Rupert Murdoch’s Manchester United? How BSkyB nearly bought the Red Devils
It started with a business lunch. On 1 July 1998, Manchester United’s chief executive Martin Edwards tucked in the napkins with club lawyer Maurice Watkins and BSkyB chief exec Mark Booth. Having arrived in the somewhat unglamorous surroundings of a drab industrial park near Heathrow Airport, the United chief settled down to hear his opposite number talk about the potential of pay-per-view channels.
Instead, Booth dramatically upped the ante by announcing that his boss Rupert Murdoch wanted to buy United. Clearly, this called for a side order of chips.
United for sale
Edwards was no stranger to takeover talk. Partly unsettled by his unpopularity among the club’s support – expertly tweaked by Alex Ferguson whenever the team required investment – he had made it clear that he would sell at the right price, even if it meant ending his family’s 40-year presence on the United board. His father Louis Edwards had bought the shares to make himself a director the day after the Munich air disaster; chairman from 1965 to his death in 1980, Louis was succeeded by his son Martin.
One way or another, the younger Edwards had spent 15 years courting the investment he knew the club needed. He’d met Robert Maxwell to discuss a £10m bid in 1984, albeit rather grudgingly and mainly as a favour to a longstanding United director who knew the tubby tycoon, and quickly withdrew amid fan fury.
Five years later, Michael Knighton got much further – as far as embarrassing himself with keepy-uppies in front of the Stretford End. While Edwards had his doubts about the property developer, he knew the ground needed an expensive renovation – especially the crumbling Stretford End, for which Knighton promised a £10m makeover. He offered the same amount for Edwards’ 50.2% majority share.
When that deal collapsed, Edwards unsuccessfully offered it to fellow director Amer Al Midani for £15m. Al Midani had another nibble in 1991, heading a consortium which would have installed Bobby Charlton as chairman, but by then Edwards’ asking price had doubled.
So instead of seeking one buyer, United sought millions. On 31 May 1991, the club floated on the London Stock Exchange, selling 2,597,404 shares at £3.85 each, while retaining Edwards’ majority stake. The very public graph of United’s share price soon started to curve impressively upwards.
As it did so, Edwards realised the value in his own shares by gradually, quietly selling them off. He sold 1.6 million shares in March 1996 and another 2.2m that June, slicing his stake to 17.2% but raising £16.6m in the latter sale alone. As chief executive, he didn’t require majority shareholding to steer the club, and he was still welcome to the idea of a takeover from a rich outside source. But who would have that sort of cash?
In the early 1990s, television had revolutionised English football with a huge new £304m five-year deal ushering in the Sky-underwritten Premier League era. Recently renegotiated, the upcoming four-year deal had rocketed to £670m. But by the late 1990s, TV companies didn’t just want to fund clubs: they wanted ownership.
Largely thanks to football-driven subscriptions and advertising, BSkyB was Britain’s most profitable broadcaster. But the heavy investment in content wasn’t a sustainable model, particularly if the clubs would soon take their ball home.
By the digital dawn of the late 1990s, the accepted wisdom was that the Premier League’s collective bargaining would soon disintegrate in the sort of me-first fiscal selfishness that had led to the Premier League’s formation in the first place. The viewing figures clearly showed that United, Liverpool, Arsenal and the other big-name clubs attracted far more interest than your Boltons and Barnsleys. The feeling was that clubs would inevitably split their own cartel to strike individual TV deals with broadcasters, their matches to be accessed via subscription or pay-per-view.
Speaking to The Independent in April 1999, specialist football fund manager Tony Fraher was in no doubt whatsoever. “It is now fairly clear that, when the current Sky deal runs out in 2001, every club will be negotiating its own deals for the rights to broadcast its home games,” he insisted, before going further with a bold claim: “I reckon that 16 out of the 20 current Premiership clubs will be taken into media ownership within the next two years.”
Broadcasters wanted to own part of the content-creation machine, partly to enjoy some of the Premier League profits, but also to get on the gravy train. With BSkyB dominant, rivals wanted a piece of the action.
Luckily for them, shares in clubs were never more available than in the mid-90s. As more clubs rushed to the stock market, hoping to replicate United’s success – 18 clubs floated between October 1995 and October 1997 alone – so it became easier for broadcasters to buy in. As Fraher put it, “If you’re running a TV channel, you want people to watch, and football is one of the biggest draws. And the best way to ensure you have football is to buy a football club.”
So in 1998, Granada paid £22m to buy 9.9% of Liverpool; the following year it spent £47m to take just 5% of Arsenal shares and establish a broadband joint venture, with a further commitment to plough another £30m in for 4.99% more when planning permission for the new stadium at Ashburton Grove was granted.
Meanwhile, cable-TV company NTL spent hundreds of millions between 1998 and 2000, buying stakes in Celtic, Rangers, Newcastle, Middlesbrough, Aston Villa and Leicester through its subsidiary Premium TV. These were eye-watering figures for a broadcast medium which was panicking at the thought of its own cosy monopoly ending with the advent of digital TV; some were even muttering that this newfangled internet might be a problem, too.
But the biggest deal of all was the one that started to be thrashed out that day near Heathrow. It made sense for the dominant broadcaster to try to buy into the dominant team – although thwarted by newcomer Arsene Wenger’s Arsenal in 1998, United had won four of the first five Premier League titles. Even so, the size of the bid was astonishing. To take control of Manchester United, BSkyB were offering north of half a billion pounds.
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