Turf war at Old Trafford

Old Trafford is in the business of drama but the quality prized most in the boardroom is control of the script. This week, as three multimillionaires spent millions on shares in Britain’s biggest football club, a terrifying thought will have entered the minds of the directors: could the battle for control of Manchester United be driven, at least in part, by a quarrel over a racehorse?

For some time now the racing world has buzzed with speculation about the row over Rock of Gibraltar, one of the most successful racehorses of recent years. It lies at the heart of an almighty falling-out between Sir Alex Ferguson, Manchester United’s manager, and John Magnier, one of the two multimillionaires who snapped up BSkyB’s 10% stake in the club.

This is a row where ego, money and reputation are on the line in a dispute that is very simple: Ferguson thinks Magnier, the most powerful man in the bloodstock business, gave him a half-share in Rock of Gibraltar; Magnier, with the reputation of his Coolmore Stud at stake, disagrees.

Huge sums are involved. Rock of Gibraltar, having won seven Group One races can command fees of £40 000 for each mare it covers. Its value now is probably more than £20-million but, if it performs well at stud for the next 15 years, it is conceivable it could generate fees of close to £200-million. If Ferguson is entitled to half those fees, the boy from Govan could be a very rich man indeed. Magnier’s claim, though, is that Ferguson was only entitled to one stud nomination.

The two men, once close friends, are now no longer on speaking terms — an irony because the supposed gift of half the horse was a verbal agreement struck before Rock had won a race. Ferguson has threatened legal action, but so far none has materialised. What happened this week, though, is that Magnier’s financial interest in Ferguson’s employer reached the point where he is effectively one of the kingmakers at Old Trafford.

Magnier, with JP McManus, now owns 23% of the club. That doesn’t buy control of any public company, but it does give immense influence. If the Irish pair plan to bid, they have the perfect platform to do so. If a rival multimillionaire wants the club, he or she will have to pay a price that is acceptable to Magnier and McManus.

As long as the Irish sit there with their shares Ferguson is in a horrible position. He is not working directly for Magnier, but the more he succeeds in his job, and the more trophies Manchester United collect, the more he adds to the wealth of the man he thinks has double-crossed him out of millions. For a man as proud as Ferguson, that will hurt.

But not everybody believes the Rock of Gibraltar theory. It is a conspiracy theory too far, they say, and certainly Magnier is doing nothing to promote it. He never speaks to the press — ‘I was brought up never to boast” is one of the few quotes attributed to him — but one of his aides in Ireland said, ‘Coolmore Stud and Cubic Expression [the vehicle that bought the Manchester United shares] are separate business interests and each involves different people.”

That is certainly true, but Cubic involves only one other person — McManus, the man who terrifies bookmakers with his aggressive punts on his own horses. McManus is certainly his own man, and not someone to invest tens of millions without good reason, but he and Magnier are as close as businessmen get. They are the heart of the axis known as the Coolmore Mafia.

The reason why the Rock of Gibraltar theory has, as they say, legs, is that it is hard to explain Magnier and McManus’s interest in Manchester United without an x factor. The pair’s investment so far is more than £100-million, which is a lot even for them: Roman Abramovich, don’t forget, secured the whole of Chelsea for just £60-million.

The club generated £35-million in cash last year, even before the windfall from the sale of David Beckham. More importantly, it has been producing healthy profits for most of its decade as a quoted company.

Given those qualities it was perhaps natural that it should attract long-term investors prepared to ride out the whims of the stock market. That was also the way Magnier and McManus presented themselves — we have no takeover ambitions, they consistently told the club.

So what are they doing now paying 239p a share for BSkyB’s 10%? Given the rumours that wealthy Americans and Russians are waiting in the wings to bid, this was a perfect opportunity for Magnier and McManus to cash in some serious profits on their original investment. In other words, they looked like natural sellers; instead, they have chosen to double up their bet.

If you don’t believe Rock of Gibraltar has anything to do with it, there are only three possible reasons for their move. Magnier and McManus may think United is still undervalued; they may have changed their minds about bidding; or they think someone else will soon pay even bigger bucks to make a full takeover offer.

The last explanation sounds the most plausible because there is a prime candidate — Malcolm Glazer, owner of American football team the Tampa Bay Buccaneers. Glazer already owns 8,9% of Manchester United and bought more than half those shares in the past two weeks.

Glazer is even more reticent than the Irish about his intentions. They, at least, were happy to speak to the Manchester United board. Glazer, though, has ignored every request from the plc chairperson, Sir Roy Gardiner, for a meeting. If he wanted to appear threatening he is succeeding.

Unlike the Irish, Glazer also has a record in owning sporting clubs. He has turned Tampa Bay from perennial losers to current Super Bowl champions and, even in his 70s, is highly active. Glazer looked more like an ageing university professor than a multi-millionaire, but with a fortune put at $1-billion he has the resources to make a full tilt at Manchester United, particularly if — as rumoured — he is prepared to sell the Buccaneers.

Alternatively, Magnier and McManus may be betting that somebody else will emerge as a bidder. Jan de Mol, the creator of Big Brother, is on the shareholder register with a 3,5% stake and is conceivably rich enough.

Even the optimists within Old Trafford now accept that a bid of some sort is inevitable. Shrewd men such as Magnier and McManus simply do not spend £60-million in one day unless they are very confident of making a profit on their investment. The betting in the City is that Glazer will buy the Irish stake and then bid for the whole company.

For Magnier, filled with fury over the Rock of Gibraltar saga, it might be the perfect outcome. Could there be a better form of one-upmanship than making tens of millions from a deal to sell the club to which Ferguson has devoted half his life? —

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