Mark Kleinman: Ratcliffe’s cost-cutting results in Manchester Disunited
Mark Kleinman is Sky News’ City Editor and is the man who gets the Square Mile talking in his weekly Morning Wire column. This week, he tackles Ratcliffe’s own goal, Shawbrook setting the tone and a FTSE 100 Doomsday clash over pay
Ratcliffe’s cost-cutting results in Manchester Disunited
Sir Jim Ratcliffe might not like to admit it, but 2024 – his first year at Old Trafford – was something of an annus horribilis for Manchester United, the Premier League club in which he is the second-largest shareholder.
The Ineos tycoon might point to that memorable May afternoon for Red Devils fans when, wholly unexpectedly, United beat rivals Manchester City to win the FA Cup. Similarly, the recent derby at the Etihad when they produced an identical outcome with two late goals.
In all other respects, however, the 12 months since Ratcliffe struck his £1.3bn deal to invest in the club has been a disaster.
United’s performance on the pitch has had enough column inches devoted to it; suffice to say, though, that supporters’ booing forward Joshua Zirkzee off the pitch after just half an hour of the recent home game against Newcastle United encapsulates the mood around the club rather better than Sunday’s resilient performance at Anfield.
Worse, though, is the savagery of the cuts taking place off the field. I reported just after Christmas that United planned to notify trustees of the Manchester United Foundation within weeks that it was proposing to cut the benefits it provides to its charitable arm.
This followed reports elsewhere in the media that the club’s disabled fans’ group and the £40,000 it provides annually to an association of former United players would also be subject to cuts.
On top of this, hundreds of full-time employees have been let go, complimentary ticket allocations have been slashed and other perks pared back.
Allies of Ratcliffe point to both the sizeable financial losses United – once-regarded as the world’s biggest club – continues to record, and the injection of $300m from his personal fortune to fund infrastructure improvements as evidence to support his approach to cost-cutting.
Those allies are missing a crucial point. Manchester United is not a petrochemicals company with no connection to its local community. Instead, it is – or should be – part of the social glue which binds together disadvantaged communities in Greater Manchester. Ratcliffe needs to redirect his axe towards United’s underperforming squad, and reverse the charitable cuts which threaten to damage the reputations of both the club, and him.
Shawbrook IPO may shape London listing sentiment this year
Fish and chips, Morecambe & Wise, gin and tonic: bankers and new year optimism are about as predictable a pairing as any you’ll find.
Every January, M&A and equity capital markets advisers talk up the prospects for activity levels and deal sizes during the coming year. In takeovers, that talk has some merit, particularly in the context of overseas and private equity buyers looking to swallow up cheap UK targets.
The case for a resurgent IPO market in London is harder to make. As I reported on Sky News at the weekend, though, Shawbrook, the mid-tier lender, is lining up Goldman Sachs and other investment bankers to spearhead a float that could value it in the region of £2bn.
It’s not the first rodeo for Shawbrook, which was taken private in 2017 by BC Partners and Pollen Street Capital, the buyout firms.
The pair explored a sale or initial public offering of the lender in 2022, before opting not to proceed amid adverse market conditions.
Since then, it has had a number of dalliances with rivals about potential tie-ups. An all-stock merger with the Co-operative Bank was proposed but that was trumped by its takeover by Coventry Building Society, a deal which completed last week.
Starling Bank, the digital lender, has also been touted periodically as a prospective buyer of Shawbrook, and I suspect they may have come closer to a transaction than the market realises.
Without an obvious alternative deal, an IPO is the logical path to pursue – with Shawbrook’s shareholders keen to pursue it in the first half of the year. The appetite of public investors could set the tone for the entire market.
2025 set for Doomsday clash over bosses’ pay
January 6, a few minutes to midday: no, not the Doomsday Clock signalling how close humanity is to armageddon, but the High Pay Centre’s calculation of the point at which a typical FTSE 100 chief executive’s earnings exceeded that which an average worker will make in the whole of 2025.
This feels like a particularly critical year for the debate about the rewards accruing to those at the top of British business.
That’s because of polarising pressures which risk making the typical blue-chip chair seem ever more remote from the agenda of a group campaigning for fair pay.
On the one hand, a stagnating UK economy in which many workers will find their jobs disappearing, partly – though not solely – as a result of tax changes announced in Rachel Reeves’s October Budget.
On the other, growing momentum behind the shift away from London’s public markets to other financial centres, particularly New York.
I know of several FTSE-100 companies which are consulting with shareholders about remuneration policy reforms that could trigger substantial overall increases to the value of CEO compensation packages.
Granted, the higher numbers won’t feed through for some time because of multi-year vesting periods, but FTSE chairs should be aware that this year – possibly more than any other – they will need to go into bat publicly to defend what they are forking out for their bosses.