How a Horse Led to The Sale of Manchester United 🐎
Plus NBA considers relegation, VW's plan to takeover F1 and Adidas ditches Kanye.
Welcome to Athletic Interest.
When researching new video ideas, we sometimes stumble across stories that are difficult to translate into a full YouTube production but are also too good to be ignored. This week's newsletter is about one of these stories:
How a horse led to the sale of Manchester United.
From 2001 until 2002, The Rock of Gibraltar was the greatest racehorse on the planet. He set the record for the most consecutive major race wins (7) and won the horse racing equivalent of the Ballon d’Or.
Over his career, this horse became almost as famous as his owners, Manchester United manager Sir Alex Ferguson and Susan Magnier (The wife of John Magnier, one of United’s major shareholders.)
In 2003, the Rock, as he was known among friends, retired and was given the arduous task of creating lots of little baby horses. Demand for his offspring was so high that the Rock was given a value of more than €250 million.
As he believed himself to be the co-owner of the horse, Ferguson demanded a 50% cut of any fees paid for studding. The co-owner, Magnier, refused, arguing that Ferguson did not actually own any stake in the horse and that they simply had a gentleman’s agreement that Ferguson would receive a cut of any money made from winning races, not from studding.
Ferguson was enraged and initiated a €150 million lawsuit against Susan Magnier and her husband John Magnier for loss of earnings.
With John Magnier being a shareholder of Manchester United, the lawsuit set up a major conflict between Ferguson and key members of United’s ownership.
This instability provoked the United fans. Many who were loyal to Ferguson decided to protest Magnier from the stands of Old Trafford.
With his image in tatters, John Magnier hired a private investigator to dig up dirt on Ferguson. This resulted in the infamous ‘99 questions’ document that Magnier sent to the Manchester United board.
In this document, Magnier demanded that the club provide more information on a number of issues he had discovered. Most notably, he questioned whether Ferguson and his family were gaining an unethical benefit because 13 of United’s players were signed in deals involving an agency run by Ferguson’s son Jason.
In response, United changed their internal policy and banned people with close links to United employees from being involved in transfers.
The conflict over the horse, which had triggered this war of words, eventually came to an end when Magnier agreed to pay Ferguson a settlement of around €3 million.
Despite the truce, United’s other investors were keen to remove Magnier, and his business partner JP Mcmanus, from the club and started to look for other investors.
At around the same time, U.S. investor Malcolm Glazer was busy buying a small stake in Manchester United on the stock market. As soon as he heard about the conflict with Ferguson, Glazer approached Magnier and Mcmanus about buying their 28.8% share of United.
Perhaps encouraged by the animosity of United’s fans during the horse affair, the duo instantly agreed to sell.
This acquisition gave the Glazer family more than 50% of the club’s shares, and within a month, they had 99% control of Manchester United. This change of ownership ushered in years of discontent for United fans, with large protests continuing to this day.
The main issue among the United faithful comes from how the Glazers took control of the club.
Instead of putting up their own money to purchase the shares, they took out loans in the name of Manchester United and secured them against the club’s assets. This meant that a large part of the massive €500 million debt became the responsibility of the club and not the Glazers.
To make matters worse, the club has spent an average of over €100 million a year just on interest payments for this debt. Money that United fans argue could have been spent on transfers or improvements to their aging stadium.
While the Glazer’s control over United is standing strong, the horse that arguably triggered this entire saga sadly died a few days ago.
The Rock of Gibraltar was initially famous for his racing abilities, but his true legacy (at least for United fans) will be one of ‘what if?’
If Ferguson and Magnier hadn’t fallen out over the value of their horse’s sperm, then United would not have turned to the Glazers for new investment and Magnier would probably not have accepted their offer.
Who knows? Perhaps without the Glazers, United would not be going through a rough era defined by huge debt, fan discontent, and a stadium infested with rats and roof leaks.
🍎 Sports Business Bites
🏎 From a horse that changes destiny to the land of horsepower.
Formula 1 is set for a massive shake-up over the next few years. With the sport working to introduce cost caps and renewable fuels, two automotive giants have decided to join the party.
Audi have just announced an agreement with the Sauber F1 team to act as an engine supplier and strategic partner from 2026.
Audi could be followed onto the grid by fellow VW brand Porsche, who are reportedly in negotiations to purchase 50% of Williams Racing. If successful, Porsche will also act as an engine supplier and strategic partner.
Before deciding to introduce renewable fuels, F1 was seen by many manufacturers as an old relic of racing’s gas-guzzling past. In fact, VW - the parent company of both Audi and Porsche - had previously stated that they were withdrawing from all fuel-based motorsport for environmental reasons.
F1 bosses will see this renewed interest as a sign they are taking the sport in the right direction.
⚽️ 🏀 Formula 1 isn’t the only series set for a shake-up.
The MLS is looking to revitalise its current play-off system in the hopes of attracting a greater audience before it starts its new $2.5 billion TV deal with Apple.
Under current plans, the existing 13-game play-off would be replaced by a new 30-game ‘World Cup-style playoff.’
The first eight teams in both conferences would progress to the playoffs and then be seeded into four groups of four (two per conference).
The top two teams from each group then move to the knockout rounds. These elimination games will also be divided by conference, resulting in the Western Conference champion facing the East in the final of the MLS Cup.
MLS isn’t the only top U.S. league considering a shake-up. There were discussions among NBA bosses to introduce a European-style relegation system.
Under the current system, some struggling basketball teams are incentivised to lose matches in order to finish lower in the NBA standings. Not only are they not relegated, but they also receive better options for new players in the draft system.
To prevent this behaviour the league considered relegating the worst two teams from the NBA into the G League. The top two teams from the G league would then be promoted in their place.
They ultimately decided against such a move, stating that the relegated teams would face financial difficulty and the promoted teams from the G league would not be able to compete.
Now for a story told in some tweets:
After having his social media profiles restricted for posting anti-semitic content, and boasting that Adidas still won’t drop him, Kanye West has finally lost his contract with Adidas.
The deal between Adidas and West’s Yeezy line was so large that the termination cost West his Billionaire status. Adidas will also lose around $250 million in profits this year alone.
While some have praised Adidas for acting, many feel that they took far too long.
“Doing the right thing as a company is more important than just the bottom line,” explained Steven Fink, a crisis consultant to Time. “And the fact that it took them so long to recognize that, I think speaks volumes about where their head is at.”
Horse.