trusted individuals into key positions.
Leaders with his background rarely speak publicly about their business and employees other than in a controlled environment, such as the briefing of market analysts. Consequently, some of his public pronouncements have been stark, pointed and sometimes naive considering the appetite of football fans for jumping on every comment made by their beloved football club.
“The important thing is, I think, that we all observe the trajectory of Manchester United over the next two or three seasons, and the trajectory has to be in a good direction. So, I think that is how we should be measured by people.”
Ratcliffe then had clearly sign-posted his primary objectives and set about doing that in a focused manner, and it soon became clear that he intended to significantly reduce the huge operating costs that United had, improve cash-flow, and turn their highly effective income generation into a profit-generating engine.
That cost-cutting would occur throughout the business, almost walking the talk of “look after the pennies and the pounds will look after themselves”.
During the process he has streamlined the organisation, removed historical benefits, made people redundant, increased ticket prices and made profound comments about past decision making and the quality of United’s players, while he hasn’t been shy at making big statements about the club’s financial status, even if on occasions they have appeared contradictory to what outsiders might believe. For example, he insisted that the club could go bust by the end of this year if he had not made some crucial decisions.
“But they are necessary to put Manchester United back on a stable footing. If people want to see Manchester United winning trophies again then we have to do this stuff.”
In summary, then, Ratcliffe has made it very clear that United have been run badly for many years and that while the process of change can be very uncomfortable and disruptive, what he is doing is for the long-term good of the club.
His own ambition is for United to win the Premier League title again by 2028. That target is three years away, and it remains clear that the sporting side of the business needs lots of attention to make that ambition a reality.
On the positive side, that period is around the average contract length of a Premier League footballer, and so some harsh decisions may have to be made if the Red Devils are unable to move on players who are currently on inflated salaries.
Such decisions may include cutting their losses or, and at worst, seeing players run down their contracts.
Ratcliffe, then, has a plan: One that will see short-term pain deliver long-term gain. Notwithstanding comments about its design, his vision for a new stadium is exciting and necessary, as United, like Real Madrid and Barcelona in Spain, need to improve or replace a tired stadium with one befitting of their stature.
United’s most recent financial results, for the third quarter of their fiscal year, show the impact of what Ratcliffe has done in the past year, and it is clear that if the trajectory continues, then United will return to profit.
A 15th-place finish in the Premier League, though, marked a disastrous season for United, bringing as it did a reduced income compared to their hoped-for top-six finish. More damaging is the lack of European football for next season, which across the board will reduce their overall income by up to £100million.
Bruno Fernandes choosing to stay at United rather than play in Saudi Arabia has cost them a transfer fee of around £100m, which would have eased their problem, meaning that while they have a fantastic player, United will have significant challenges complying with both the Premier League and UEFA versions (in subsequent seasons, perhaps) of FFP (Financial Fair Play), and so it remains to be seen how they can spend significantly on new players without removing some of their high-cost players, and specifically those Ratcliffe described as “not good enough" and those he said are "overpaid”.
United have already signed Matheus Cunha for upwards of £60m, and are seemingly about to spend as much on Bryan Mbeumo.
Alejandro Garnacho and Marcus Rashford are among the players deemed surplus to requirements by Ruben Amorim, who will rightly be under pressure heading into next term. But getting those players, and their big wages, off the books will be easier said than done.
Ratcliffe believes that the value of Premier League broadcast contracts is positively influenced by United’s global fanbase, and that should give them [and other select clubs] more influence.
Having benefited from what some thought was excessive relief previously in order to see the club comply with the Premier League’s PSR, United may need to rely upon exemptions again if on-the-pitch matters do not drastically improve.
Good read and a fair summary. Getting sub-standard players off the books, who are paid ridiculous amounts of money, is easier said than done as evidenced by Everton who have seen such players run down their contracts. You can see why Maino, Garnacho and more home talents are open to transfers. Difficult times ahead.
Very good piece.
The truth is, as those of us interested in Cycling, Sailing, Rugby and Football (my team is a Championship struggler) will know, Ratchiffe’s sporting endeavours all seem to be short term attention span and/or end up in rancour, then the courts and him making a big pay off.
Man U is in a far better fiscal place than many clubs in the UK and European leagues, but given the ManU fan base in Asia is shrinking and that loss being made up by fans of other Premiership clubs, Ratcliffe is again overstating Man U’s value to the TV value. Consequently, ManU should not be given any more leeway, it is a distortion of the game and other clubs would rightfully seek redress.