Manchester United takeover: How rich is Sir Jim Ratcliffe?

June 29, 2024

It was my birthday last Tuesday. I received a new radio from my wife and a jacket from my parents. Well, when I say “from”, what I really mean is I bought them, then told my wife and parents what they had got me. It is just easier that way.

It was Sir Jim Ratcliffe’s birthday last week, and it looks like he buys his own presents, too. When you know what you really want, why risk it?

Doing it that way must also take a lot of pressure off his family and friends. After all, what do you get a billionaire for his birthday?

A bike? Nah, he owns one of the world’s best cycling teams.

A car? Nope, one of his companies manufactures a line of 4x4s, he owns a third of the Mercedes F1 team and has the great Michael Schumacher’s very first Ferrari in his garage.

A boat? Been there, done that. He owns a $150million (£123m) super-yacht and the skipper of his sailing team is four-time Olympic gold medallist Sir Ben Ainslie.

OK, you get it. Ratcliffe, whose company INEOS has made an offer to buy a quarter of Manchester United for £1.3billion ($1.6billion), is rich.

But how rich? How much money does INEOS have? And, crucially, what could all this mean for United, a club which posted record revenues but still made a loss for the 2022-23 season?

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For 35 years, the UK’s Sunday Times newspaper has been trying to answer questions like this with its Rich List, an annual ranking of the nation’s plutocrats. Its most recent effort was published in May and it had Ratcliffe’s fortune at a smidgen under £30billion ($36.4bn), good enough for second place in its rankings.

This represented a remarkable return to form for a chap who had topped that list in 2018, when the newspaper pegged his wealth at just over £21billion, but then saw his fortune decline for four years in a row. In the 2022 Rich List, Ratcliffe’s personal fortune was just over £6bn ($7.3bn) and he had slumped to 27th spot.

So, how did Ratcliffe lose so much between 2018 and 2022, only to bounce back when a war in Europe and the after-effects of a pandemic were weighing on the global economy?

All is explained in the Rich List’s methodology. The newspaper admits it does not know how much people have in their bank accounts or what small shareholdings they may have in private portfolios. Instead, it focuses on land, property, racehorses, art or significant shareholdings in listed companies, what it calls “identifiable wealth”.

And if, like Ratcliffe, your fortune is based on owning 60 per cent of a private company, well, The Sunday Times guesses.

“We value private companies on a multiple of their profits, depending on their sector, track record and the strength of their balance sheets,” the newspaper explains. “Our starting point is to take an average of 10-12 times the latest profit figure but we also take account of the sector, track record and debt.”

Ratcliffe’s company, INEOS, is an unusual beast, though. It is actually 36 separate businesses, with 194 sites in 29 countries. For accounting purposes, most of those are grouped into three main holding companies, only two of which publish annual accounts. These businesses are in some of the global economy’s most cyclical sectors — chemicals, energy and plastics — so profits can swing wildly from year to year.

Lately, INEOS has been branching out into sectors that could be described as more fun — automotive, fashion and sport — but also more expensive.

Sir Ben Ainslie and Sir Jim Ratcliffe in August 2018 (Lloyd Images/Getty Images)

So, if we go back to The Sunday Times’ methodology and apply it to INEOS, we can see the two groups of companies that make chemicals and plastics did very well in 2022, with combined revenues of £35billion and profits of £3.5bn. Only investors can see the numbers for the third main group of businesses, INEOS’s growing network of oil and gas ventures, but they are widely believed to have returned a similar contribution to the group’s annual endeavours.

Including its share of joint ventures, INEOS claims it has total revenues of $65billion and industry experts think its profit margin is at least 10 per cent. Let us call it £5bn to keep things simple. Use the newspaper’s multiple of 10x and you get back to £50bn. Ratcliffe owns three-fifths of the business, with his co-founders – both Rich Listers in their own right – Andy Currie and John Reece owning a fifth each. Three-fifths of £50bn is £30bn.

OK, that is a very rough and ready calculation but there is always going to be a big dollop of guesswork involved when trying to pin down someone’s wealth when that wealth is so closely linked to a privately-held, global petrochemicals conglomerate. As INEOS notes in its annual accounts, “historically, margins in the petrochemical industry have been volatile due to a number of factors, most of which are beyond our control”.

One month before The Sunday Times published its latest look at British wealth, U.S. business publication Forbes released its 2023 World’s Billionaires List. It estimated “James” Ratcliffe’s wealth to be $22.9billion, good enough for 67th in its global ranking. This was $6.6bn up on how much Forbes thought he was worth a year before but still £10bn less than the British newspaper’s estimate a month later.

Forbes, however, loves this particular guessing game. As well as its annual ranking, it also has a Real Time Billionaires List it updates every day. As of last Thursday, Ratcliffe’s wealth had dipped to $18.6billion (£15.3bn) and he had slid to 89th in the table.

Is he bothered? Probably not. The Billionaires Index run by Bloomberg, another American business news outlet, had him in 103rd place last week, with only $16.8billion (£13.8bn) to his name.

So, we have four different guesses at Ratcliffe’s wealth, by three different outlets, six months apart: £18.9billion, £29.7bn, £15.3bn and £13.8bn. And those last two were snapshot estimates of his fortune on the same day last week.

The obvious conclusion is that nobody really knows how much he is worth. And why should they? Ratcliffe has spent most of his life avoiding the limelight and his wealth is a big but fluctuating number. But is it possible that the two American titles have only credited Ratcliffe, Currie and Reece with the INEOS-related wealth they can actually see, as opposed to the newer, even more volatile and less transparent parts of the business they cannot?

It might just be a coincidence but a section of a book published this summer to mark the company’s 25th anniversary, Grit, Rigour & Humour, was written by Times Radio business presenter Dominic O’Connell, who was formerly business editor at The Sunday Times. He credits INEOS with underlying profits, before interest, tax and other bad things, of £5billion-£7bn a year. It all adds up.

When assessing wealth there is another variable to consider: tax.

Ratcliffe following Nice, the French club he bought in 2019, away at Monaco (Valery Hache AFP via Getty Images)

News of Ratcliffe’s seemingly imminent investment in Manchester United broke the weekend before Leaders Week in London. One of the world’s largest sports business conferences, Leaders brings together administrators, bankers, consultants, investors, lawyers and everyone else who likes to gossip about the industry.

When The Athletic asked one very experienced banker how much he thought Ratcliffe was worth, he said: “It depends if he is trying to raise money or pay his taxes.”

This exchange was clearly tongue in cheek, but Ratcliffe moved his company’s headquarters to Switzerland in 2010 when the UK government declined its request to defer a tax payment — a move he reversed in 2016, moving back to the well-heeled Knightsbridge district in west London — and he then moved himself to Monaco in 2018, saving himself an estimated £4billion in income tax.

Ratcliffe has since described that decision as an attempt to make himself “Corbyn-proof”, a reference to former Labour leader Jeremy Corbyn, who briefly looked like he might become the UK’s prime minister one day. Ratcliffe believed that people such as him, Currie and Reece “would have got clobbered” by a Corbyn government, but he has also said he prefers the Mediterranean climate of Monaco. He also likes to point out that INEOS pays corporation tax (25 per cent) in the UK and still employs thousands of well-paid workers in his homeland.

Let’s be honest, Ratcliffe’s finances are only an issue now because some United fans feel like the losers in the 1980s British game show Bullseye. For those of you who missed this slice of light entertainment history, its host Jim Bowen would say, “Look at what you could have won” to the disappointed contestants as a screen slid up in the studio to reveal a car or power boat.

For a large contingent of United fans on social media, “what you could have won” is all the state wealth in Qatar, one of the world’s richest countries on a per capita basis and the home of Ratcliffe’s only real rival in the year-long race — if that is the right word — to buy the Premier League side, Sheikh Jassim.

Not a huge amount is known about his personal wealth but his dad, the former Qatari prime minister Hamad bin Jassim bin Jaber Al Thani, is worth $1.1billion according to Forbes. HBJ, as the father is better known, does not make the Bloomberg list but most Gulf experts believe he has enough squirrelled away from his time as the second most powerful person in Qatar to be considered a billionaire.

But how rich Sheikh Jassim or his daddy are has never really been a matter of much debate. After all, Sheikh Jassim’s bid was for all of United’s shares, not just the 69 per cent owned by the club’s current owners the Glazer family, and he also said he would clear all of the club’s debts and rebuild their Old Trafford stadium. In cash.

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The INEOS bid – and it should be remembered that it is a bid from Ratcliffe’s company, not just him – has always been a more targeted approach. At first, INEOS was only interested in the shares owned by the Glazers, or enough of them to give it a majority, as this was the cheapest and quickest way to gain control of the club, even if it meant leaving the deeply unpopular Glazers still with a seat at the table.

Ratcliffe visits Old Trafford in March (Peter Byrne/PA Images via Getty Images)

But, as it became clear that at least two of the six Glazer siblings — their father Malcolm originally bought the club, before passing away in 2014 — thought there was a bit more juice to be squeezed from their 20-year relationship with United, the INEOS plan morphed into an even smaller initial outlay.

Overall, its bid for some of the Glazers’ shares values the club more highly than Sheikh Jassim’s offer for all of the shares, which is why INEOS appears to have won. But anyone who knows anything about the company’s modus operandi will know Ratcliffe and company will not be planning to stay a minority partner forever and this investment will be the first step on a pathway to full control and, very probably, taking the club back into private ownership.

In Grit, Rigour & Humour, Ratcliffe explained his feelings on the merits of public ownership.

“You just waste an immense amount of time with (analysts and investors), and they all have their own agendas,” he said. “It wasn’t an environment I particularly enjoyed.”

Unlike most other modern multi-nationals, INEOS was built, piece by piece, using borrowed money, not money from shareholders. At first, when nobody knew who they were, it was expensive debt secured against their own assets. Ratcliffe famously remortgaged his house to buy his first chemicals business in 1992. But as the company’s balance sheet and turnover grew, the debt got cheaper.

Since 1998, INEOS has borrowed money on 47 different occasions. Secured bonds, term loans, project finance facilities, INEOS has signed a variety of IOUs, for sums that range from £100million to nearly £8bn, and it has used them to finance dozens and dozens of acquisitions.

In the past six weeks, INEOS has bought an acetic acid plant in the U.S. state of Texas for $500million, a Norwegian titanium and iron business for $245m and agreed a joint venture with a Chinese firm to make high-grade plastic at a new factory in the city of Tianjin. Did Ratcliffe, Currie and Reece dip into their personal fortunes to pay for these investments? No, INEOS borrowed the money and will pay it back in the same orderly fashion it has been paying back its loans for a quarter of a century.

INEOS has gone to the bond market 15 times in the past five years alone, borrowing £13billion. Its net debt is estimated to be nearly £14bn. Apologies for getting a bit technical here, but this gives INEOS a debt-to-turnover ratio of around 25 per cent, which means when banks lend this company money, they know they are getting it back, with interest.

Another metric that lenders like to look at is the relationship between debt and profit, and with INEOS’s ratio being barely 2:1 it is no wonder the company did not have too much trouble raising the £3billion it was looking for to build a new ethylene plant in Belgium — the largest investment in the European chemicals sector for a generation.

INEOS has encountered much more trouble, however, in getting that facility built. Construction was halted earlier this year when the regional government withdrew its support over environmental concerns. This, as Ratcliffe notes in the anniversary book, is becoming an occupational hazard for INEOS in Europe, but the company remains confident the plant, which is designed to be the greenest ethylene manufacturing site on the continent, will go ahead.

The point for United fans is that INEOS regularly borrows more money than the club currently owe, and has experience of more complicated construction projects than football stadiums.

But, just for comparison, United’s net debt, including future instalments on transfer fees, is just under £1billion, with the club’s revenues at about £640m. Roughly speaking, this gives the club a debt-to-turnover ratio of more than 150 per cent. Yep, you guessed it, that’s going the wrong way.

As every United fan knows, more than half of that debt has been sitting on the balance sheet ever since Malcolm Glazer borrowed it to complete his takeover in 2005. As interest rates have risen, its weight has grown. Sheikh Jassim’s promise to clear it was more than just good PR – it made business sense, too.

It remains to be seen quite how Ratcliffe and his partners intend to tackle it, and how quickly, but United fans should be assured that INEOS has a good credit history and banks call the company up looking to lend it money, not the other way around. And any money INEOS borrows to finance the United deal will sit on its books, not the club’s.

Sheikh Jassim’s other very fan-friendly promise was to drag Old Trafford into the 21st century.

United’s stadium has lots of seats (almost 75,000) but that is about it as far as the frills go. And there are holes in the roof, which is not ideal for an outdoor venue in the often rainy north west of England.

(Joe Prior/Visionhaus via Getty Images)

Ratcliffe grew up in Failsworth, less than 10 miles away, and he knows the weather up there. He also knows United could easily sell another 15,000 tickets for every home game. So, it should come as no shock that enlarging Old Trafford would be high on his list of priorities, too. Again, this would be financed in much the same way that he enlarged INEOS.

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If that sounds a bit… risky, well, it is. And buying only 25 per cent of a sports team that needs an overhaul as badly as United do is also risky, particularly when you are effectively taking on 100 per cent of the responsibility for turning around the hardest part of running a sports team: what happens during their competitions.

But INEOS has an interesting relationship with risk.

In the foreword to that recent book, Ratcliffe tells a story about visiting The Kimberley region in north west Australia. Very beautiful but hard to reach, the unspoilt wilderness is a bucket-list-type destination for intrepid travellers.

Ratcliffe and two mates chartered a helicopter to get there. But it is a long trip from almost anywhere, so their chopper needed to set down at a hot and dusty refuelling station. It was run by a woman, on her own, who made them tea and cake. While enjoying her hospitality, Ratcliffe noticed a sign on the wall that read, “DON’T DO DUMB S–T”.

For a guy who runs a chemicals business, this really resonated. But it has also – until now – steered his investments.

Perhaps this punt on United will prove to be the exception to his customary caution, and maybe it is better to think of it as a 71-year-old billionaire buying himself – or his children – presents.

But United fans should not feel like the Bullseye contestants forced to look at the fantastic prize they “could have won”.

INEOS money, Qatari money, it is all just money at the end of the day.

The trick will be whether INEOS can spend it better than the Glazers spent United’s.

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(Top photo: Valery Hache/AFP via Getty Images)

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