Is the Ratcliffe approach the right way to run Man Utd? | The Football Boardroom

27:59Henry:The debt everyone talks about. This summer Manchester United refinanced some of the loans that have been around this place for over 20 years since the notorious Glazer leveraged buyout. For the audience's benefit, what does that mean? They had mortgages that were maturing and needed extending. Many of our listeners will have been in that position. Many people who've tried to refinance their mortgage recently will have noticed that maybe their prior mortgage was costing them less than they do today. Manchester United had about£400 million and one facility that was costing them 3.5%. They refinanced that loan this summer.

28:43Henry:It's now costing them 5.5%. So they're paying more. The good news is they've extended the loans for a reasonable period of time. The bad news is it's costing them more money. Total debts today, gross, okay, are between£900 ,000 ,000 and£950 ,000 ,000. And they're now costing them maybe 5.5 % per annum. So maybe 45 to 50 million pounds of interest at least per annum. I mentioned early EBITDA, a measure we've talked about on this show. Our audience should think about it as operating profit, cash profit. Those of you who've got your own private business, you have your turnover, cash in, and you pay your wages to your staff.

29:28Henry:Maybe you pay your rent. Maybe you pay your utility bills. that turnover less those cash costs is your operating profit or EBITDA. Man United is the biggest in the Premier League. Last year,£184 million. This year, it's going to be between£200 and£210. By this year, I mean the year to summer 26, before we're back in the Champions League. So£200 million of profits before we go and buy footballers, before we pay that interest. Well, that relationship to interest is important. OK, 200 million of profit, maybe 50 million of interest, plenty of coverage. Put it another way, H. Again, lots of Man United fans ask me about this.

30:13Henry:Please put it another way. OK, think of it as your house. OK. If you've got a house worth half a million pounds, Man United five billion pounds, and you've got a mortgage of 100 ,000 pounds, you probably feel pretty comfortable. The mortgage relative to the value of the home, Man United's got maybe£950 million of debt. We know the club's worth£4 or£5 billion because that's what Jim Radcliffe paid for it. And unlike any other club, Henry, Manchester United is still listed on a stock exchange, which tells us what the market value of the club is today, nearly£4 billion. So this is not a philosophical conversation about whether we like debt.

30:53Henry:Every listener to this show knows your and my view on that. But Jim Radcliffe didn't put this debt on the club. When he bought the club, he used his own cash. Just on the mortgage analogy, if, say, your house is worth£500 ,000 and you've got 20 % mortgage,£100 ,000, the majority of people are taking out that£100 ,000 mortgage because they don't have£100 ,000 in their savings. But the Glazers will have, I mean, they're worth absolute fortunes. They will have a billion. So why don't they write off, not write off the debt, but why don't they pay off the debt? Is that naive on my part? No, it's a very reasonable question.

31:31Henry:But businesses of all shapes and sizes are used to having a balance of debt and equity in their financial structures. and most businessmen, chief executives or owners in most industries and businesses will find what's called the optimal mix of debt and equity in their funding structure. And on debt, they'll be looking at how easy is it for me to cover the cost of that debt from my profits. And that's the framework that people doing leverage buyouts applied at Manchester United and other clubs where that occurred in the past. And I've just said to you, 21 years into this regime, can Manchester United afford the interest on those loans?

32:25Henry:Yes, it can. Should they have been there in the first place? In my opinion, absolutely not. But very few businessmen, and I include Jim Radcliffe in this, Jim Radcliffe in ponying up to buy effectively the ability to control this football club, putting up the best part of$1.6 billion, over a billion pounds of his own money, it took that to buy the Glazer shares and some of the public shareholders. It would have been unlikely he'd have said, oh, and by the way, you know, there's a loan sitting there that the club can comfortably afford. I'm going to use my money to pay them off as well. He wanted to bring his money to bear, probably to invest in the football operations, either in players or maybe long term in the stadium.

33:12Henry:So I would say it would be pretty unusual to voluntarily repay loans if they are affordable. Please, to be clear, I'm not opining on the philosophical, the rights and wrongs of having those debts sit on this football club. I'm talking about the position of the club today. Man United fans shouldn't think it is over leveraged or that it can't meet those obligations. Whether it could use those profits more wisely on football matters, obviously it could. Just on that, as a businessman and as a football fan, what is your perception of the Glazers? The cleverest owners in English football history and also the most loathed.

34:00it's quite a double trophy that well cleverest is a big is a big statement um well they're going to walk away with billions yeah yeah they are they have already without without putting their own money in i mean the payment in kinds as we saw in 2005 no i was picking up i'd like clever to be

34:18Henry:applied to brilliant recruitment okay or okay you know brilliant football tactics or lots of things that I value much more highly than pure money making. So, but on, yes, if your metric is spectacular wealth creation for yourself by buying a club for 800 million quid and putting very little money down and selling it over time for billions. By the way, before they sold, before Radcliffe came in, they'd probably taken a billion out already. And then, you know, they take a load out from Jim. And obviously, if Jim buys the rest or the whole club is sold, then this will have been all day. I mean, their stake today, I think, is about 50 percent left in the club.

35:01Henry:We know the club, you know, the stock market valuation is the best part of four billion. So they've still got two billion to come, having had maybe a billion out. So there's no question there are there are financial people who have no interest in football. don't even know what English soccer is who would definitely list that in the all-time most successful leveraged buyouts in history. So if that's what you mean by the cleverest, you're right. But yeah, also deeply unpopular because I think most fans can see that using Manchester United's own revenues which have largely come from the hard work of their loyal fan base whether that's in buying tickets whether that's in buying merchandise or indeed in the last 30 years, whether that's in subscribing to football on TV subscriptions.

35:50And initially the genius of Sir Alex Ferguson.

35:52Henry:Well, that's that's how it worked for the Glazers. But but yeah, football fans would not really have chosen as one commentator puts it really beautifully, accurately, fairly. You know, those interest charges are for the privilege of having the Glazers as owners. And that's a very ironic and accurate description of how a leverage buyout works. Manchester United's resource is being used to service a loan, whose purpose was to buy the football club. I am very clear is morally wrong. I don't believe it's right. Jim Radcliffe, who I said at the start of this show he would be perfectly happy to accept, has been a very skilful user of the debt markets in his petrochemical companies, very sophisticated user of the debt markets.

36:45Henry:Ironically, this summer, summer 26, not only refinanced many of his petrochemical assets in the current debt markets, but took the opportunity, I'm sure, to help with the refinancing at Manchester United. and that is what it is. I don't see those legacy loans being paid off until the entire club is sold one day. Let's move on from the loans and the debt, which I understand is such a big issue. Your point about the fact that he has learnt as he's gone on, which is such an important thing, I think we can see it in this summer transfer market in terms of the key thing I'm sure Manchester United fans would absolutely concur on this, was actually prioritising midfield.

37:35So they've got Andre Santos in, they've got Tielemans in, and yesterday they got Belieber in, who's probably the most important of the three in terms of they needed that defensive midfield. So he's absolutely focused on the priority, fantastic, but they still need a centre-half, they still need a left-back, there's still issues there. So do you think he will look at that going forward, or was it simply about addressing the key issue, as they did last summer in the attack successfully, as they've done with the midfield in this?

38:09Henry:Well, I don't actually agree that they have necessarily fixed those issues and I have a different take on it. And that is, as I said earlier, I would have viewed this investment in phases. And the most important priority was to get the club back in the Champions League because of the financial effects I've described to you. At least£100 million across broadcasting and then benefits into matchday income, benefits into commercial income. at least£100m of pure revenue, lots of which will fall to the bottom line, to a club that already makes£200m of EBITDA before they re-qualify for the Champions League.

39:01Henry:That is a financial profile that, in my opinion, allows Manchester United to strive for supremacy that they had for donkey's years and which, in my opinion, with competent management, they should have for the foreseeable future. We haven't even talked about the fact that if you were going to write a set of financial rules to benefit Manchester United, you'd have written the SCR rules. The new rules that started this summer. This club has prodigious revenues even when they're shit. When they're good, their revenues will be through the roof. They'll be up there touching Real Madrid, who are now, I think, at the billion-dollar level.

39:54Henry:It is a measure of how much waste has gone on in the post-Ferguson era at Manchester United. That, sadly, for the first time, I can't believe I would ever utter this sentence, I think they appeared eighth in the so-called money list Deloitte list of rich football clubs which is a measure of clubs turnover and that is for one reason only they still have dominant commercial income, they still have the biggest match day income but their broadcast income has been torpedoed by not being in the Champions League regularly and by not fighting for the top two slots in the Premier League and by the way I just want to land this point, quick segue it's really important that our football fans understand this that whilst I have said on the one hand, it's amazing how Manchester United have held on to its financial performance, despite underperformance, the cost of that underperformance has been, H, that their competitors have caught them up in financial terms.

41:02Henry:I never thought that I would sit here in 2026. You'd ask me any time in my football career, 08 to 2023, that I would be sitting with you chatting about the financials of the big six and would be saying that Man Utd would be making less money than City, Liverpool and Arsenal. That's what happened last year. Those three clubs were over 700 million quid, Man Utd 660 million quid. And this year, Manchester United will also be. Now, I've already explained, unlike those clubs, they make by far the largest profits. and that is the ultimate metric of financial success. But the reason they've been caught up is on-field performance now with the rewards on offer for success in the Champions League and the TV money in the Premier League for finishing position means that they have been caught up in this order by Manchester City, Arsenal and Liverpool, all of whom have benefited Henry from miles more European paydays from the Champions League.

42:09Henry:Now that United have got that back and this is the point I'm driving at I would like to have seen them go for it this summer. Yeah, absolutely. What do I mean by go for it? Elliot Anderson. Yeah, I'd have said well there have been three England players moved this summer. Morgan Rodgers to Chelsea from Aston Villa 117 Elliot Anderson 116 Forest to City Don't go down to 115 by the way And actually last week Smaller number Esri Konza 51 Villa to Arsenal Why? I mean they're crying out for someone like him But do not just You know Go with me on my I'm going to call it like my sort of you know I love my analogies I don't think Man United pursuing an Aldi business strategy fits with the brand to me they're Marks and Spencers food they need to be the premium product and yes out of the Champions League given pressing financial needs, given financial regulation.

43:30Henry:I absolutely sympathise that the Radcliffe regime's first priority was to grip and gain financial control over the football club, drive on efficiency, drive on profitability, get the club back on a sound financial footing. And they have done that. But these signings, from what you're saying, aren't going to take them up to PSG levels. Well, let me do the counterfactual. If we were sitting here today and our Man U audience were listening and they had signed Esri Konza at centre-back, Elliot Anderson at central midfield and Morgan Rodgers at wherever. Morgan can play 7, 10, 11, even 9. those three players if they sign those three players I guarantee you the entire football community your peers your rivals all you guys who do your your pre-season predictions you'd have had United first or second whereas I don't read anybody thinking Man United are going to win the league this year do you?

44:35Henry:Do you think they're going to win the league? It doesn't so my they're not shopping at Harrods I'm not denigrating the players I'm not denigrating the club I'm talking about business strategies. The business strategy does look to be about prudency, efficiency. They're spending plenty of money. But for a few dollars more, go and buy the absolute proven finished article who slots straight into the starting leaven. because honestly, Henry, the payback, this is my point as a professional investor, the payback on those three players, as much as anything's certain in life, I would compare them to the effect of Dec Rice at Arsenal, the effect of Virgil van Dijk and Alisson at Liverpool.

45:31Henry:Just list the Manchester City signings where they just go and buy the best. Last January, they went and bought Semenyo and Gehi and they win two trophies. They don't hesitate. Manchester United never used to hesitate. We are the best. We demand the best. The best players want to come to Manchester United. We're in the conversation on all the best players every summer. I'm not even seeing them in the conversation. And I personally, as a strategic choice, having got myself back in the front row seat of Europe, I would have said, let's go meaningfully improve the first team. But is this Ratcliffe remembering what it was like?

46:14Was it the Richard Arnold quote of having burnt through a billion? And actually, your point about learning, your point about austerity, actually, that is still, in a way, inhibiting Manchester United in this transfer window.

46:28Henry:I think it is. I think that there may well be a gradual migration towards higher capital spending in the market. But certainly it's human nature. I've seen it so often in the boardroom. I think they're pretty pleased with the way last summer went, which would have been seen as buying mid-level proven Premier League players for reasonable money. Baleba is another example of that. Yuri Tielemans is another example of that. I personally, Villa fans, will know that was a big part of what we tried to do at Villa. I'm a great believer. Take out what the Spanish call riesgo de adaptación. the risk of players moving from foreign markets, foreign leagues, and not adapting quickly.

47:27Henry:I learnt that lesson hard in football. I like players who've been there, done it in that league. Look at some of the great signings we did at Villa in that era. You know, Watkins, Martinez, Esri Konza himself, Matty Cash. These are players who didn't have adaptation risk. They settled immediately. So I think maybe Man United applied to that a bit. But I would say, Rodgers, Elliot Anderson, youthful and their plug and play. That's my point. And Convo slightly older. That's my point. You've landed on the right conclusion here, OK, which is that try and de-risk those signings. But I think they've drawn the wrong conclusion about paying top dollar for the best talent.

48:14Henry:In terms of transfer fee or wages as well? certainly in terms of what it takes to land the best players in the transfer market. Could they afford Elliot Anderson's wages that he's getting at City? Yes, most definitely. Most definitely. So why? Well, because the other side of the equation is, of course, you've got to be born brutal at getting players out as well. My takeaway is this was the summer where they could have said we need to get Manchester United back on the top of the pile. And I'll link it to two other important themes that are hanging out there. We know the stadium project is a big part of the value creation play here for Ineos and the Glazers.

48:56Henry:And I've talked about phases. To me, that's most definitely phase three. Phase one, stabilise, change the culture. Stage and get back into the Champions League. Stage two, start winning trophies, but going very deep in the Champions League like they used to every year and be first or second in the Premier League like they should be with their financial position. Having done that, that's the context where you might seriously entertain taking your capacity from 75 ,000 to 100 ,000. You need to be firing on all cylinders to achieve that, not least aged because you've got to pay for that stadium. You've got to pay for that stadium.

49:36Henry:And that is the best estimates I've seen now are certainly the Foster and Partners design I've seen. you know that's a two billion pound project is it easy so so and you know that's going to need um a very significant uh mortgage package because no stadium's been built in the world without a significant mortgage package i don't know let's let's play some numbers let's say that it's let's say it's got an 80 mortgage on it that's 1.6 billion of borrowings it's going to need the interest on that interest on that's going to be yeah the best part of 80 million quid a year so you need Manchester United to be making 80, 90, 100 million pounds more from football performance plus the 100 million pounds maybe the 80 to 100 they'll get from those extra 25 ,000 seats this starts to look like a viable project but I would argue only if you fixed football first and for Manchester United fixing football isn't you know fighting third, fourth, fifth it's being nailed on fighting for the title going deep in the Champions League.

50:44Henry:And to do that, and I say it again, my strategic approach this summer would have been to say, let's go get Elliot Anderson. Let's go get Esri Konza. Let's even go get Morgan Rodgers because those players meaningfully increase the percentage likelihood of us winning big trophies this season and going really well in the Champions League. They may do, but I'm talking here about risk management. I'm talking about the expected value of that investment. And the expected value on that, that would have been, what,£170 ,000? Yeah, the best part of£300 million of spending, the best£300 million they could ever have spent.

51:26Henry:Proven Premier League performers, we know how good they are because their rivals bought them unhesitatingly. You know, Arsenal have got Esri Konza at cover, right back and centre. He won't even be a starter if the CB's in the right. Seven centre-backs. You know, whereas he walks into the starting 11 at Man United. Elliot Anderson, you know, we know he hit Baliba coming out of Brighton. Is Kobaymenu the right fit? Is Thielamers the right fit? Elliot Anderson would straight in the middle. You're building around him. So the obvious question to all that, is Jim Ratcliffe giving Michael Carrick a fair chance?

52:01Henry:I don't know what Michael would really in private say to us about his beliefs on this team this is a guy who's been around the great Man United teams he would have stronger opinions than me even you on what good really looks like I wonder what he does privately privately think as a club legend as a midfielder who probably knows the positions best of all the people in the building that they're trying to fill. I agree, but it's not just midfield, is it? I'm talking about... But this summer's been about... It has, but I'm saying it should be about more than that. It's about being wall-to-wall top players.

52:44Henry:He knows what that looks like. He took Roy Keane's number, effectively. Yeah, exactly. I suspect he would share my view that they're on a journey. And I think Michael is thrilled. Look, Michael was an out-of-work manager who started well at Middlesbrough and it didn't quite end so well, who I think would have taken the interim job at Man United last January, probably unpaid. You know, he is absolutely in his DNA. He's Man U to his core. Great lad. Son in the academy. I'm chuffed to bollocks that it went so well for him. and I'm incredibly chuffed. We said he would and he did get the job full-time and he isn't complaining about anything.

53:32Henry:That's not the way I think that fell as wide. You know him much better than me, but he comes off as balanced, thoughtful, deep down. Does he know the current starting XI when compared side by side with some of the teams he played in isn't at the level? Of course he does. But would Michael Carrick have banged the table like I'm banging it today to go do 300 million of signings of those three England players? Michael doesn't bang the table, but I think he would make his point about what they need. Should he have done? Yeah. Could he have done? It's not a question. Because he's a head coach, he's not a manager, he's not like one of your Unai Emery, Mikel Arteta characters who has far more control in the building.

54:15Henry:No. Well, let's say, let's put it this way. We have seen, haven't we, a number of managers, including Mikel Arteta, who have proved their worth and as they've done so and started to deliver, then maybe their table-banging tendencies, shall we say, increase somewhat. And maybe that will happen more with Michael. I'm not focused. I don't like this phrase of backing the manager. I think that is a cop-out. I think ultimately we are talking about a generation of owners in the Premier League who are, like I was, professional investors whose job is to make their football clubs more valuable. The way you make a football club more valuable is by winning more.

55:02Henry:And if you're Man United, the way you make Man United more valuable than what Jim Radcliffe paid is by getting it right back up where it was for 30 years, basically finishing first or second in the Premier League and getting to at least the quarterfinals of the Champions League. And you do that, OK, you do that by fixing the team. And that's going to take more investment. And you buy proven A-listers. Just one final analogy on that, which you'll appreciate, is that when Michael Carrick actually went to Manchester United, the rondos that they had for the warm-ups at Carrington in the morning were split into two groups.

55:40The real legends group, those with the best technique, the skulls and players like that. And then the slightly less ones, all very good, who probably in the majority of them actually get into Manchester United starting 11 now. But just the split between the two obviously had the superstars, the Rio Ferdinand Scholes, people like that, the ones with the best touch, which obviously Michael gravitated towards. And that was known as the Cootes group. and then the other group which weren't quite as good but is still exceptional particularly by Manchester United's modern day standards was I think if memory serves was called the Barclays group still high end banking but not Cootes and I think what Manchester United need to do is a few more Cootes signings Verdict on Ratcliffe that's what I want from you

56:24Henry:OK, seven days to go I don't get the sense we're going to see them pluck a£100 million player from the hat in the next seven days we're very clear on that I honestly think that there's lots to like about having a guy rooted in the community, real fan, made his money elsewhere, an old style, an old style buyer, acquirer of a football club in Jim Radcliffe. There's lots about him that isn't old style, but ultimately, you know, versus, for example, a takeover by the Qataris. I think a lot of fans would have welcomed Jim. And I certainly did if that was the alternative. I think, as I hope we've portrayed.

57:11Henry:And it happens to all of us. When businessmen come in from the outside, they pretty quickly realise it's not like anything else they've ever done. and the good ones learn from their mistakes. And he's learned. Improve. And I'm sure he has learned. And as we sit here today, his biggest call to date, and this was on the back of, let's face it, the Ten Hag extension and the Amarine departure, which were terrible mistakes. The call to put Michael Carrick in charge as interim manager has been a spectacular success. They've laid the table. and I think it's now time to eat a beautiful gourmet meal and I hope that's the lesson they learn.

57:55Henry:We will watch and see. Jury out, but I'm optimistic in the long run.