Frankfurt
The Case of Manchester United: The Importance of Governance
The case of Manchester United is a powerful example of how thoughtful corporate governance and alignment of interests can create value for all stakeholders. It is an example of how effective stakeholder collaboration can ensure not only economic, but also operational success – regardless of the type of investment or ownership.
The challenge
Following the retirement in 2013 of Sir Alex Ferguson, who had led Manchester United to become one of the world’s most successful football clubs for 26 years, the club faced new challenges. Despite significant economic and commercial success, Manchester United was unable to achieve operational success and match its past sporting achievements. Increasing competition in the Premier League and instability in the manager’s position – eight changes in ten years – led to a certain destabilization of the internal structures. Fan confidence threatened to erode, which could have a long-term impact on the club’s commercial success.
The family ownership structure, which controls 96 percent of Manchester United’s voting rights, recognized the growing pressure and began evaluating various strategic options. Partnerships as well as a potential sale of the club were discussed with the goal of finding a solution that would ensure the long-term success of the club.
Our impact
Having worked successfully with INEOS Chairman Sir Jim Ratcliffe, in particular on transactions, performance and strategic issues relating to his multi-sport portfolio (football, cycling, Formula 1, rugby and running), we were asked to develop a corporate governance structure that would serve the interests of both the owner family and other stakeholders. Our goal was to create a sustainable foundation that would combine commercial and sporting success and equip the club for future challenges.
In close consultation with all stakeholders, we developed an effictive corporate governance model that kept the commercial ownership of the club in the hands of the owning family, while transferring the sporting management and responsibility to the new minority shareholder. Following Sir Jim Ratcliffe’s investment in Manchester United, the Board of Directors consisted of eight members: four representatives of the family that owns the club, two members representing the interests of the minority shareholder, and two members representing the interests of the other shareholders. The management team comprised the two co-chairmen of the owner family, the CEO and the CFO, who were selected by the minority shareholder. This division of responsibilities ensured that the club benefited not only from a strong and successful business strategy, but also from INEOS’ expertise in improving the performance of sports teams.
In addition, it was important for us to create a common strategic narrative that would bring together the interests of stakeholders – from fans to shareholders – and provide clear guidance on the future direction of the club. The cohesive vision of “Sporting Success is the Basis for Commercial Excellence” enabled us to further unlock the commercial potential of Manchester United, while at the same time laying the foundation for sustainable sporting success by coordinating the necessary investment in infrastructure.
The results
The new corporate governance model have been well received by all stakeholders and have enabled Manchester United to take rapid and focused action to optimize the football operations structure. In addition, the expertise and power of INEOS has been used to attract experienced executives with strong track records to the new project. The trusting collaboration between majority and minority shareholders in the boardroom has been instrumental in bringing both stability and a sense of new beginnings to the organization. Thanks to the clear division of roles in the corporate governance model and the transparent cooperation in the boardroom, the club is ideally positioned to continue to be commercially successful with the experience, networks and expertise of INEOS and to build on past sporting glories.
