Raine earned £25m from Man Utd sale to Sir Jim Ratcliffe

Sir Jim Ratcliffe outside Old Trafford before he purchased a 25 per cent stake in Manchester United
Sir Jim Ratcliffe and Ineos are now in charge of the sporting operation at Manchester United - Reuters/Phil Noble

Manchester United paid Raine Group $31.5 million (£24.9 million) to broker Sir Jim Ratcliffe’s £1.3 billion bid for a 29 per cent stake in the club.

The US merchant bank had first met with United in June 2022, five months before the Glazers announced a strategic review of the club and selected Raine to oversee the process as the club’s financial advisors.

Raine had previously brokered the £4.25 billion sale of Chelsea to Todd Boehly and Clearlake Capital in May 2022.

A filing on the United States Securities and Exchange Commission (SEC) said United’s board of directors had chosen Raine because they were regarded as an “internationally recognised investment banking firm that has substantial experience in transactions” and “familiarity with our company and the markets in which we operate”.

United launched the strategic review on Nov 22, 2022 with the process culminating 13 months later when Ratcliffe’s deal – in which he will also take complete control of football operations at Old Trafford subject to regulatory approval – was announced on Christmas Eve.

“The engagement letter between us and Raine provides for an aggregate fee that is estimated, based on the information available as of the date of announcement, at $31.5 million, all of which is contingent upon consummation of the proposed transactions,” the SEC filing read.

In addition, United have agreed to reimburse Raine for certain expenses, including “reasonable and documented” fees and disbursements of the merchant bank’s outside counsel and “to indemnify Raine and related persons against various liabilities, including certain liabilities under the federal securities laws”.

All the costs will be paid by United rather than the Glazers, who stand to earn £715 million from the sale of shares to Ratcliffe. The Americans are paying for the personal advice they received from Rothschild & Co.

Sale process involved 56 lawyers

In addition, United’s legal bill will also run into the millions after the club hired Latham & Watkins LLP to work on the deal.

A total of 56 lawyers from a host of cities including London, New York, Washington DC, San Diego, Houston, Washington, Orange County and Brussels all worked on the transaction.

Richard Arnold, who resigned as United’s chief executive in November, stands to earn $1.98 million (£1.56 million) should he opt to cash in a quarter of his 240,019 Class A shares, which are valued at $33 per share under the terms of Ratcliffe’s deal.

Patrick Stewart, United’s chief legal counsel who has been serving an interim chief executive in the wake of Arnold’s departure, and the club’s chief financial officer Cliff Baty will each receive a “completion bonus” worth twice their annual salary should Ratcliffe’s deal go through. That is expected to be worth a high six-figure sum to both individuals.

In addition, Baty could earn a further £446,000 if he tenders 25 per cent of his 54,112 Class A shares and Stewart stands to receive around £243,000 if he opts to do the same with his 29,437 shares.

Sir Jim Ratcliffe at Old Trafford sat next to Sir Alex Ferguson
Ratcliffe alongside Sir Alex Ferguson at Old Trafford for Manchester United's 2-2 draw with Tottenham - Getty Images/Matthew Peters

United losses of £26m

Meanwhile, United released their first quarter results for 2023-24 which revealed record Q1 revenues of £157.1 million.

However, United posted a net loss of £25.8 million for the period as revenue guidance for 2024 was downgraded from between £650 million and £680 million to between £635 million and £665 million following the club’s early exit from the Champions League.

United’s pre-tax loss of £32.8 million follows combined pre-tax losses of £182.2 million for 2021-22 and 2022-23, totalling £215 million.

Although United are allowed to make significant deductions for Covid losses, the academy, women’s team and community projects, the losses present challenges relating to the Premier League’s profit and sustainability rules (PSR).

Under PSR rules, clubs are allowed maximum losses of £105 million over a three-year period.

Ratcliffe has committed $300 million (£237 million) of additional investment as part of his deal which will provide valuable headroom on the balance sheet but this money has been earmarked for redevelopment work at Old Trafford.

United had £80.8 million cash in the bank and had drawn down £204.4 million of their revolving credit facility as of September 30, 2023.

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