Theresa Towle
13th January 2004, 18:58
Not the usual bull….
David Gill tells Theresa Towle why MUplc neither needs nor wants a sugar daddy
An anonymous United official, quoted in an early season edition of Red Issue, allegedly said, “We go down and talk to IMUSA and Shareholders United. It’s just a case of fobbing them off with all the usual bullshit.” Well, we have a new CEO now. And a new mood seems to be blowing through Old Trafford.
David Gill, in his first interview for United Shareholder, is keen to stress that he will be available to SU and IMUSA, and that the dialogue which both he and Sir Roy Gardner talked about at the AGM will continue and will move on to new heights.
Reflecting on his time in the job, since that “bolt from the blue” moment when he heard the leaked news that Peter Kenyon was leaving Old Trafford, Gill agreed it has been a hairy few months even by United standards. He admitted that no matter how well prepared you are, there are always issues that can come out of left field - Rio, Arsenal, disputes with the FA and Sepp Blatter, not to mention the manager, our largest shareholder and that horse, and the ever more feverish takeover speculation.
He is adamant that there had been no clues that Kenyon was thinking of leaving.
“I think if there had been an inkling that something was up then I’m sure I would have picked up on a change of mood or a change of attitude. And you can understand from his point of view the need to keep it very, very confidential.”
So is Gill a United fan?
“I know everyone says it, but yes. I’m one of those Southern Reds.” He was born in Reading in Berkshire in 1957, and like a lot of children of the ‘50s it was the United team of the ‘60s and the glory days of Best, Charlton and Law, that attracted him to the club. George Best was his favourite player and he was very pleased to meet him for the first time two or three months after he joined the club in 1997. As a proud parent he watches his two sons play football, one for his local Sunday team and the other at the United Academy.
Does it matter, in terms of the plc, whether he is a fan or not?
“For me personally yes. I wasn’t looking to move from First Choice (his previous company), but the job came up. I thought it was a good career move and it gave me the opportunity to get into something that I really loved. If any other club had been there I wouldn’t have moved. It was United or no-one. I’ve been approached by other clubs since and I’ve not taken the bait.”
Peter Kenyon was very practised at the media aspects of the job and clearly enjoyed it. But this is an area where Gill sees a difference in style.
“My intention is to be less visible. I will obviously be available and comment on key issues, and I’m comfortable with that. But I don’t think it is necessary for me to be constantly on the back pages. Alex and I have spoken about it and I think he should do more of the talking about the team and football club issues. It’s a question of the right balance.”
In the pubs and clubs around Old Trafford the suspicion is, and this is putting the best interpretation on it, that Peter’s mind may not have been wholly concentrated on transfer dealing last summer, the suggestion being that we should have got more for David Beckham and for Veron and that we should have made at least one high profile signing over the summer. Some people put a more sinister interpretation on the whole transfer dealing saga last summer. Can you just finally knock all that on the head?
I can be categoric that no-one worked harder during the summer, than Peter with my help, on those transfer dealings. The David Beckham sale was a long process and I was involved in a lot of those negotiations. I think we did, in that market place, get the best deal that we could for David Beckham. And I think it will prove to be a good deal. With Veron, I think you have to look at Veron in the round, and by that I mean that there was only one club interested in Veron. Therefore you didn’t exactly have a sellers’ market. I think we got a very good price for him coupled with the fact that we have removed a very significant wage bill. If you look at the fee that we got and the removal of a large salary, time will prove it to be a good deal for Manchester United. Obviously, as was said at the AGM, the manager always dictates which players he likes to sell and who he would like to buy. It’s up to us to do the deal. Peter ran that day to day with my assistance and then subsequently all the transactions are approved in their entirety by the main board. I was involved in all those negotiations over Ronaldinho and my sense throughout was that he didn’t really want to come to Manchester United and I’ve seen enough deals to understand players who want to come and the reaction of their agents when they want to come and those who don’t. But I think I can categorically say that Peter has worked very diligently, very conscientiously on it and as a result the deals that were done were the right deals at the time.
Peter’s contract and his gardening leave. Are we close to a resolution on that? Is it possible to hold him to his gardening leave?
That is being done by our lawyers and theirs. Hopefully something will be resolved relatively quickly. But I think that it is important to note here that when someone signs a contract they understand the terms of that contract. There are rules within the Premier League as to attracting, for example, managers but also on the non-football side from one club to another. We are just working through those with the relevant people to get to a sensible compromise which reflect the concerns of us and the wishes of the other party.
In the wake of all of this, are we reviewing any other executive directors’ contracts?
We’ve all got gardening leave provisions within our contracts. To my mind they are pretty tight anyway. No-one wants this dragging on. After all this we have to work with Chelsea and operate them within the PL.
The main plc board is now down to six directors. We had nine at one point. Does he ever see any likelihood of there being a supporter director or a supporter-shareholder director on the board?
“Our view in the past has been that directors should look after the interests of all shareholders and that should be the case whether they are big institutions, corporate shareholders or supporter-shareholders, and that hopefully works. Now that’s not to say that things don’t change and that if there is someone who can add value, it may happen. At the moment there is no intention to make that change. We hope that through our regular dialogues with SU or through the Fans’ Forum we make sure those points of view are communicated to directors and taken into account when we reach decisions. But as far as SU is concerned, we would like to discuss with you, as Roy Gardner said at the AGM, this whole notion of a supporters’ trust which Jonathan Michie raised. What is the trust, what are its aims and let’s see if it can be of any benefit to us.” (This meeting has been arranged - ed.)
Why does Gill think the plc ownership model has worked well at United, in comparison to clubs like Leeds and Chelsea, and almost nowhere else in football?
“I think when Martin Edwards went public in 1991 he recognised that we needed to embrace the idea of being a quoted company. If you look at other clubs around the ’96 time when there was a lot of money floating around on the back of the second Sky deal and a lot of clubs floated, did the owners really embrace what is required of being a plc? Martin did by bringing in Sir Roland. He worked tirelessly to get the club to understand its responsibilities and to make sure that we didn’t stray from the core business of football. Then clearly we went through a golden era, which of course we hope will continue, of having a fantastic manager who won trophies. We then invested our growing revenue back into the stadium and the new training ground. A lot of things have gone right for us, but I don’t think they have gone right be luck. They’ve gone right through good management, and that’s good management both on and off the field.”
But there is always an element of risk, isn’t there? It doesn’t matter how good the management is if the team isn’t winning, from the plc point of view, it has a knock on effect on shirt sales in China.
“The point is that you must be competing in the final stages of the Champions League. We want to win as many trophies as we can but if we are competing then we are still going to be effective. Our main contracts with Nike, Vodafone or Budweiser don’t have clauses that relate to actually winning trophies but to competing in competitions. Nike signed up with us for 13 years. They must have taken the view that there may be a barren year or two. But overall Manchester United will be very much in the forefront of both domestic and European football. We do financial models and analysis on a regular basis on different levels of success and clearly the difference between winning everything and a lower level of success is quite dramatic. That is why we concentrate our resources just on the core business of football.”
What is the plc doing in America?
“The issue for us is attracting fans and getting the support of Manchester United to buy more credit cards or to subscribe to MUTV or to go to the soccer schools that are there now. As part of that exercise we met institutions in America just to tell them the Manchester United story. We have done that in some of the European markets too. But it was secondary to the key objective which was to expose the business to the fans. So if the institutions buy that’s great. I think it just widens the share base and that’s it.”
And the takeover speculation that has followed Malcolm Glazer’s increased holding?
“All we can say is that we have had no indication that any of our key or large shareholders has intentions to make a bid for us in any way.”
But isn’t that the same formula answer the plc always gives, which doesn’t reassure anyone. Is he not concerned, as we the supporters are, that this may be a real possibility?
“We are monitoring the situation carefully and, yes, it is always a possibility. It would be naïve to say that the increase in the share price from 90p to £2.40 is all based on the back of results and the changes in football. Obviously the changes in the composition of the share structure and the shareholding base have driven it to a large extent. Now does it keep me awake at night? No. We have to get on and run the business. If something comes we will have to address that situation, but I wouldn’t want you to think that we haven’t discussed it, analysed it both internally and with our advisers. We have run models to look at what the club is worth, how a buyer might structure it, what would be their return, their financial criteria. We’ve analysed it from both our perspective and the perspective of a prospective bidder. We’ve done that exercise, as any good company would, as good preparatory work. But it is done on the basis that no one has approached us.”
What did he think the motives of a prospective bidder might be?
“It is difficult to comment on a hypothetical situation, but no one, be it a corporate person or a high-worth individual is going to put in, let’s assume the current market capitalisation of £670million, and not want that figure to grow. People may have different motives but none that would want to diminish or take money out of the club and therefore decrease the chances of success.”
Supporters were very relieved to hear his public statement at the AGM that it is best for the plc to remain independent and that we don’t need or want a sugar daddy. Is this a declaration that any bid would be treated as hostile or if the club’s financial advisers recommended a bid to the board would the board then be forced by the rules to recommend it to shareholders?
“The obligations on the board are to make sure that it is in the best interests of the company, so it is not just a financial analysis. The reason I made that statement was that United has so many strengths and so many assets both tangible and intangible, in terms of our business model and our following, that we don’t need and don’t want a sugar daddy to come in. Now everyone has to recognise that if someone came in with a knock-out financial bid, then we as directors have individual responsibility to consider it. We would possibly have to put it to shareholders, but it is up to individual directors whether the board put it to shareholders with a recommendation or without.”
In the previous two weeks he had met with representatives from Cubic Expression and with Malcolm Glazer and two of his sons. Had he asked Malcolm Glazer the takeover question?
“It was a very positive, friendly meeting. It was good to make contact with them and we now have opened a channel of communication as we have with Cubic. They think Manchester United is a good investment, as they thought was the case with the Tampa Bay Buccaneers back in ’95. It’s a good investment full stop.”
And as far as John Magnier and Sir Alex are concerned, does their quarrel pose a problem for the plc?
“As Roy Gardner said, it is a private matter. Alex is conscious that he needs to keep us informed of developments and how, if at all, it may impact on his job. We are not complacent but at the moment I don’t think there is any impact whatsoever.”
Has Cubic used its shareholding to unduly influence the board in any respect, whether in Sir Alex’s contract negotiations or in any other way?
“No.”
The day after this interview took place saw the funeral in Manchester of Sir Roland Smith, chairman of MUplc for 9 years, and old adversary of SU. David Gill had the following words to say about him:
“Personally, I am very sad to hear of his death. I got to know him when I joined in ’97. He was one of the reasons why I joined the club and was a tremendous asset to Manchester United. He was a very good business man, tough but fair, always challenging, and critically, as you all saw at the AGMs, he had a sense of humour. He and his wife made my wife and I and our young kids feel very welcome when I came up to Manchester from the south and I will always remember that.”
David Gill tells Theresa Towle why MUplc neither needs nor wants a sugar daddy
An anonymous United official, quoted in an early season edition of Red Issue, allegedly said, “We go down and talk to IMUSA and Shareholders United. It’s just a case of fobbing them off with all the usual bullshit.” Well, we have a new CEO now. And a new mood seems to be blowing through Old Trafford.
David Gill, in his first interview for United Shareholder, is keen to stress that he will be available to SU and IMUSA, and that the dialogue which both he and Sir Roy Gardner talked about at the AGM will continue and will move on to new heights.
Reflecting on his time in the job, since that “bolt from the blue” moment when he heard the leaked news that Peter Kenyon was leaving Old Trafford, Gill agreed it has been a hairy few months even by United standards. He admitted that no matter how well prepared you are, there are always issues that can come out of left field - Rio, Arsenal, disputes with the FA and Sepp Blatter, not to mention the manager, our largest shareholder and that horse, and the ever more feverish takeover speculation.
He is adamant that there had been no clues that Kenyon was thinking of leaving.
“I think if there had been an inkling that something was up then I’m sure I would have picked up on a change of mood or a change of attitude. And you can understand from his point of view the need to keep it very, very confidential.”
So is Gill a United fan?
“I know everyone says it, but yes. I’m one of those Southern Reds.” He was born in Reading in Berkshire in 1957, and like a lot of children of the ‘50s it was the United team of the ‘60s and the glory days of Best, Charlton and Law, that attracted him to the club. George Best was his favourite player and he was very pleased to meet him for the first time two or three months after he joined the club in 1997. As a proud parent he watches his two sons play football, one for his local Sunday team and the other at the United Academy.
Does it matter, in terms of the plc, whether he is a fan or not?
“For me personally yes. I wasn’t looking to move from First Choice (his previous company), but the job came up. I thought it was a good career move and it gave me the opportunity to get into something that I really loved. If any other club had been there I wouldn’t have moved. It was United or no-one. I’ve been approached by other clubs since and I’ve not taken the bait.”
Peter Kenyon was very practised at the media aspects of the job and clearly enjoyed it. But this is an area where Gill sees a difference in style.
“My intention is to be less visible. I will obviously be available and comment on key issues, and I’m comfortable with that. But I don’t think it is necessary for me to be constantly on the back pages. Alex and I have spoken about it and I think he should do more of the talking about the team and football club issues. It’s a question of the right balance.”
In the pubs and clubs around Old Trafford the suspicion is, and this is putting the best interpretation on it, that Peter’s mind may not have been wholly concentrated on transfer dealing last summer, the suggestion being that we should have got more for David Beckham and for Veron and that we should have made at least one high profile signing over the summer. Some people put a more sinister interpretation on the whole transfer dealing saga last summer. Can you just finally knock all that on the head?
I can be categoric that no-one worked harder during the summer, than Peter with my help, on those transfer dealings. The David Beckham sale was a long process and I was involved in a lot of those negotiations. I think we did, in that market place, get the best deal that we could for David Beckham. And I think it will prove to be a good deal. With Veron, I think you have to look at Veron in the round, and by that I mean that there was only one club interested in Veron. Therefore you didn’t exactly have a sellers’ market. I think we got a very good price for him coupled with the fact that we have removed a very significant wage bill. If you look at the fee that we got and the removal of a large salary, time will prove it to be a good deal for Manchester United. Obviously, as was said at the AGM, the manager always dictates which players he likes to sell and who he would like to buy. It’s up to us to do the deal. Peter ran that day to day with my assistance and then subsequently all the transactions are approved in their entirety by the main board. I was involved in all those negotiations over Ronaldinho and my sense throughout was that he didn’t really want to come to Manchester United and I’ve seen enough deals to understand players who want to come and the reaction of their agents when they want to come and those who don’t. But I think I can categorically say that Peter has worked very diligently, very conscientiously on it and as a result the deals that were done were the right deals at the time.
Peter’s contract and his gardening leave. Are we close to a resolution on that? Is it possible to hold him to his gardening leave?
That is being done by our lawyers and theirs. Hopefully something will be resolved relatively quickly. But I think that it is important to note here that when someone signs a contract they understand the terms of that contract. There are rules within the Premier League as to attracting, for example, managers but also on the non-football side from one club to another. We are just working through those with the relevant people to get to a sensible compromise which reflect the concerns of us and the wishes of the other party.
In the wake of all of this, are we reviewing any other executive directors’ contracts?
We’ve all got gardening leave provisions within our contracts. To my mind they are pretty tight anyway. No-one wants this dragging on. After all this we have to work with Chelsea and operate them within the PL.
The main plc board is now down to six directors. We had nine at one point. Does he ever see any likelihood of there being a supporter director or a supporter-shareholder director on the board?
“Our view in the past has been that directors should look after the interests of all shareholders and that should be the case whether they are big institutions, corporate shareholders or supporter-shareholders, and that hopefully works. Now that’s not to say that things don’t change and that if there is someone who can add value, it may happen. At the moment there is no intention to make that change. We hope that through our regular dialogues with SU or through the Fans’ Forum we make sure those points of view are communicated to directors and taken into account when we reach decisions. But as far as SU is concerned, we would like to discuss with you, as Roy Gardner said at the AGM, this whole notion of a supporters’ trust which Jonathan Michie raised. What is the trust, what are its aims and let’s see if it can be of any benefit to us.” (This meeting has been arranged - ed.)
Why does Gill think the plc ownership model has worked well at United, in comparison to clubs like Leeds and Chelsea, and almost nowhere else in football?
“I think when Martin Edwards went public in 1991 he recognised that we needed to embrace the idea of being a quoted company. If you look at other clubs around the ’96 time when there was a lot of money floating around on the back of the second Sky deal and a lot of clubs floated, did the owners really embrace what is required of being a plc? Martin did by bringing in Sir Roland. He worked tirelessly to get the club to understand its responsibilities and to make sure that we didn’t stray from the core business of football. Then clearly we went through a golden era, which of course we hope will continue, of having a fantastic manager who won trophies. We then invested our growing revenue back into the stadium and the new training ground. A lot of things have gone right for us, but I don’t think they have gone right be luck. They’ve gone right through good management, and that’s good management both on and off the field.”
But there is always an element of risk, isn’t there? It doesn’t matter how good the management is if the team isn’t winning, from the plc point of view, it has a knock on effect on shirt sales in China.
“The point is that you must be competing in the final stages of the Champions League. We want to win as many trophies as we can but if we are competing then we are still going to be effective. Our main contracts with Nike, Vodafone or Budweiser don’t have clauses that relate to actually winning trophies but to competing in competitions. Nike signed up with us for 13 years. They must have taken the view that there may be a barren year or two. But overall Manchester United will be very much in the forefront of both domestic and European football. We do financial models and analysis on a regular basis on different levels of success and clearly the difference between winning everything and a lower level of success is quite dramatic. That is why we concentrate our resources just on the core business of football.”
What is the plc doing in America?
“The issue for us is attracting fans and getting the support of Manchester United to buy more credit cards or to subscribe to MUTV or to go to the soccer schools that are there now. As part of that exercise we met institutions in America just to tell them the Manchester United story. We have done that in some of the European markets too. But it was secondary to the key objective which was to expose the business to the fans. So if the institutions buy that’s great. I think it just widens the share base and that’s it.”
And the takeover speculation that has followed Malcolm Glazer’s increased holding?
“All we can say is that we have had no indication that any of our key or large shareholders has intentions to make a bid for us in any way.”
But isn’t that the same formula answer the plc always gives, which doesn’t reassure anyone. Is he not concerned, as we the supporters are, that this may be a real possibility?
“We are monitoring the situation carefully and, yes, it is always a possibility. It would be naïve to say that the increase in the share price from 90p to £2.40 is all based on the back of results and the changes in football. Obviously the changes in the composition of the share structure and the shareholding base have driven it to a large extent. Now does it keep me awake at night? No. We have to get on and run the business. If something comes we will have to address that situation, but I wouldn’t want you to think that we haven’t discussed it, analysed it both internally and with our advisers. We have run models to look at what the club is worth, how a buyer might structure it, what would be their return, their financial criteria. We’ve analysed it from both our perspective and the perspective of a prospective bidder. We’ve done that exercise, as any good company would, as good preparatory work. But it is done on the basis that no one has approached us.”
What did he think the motives of a prospective bidder might be?
“It is difficult to comment on a hypothetical situation, but no one, be it a corporate person or a high-worth individual is going to put in, let’s assume the current market capitalisation of £670million, and not want that figure to grow. People may have different motives but none that would want to diminish or take money out of the club and therefore decrease the chances of success.”
Supporters were very relieved to hear his public statement at the AGM that it is best for the plc to remain independent and that we don’t need or want a sugar daddy. Is this a declaration that any bid would be treated as hostile or if the club’s financial advisers recommended a bid to the board would the board then be forced by the rules to recommend it to shareholders?
“The obligations on the board are to make sure that it is in the best interests of the company, so it is not just a financial analysis. The reason I made that statement was that United has so many strengths and so many assets both tangible and intangible, in terms of our business model and our following, that we don’t need and don’t want a sugar daddy to come in. Now everyone has to recognise that if someone came in with a knock-out financial bid, then we as directors have individual responsibility to consider it. We would possibly have to put it to shareholders, but it is up to individual directors whether the board put it to shareholders with a recommendation or without.”
In the previous two weeks he had met with representatives from Cubic Expression and with Malcolm Glazer and two of his sons. Had he asked Malcolm Glazer the takeover question?
“It was a very positive, friendly meeting. It was good to make contact with them and we now have opened a channel of communication as we have with Cubic. They think Manchester United is a good investment, as they thought was the case with the Tampa Bay Buccaneers back in ’95. It’s a good investment full stop.”
And as far as John Magnier and Sir Alex are concerned, does their quarrel pose a problem for the plc?
“As Roy Gardner said, it is a private matter. Alex is conscious that he needs to keep us informed of developments and how, if at all, it may impact on his job. We are not complacent but at the moment I don’t think there is any impact whatsoever.”
Has Cubic used its shareholding to unduly influence the board in any respect, whether in Sir Alex’s contract negotiations or in any other way?
“No.”
The day after this interview took place saw the funeral in Manchester of Sir Roland Smith, chairman of MUplc for 9 years, and old adversary of SU. David Gill had the following words to say about him:
“Personally, I am very sad to hear of his death. I got to know him when I joined in ’97. He was one of the reasons why I joined the club and was a tremendous asset to Manchester United. He was a very good business man, tough but fair, always challenging, and critically, as you all saw at the AGMs, he had a sense of humour. He and his wife made my wife and I and our young kids feel very welcome when I came up to Manchester from the south and I will always remember that.”