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Old 10th January 2007, 14:33   #2
Join Date: Oct 2004
Location: Houston Texas
Posts: 1,537

Martin and the Several Noughts

Martin Edwards was fast tracked onto the Manchester Board during 1970 at the tender age of 24. His father Louis, the Chairman, had coerced fellow board members into rubber stamping the appointment. Martin, knew little or nothing about football, nor about the running of a major football club. He had in fact led a very privileged life being, unlike his father’s early times, brought up away from the sprawling urban jungle of Manchester and Salford. He’d always known money and the rambling spaces of the Cheshire green belt. He was educated at a minor public school, Cokethorpe in Oxfordshire. He had no interest in the game of football at all, and at that time, certainly no interest in, and what was going on at, Manchester United Football Club.

After finishing his education at aged 19 in 1965, he went into the family meat business, gaining some limited experience in the shops before a few years later, taking over the appointment of retail/wholesale controller. It’s ironical really when you look at the family business which had been hugely successful during the previous 20 years or so, that it started to encounter problems as soon as Martin was taken on board! Even though he had become a director at Manchester United, he was very, very rarely seen at Old Trafford, preferring to spend his time at Wilmslow Rugby Club where he turned out for their lesser teams.

As the family business started to struggle in 1977, his father began to do what he had done in the 1960’s - acquire more shares any way that he could, only this time, he did it with the help of Martin. The reason being was that they both knew exactly what they were doing in that any further shares that they acquired at this time would be worth much more than they had paid for them in the not too distant future. It was in 1977 that Louis Edwards and Sir Roland Smith had hatched the plan regarding the rights issue.

One of the people coerced into parting with shares was the niece of the late Club Secretary, Walter Crikmer, who had perished at Munich. She had inherited 51 shares from her uncle. Edwards senior paid her 194 pounds a share, a total outlay of 9,900 pounds. Martin and his father somehow persuaded Alan Gibson to part with his remaining shares which totalled 1,138, and it was Martin who bought them for a price of 172.70 pounds each. He raised the money to purchase the shares by obtaining an overdraft of 200,000 pounds from his bank. When the 208-fold first rights issue was imminent, Martin increased his bank overdraft to 600,000 pounds to pay for it. It may well surpise a lot of United supporters to find out that this was the only solid tangible investment that he EVER made in Manchester United. That first rights issue cost the Edwards family a total of 740,000 pounds, and as Sir Matt and Les Olive had suspected and forecast, money started to go out of the club fast being paid out in dividends. So in 1978, the Edwards family holding in United grew to be 74%. What they were doing was not criminal, but it could be said that it didn’t set any new standards in commercial ethics!

After his father’s death in 1980, Martin took a lot more interest in Manchester United. He saw the club as a vehicle to make money. In 1981, the F.A. in their wisdom changed the rules and allowed the maximum dividend payable to shareholders to be increased to 15% under the pretext that it would encourage outside investors to put their money into football clubs. It was no coincidence that Manchester United immediately paid out that maximum 15% dividend, a total of 151,284 pounds, of which, Martin received 77,319 pounds. By 1987, the total dividends paid out since the initial rights issue was a little more than 500,000 pounds, of which, 233,684 pounds went to Edwards.

At the same time of the F.A.’s change in the dividend rule, they also changed another rule that had protected the game’s sporting ethos. Before 1981, no director had been allowed to draw a salary from their club. This was all about to change as they allowed for directors to be paid for the first time, the proviso being, as long as they were genuinely working full time for their clubs. The Edwards family business which had been in serious trouble had by 1980 been sold to Argyll Foods, and Martin Edwards had left the company – he was unemployed. It is no surprise therefore that upon the change of rule regarding directors being paid, he became one of English football’s first full time paid executives. Not only that, the club, controlled by Edwards shareholding, did not stint with regards to a salary for him. 30,000 to start with, 75,000 by 1985, 88,000 by 1988, 96,000 in 1989, and breaking the 100,000 barrier in 1990.

In 1980, from the very start of his taking a far more active part in Manchester United, Edwards played a leading role in calling for the top First Division Clubs to break away from the League, and to no longer share any monies with clubs from the lower divisions. He was continually moaning about his bank overdraft and the fact that United was his only full-time business interest. He got into bed with the likes of Irving Scholar and the idea of a “Superleague” began rumbling on. He also toyed with the idea of floating United on the Stock Exchange as Scholar had done with ‘Spurs in 1983. The new kids on the block were arriving fast, people like David Dein, Phillip Carter, Noel White and they were all in effect, pissing in the same pot.

In 1985 another capitulation by the FA allowed Clubs to keep all their home gate money and the majority of the television income was split between the “famous five” – United, Liverpool, Tottenham, Everton and Arsenal.. Once again, the threat of a breakaway had got the FA trembling and they caved in to their demands. It was during these negotiations that Edwards was heard to make the crass remark; “The smaller clubs are bleeding the game dry ………they should be put to sleep.” This remark showed not only how much he knew about the game, but just how little he really cared for it.

Edwards had brought on board around this time Maurice Watkins, a solicitor in a company named James Chapman & Co. They were specialists in personal injury liability. Edwards father, had in 1977, started using Watkins as Manchester United’s solicitor, and Martin Edwards had also engaged him to become his own solicitor. In 1984, Edwards unceremoniously swept away some of the old board members, and replaced them with close allies. Sir Matt had resigned his non-exrcutive directorship some years earlier. Edwards in later years, was to comment about this, saying in effect that, Sir Matt didn’t understand the financial workings of a modern day football club, and that he couldn’t understand them. It’s my opinion that Sir Matt knew only too well, as did Les Olive, the financial workings of the Club, and weren’t happy to see the money that was going out of the Club, and the direction the in which the biggest percentage was traveling! Maurice Watkins was made a director, but to do this he had to own 50,000 shares. The story goes that he was allowed to purchase these shares probably for the paltry sum of one or two pounds per share!

Around the time that Edwards was thinking about floating the club on the Stock Exchange, he was also involved in some negotiations with Robert Maxwell who was starting to have a desire for getting more involved with owning a football club. However, although Maxwell was purported to have offered 10 million pounds for Manchester United and that Edwards was amenable to the deal, on advice from Watkins, he turned it down. To most Manchester United supporters at this time, it was unthinkable that Edwards would sell the club – but the warning signs were now there – the club was for sale – but at the right price. On the first Saturday of the 1989/90 season which was a home fixture against Arsenal, a slightly portly figure emerged from the players tunnel at Old Trafford dressed in a United playing strip, and carrying a football. This figure made his way onto the pitch and down towards the hordes massing on the Stretford End. He began juggling with the ball before finally lashing it into the back of the goal net. This man was Michael Knighton, a former school teacher, and erstwhile small time business man. He had hatched an audacious plan to purchase Manchester United. Say what you will about Knighton, but he was also one of the first to see that there was money to be made out of football clubs. Prior to making known his plans to buy Manchester United, he had made quite an intensive study the findings of which showed him that by financially exploiting fans through their emotional attachment to their clubs, it was possible to make money through exploiting and merchandising that emotional attachment. He also foresaw that there was enormous amounts to be made from future television revenues. So contrary to popular belief, Michael Knighton was not the “dumbass” that he was so freely perceived to be around that time!

That he didn’t succeed was down to a number of factors and none of these concerned Martin Edwards. As Knighton was to say later on; “He was desperate to sell, desperate for my cash.” He wanted to give Knighton his half a million shares for 20 pounds per share – in effect he wanted 10 million pounds and he’d leave Old Trafford for good. It was widely reported that the Knighton deal fell through because he didn’t have the money. That was untrue. He actually did have more than double the amount required to purchase Manchester united in the form of a 24 million pounds overdraft from the Royal Bank of Scotland. What actually stopped the deal going ahead was all the ill-informed, adverse, and hostile media publicity that surrounded his proposed deal. That adverse comment persuaded his two main allies, Robert Thornton, the former Debenham’s chief, and Stanley Cohen of Parker Pens, to withdraw their support after initially agreeing to take 40% of Knighton’s proposed holdings off him. Once news of their involvement became public knowledge, they backed away. There was also unrest in the United boardroom about the proposed sale and Edwards came under pressure not to go ahead with it. Knighton could have forced his hand – he had a signed legitimate agreement – he could have forced the deal through. However, under the pressure and spotlight of all the adverse publicity surrounding the deal – he simply withdrew his offer….. in return for 30,000 shares and a place on the Manchester United board!

Knighton stayed at Manchester United for 3 years. He was always there “under tolerance” so to speak, but say what you will, it was his ideas about “exploiting a captive market” that plunged not only Manchester United Football Club, but football itself, into a whole new era – that of commercial exploitation! Edwards took on board most of Knighton’s ideas, particularly that of “maximizing the brand” and over one hundred years of innocence, and history, of Manchester United being a football club went down the pan. From the moment Knighton’s ideas were embraced, Manchester United ceased to be what it was and became a money making corporation.

The 1991 prospectus for the floating of Manchester United as a plc actually set out 4 reasons for the floatation; (a) to raise 6.7 million pounds for the redevelopment of the Stretford End; (b) to widen the ownership of Manchester United; (c) to provide “increased liquidity” to Shareholders; (d) to give employees and supporters of Manchester United greater opportunity to invest in the club. Maurice Watkins talking a few years later about the flotation stressed only the third reason; “one of the primary purposes for the flotation was that it released cash for the shareholders.” There you have it, the main beneficiaries from such a bold move were Edwards, Watkins, and the rest of the United board at that time. It’s my honest opinion that this was the main reason for taking Manchester United public.

Edwards and his cohorts on the Manchester United board who had decided to take the club public in 1991 faced a dilemma prior to this happening, as had other clubs who had already traveled this path. The F.A. rules that were in place at this time, limited clubs to only one paid director and also the 15% dividend rule and so effectively, made sure that clubs did remain sporting institutions. Again, together with Roland Smith, they had hatched their plan to form a new company – Manchester United plc. It was not a football club at all and had three subsidiaries, Manchester United Merchandising, Manchester United Catering, and Manchester United Football Club. The duty of the plc was stated as “to make money for its shareholders.” Simple as that.

When the flotation took place, Manchester United plc was floated initially in 10 pence shares priced at 3 pounds and 85 pence each; It effectively valued the club at 47 million pounds. Immediately upon the flotation Martin Edwards offloaded 1.7 million shares immediately making himself 6 million pounds! He still held over 3 million shares. It was indeed a new era which was taking place at the beginning of new successful era on the playing field, and not too many fans were interested in what was going on in the boardroom. The flotation was treated with apathy by the large majority of fans who obviously could not see what lay ahead for them in future years. It may well be that on-the-field successes blinded them to the off-the-field shenanigans in the boardroom.

At the time of the flotation it is interesting to note that admission prices at Old Trafford were as follows; Seating – 5 pounds 75 pence to 7 pounds 50 pence; there was room for 20,000 fans standing at only 4 pounds, and the 90 pence standing for juniors was still there. Oh how that was all soon to change especially as the new plc had openly boasted to the City of future profits by ‘introducing admission price increases of over 30%.”

Martin Edwards also at this time played a large part in the formation of the Premier League and the breakaway of the First Division clubs away from the Football League after more than a hundred thirty years. He knew that there was going to be a huge increase in television monies as was predicted in Knighton’s study, and he had happily embraced Knighton’s philosophy to cash in on the supporter’s love for their club. Suddenly Old Trafford began to see the arrival of “the men in suits.” A dedicated finance director with the very apt name of Robin Launders arrived from a car dealers named Reg Vardy; Edward Freedman who had worked for Irving Scholar at ‘Spurs in the ‘80’s arrived as “Head of Merchandising”. The company more than fostered a culture of seeing profit as the primary object in which the profit end was seen to justify the means, no matter what.

By 1993 ticket prices had risen steeply, contrary to the recommendations of the Taylor Report which had followed the appalling Hillsborough Disaster. The days of affordable, regular entry to matches were fast declining. In 1994 the Stretford End was engulfed into what has become the West Stand, and with it went a large slice of United’s history. No longer the raucous, rousing, stirring area it used to be. The new banks of seats were rolled out and with them a further increase in prices ranging from 10 pounds to 16 pounds. For kids, the 90 pence terrace charge became just a part of folk history. Corporate hospitality was also beefed up, and the stadium that began development under “Champagne Louis” in the mid – ‘60’s was now surrounded by it.

The commercialization of Manchester United was rolling along at full speed ahead, and the main driver was Martin Edwards. In 1994 he again offloaded a number of shares, this time making 1.5 million pounds. In April 1996 he was at it again selling 3.7 million shares as United’s share price puffed up to 4 pounds and fifty pence each, and he made a total of 16.6 million pounds on that deal. In July 1997, again he sold more shares, this time making a total of 5.57 million pounds. In 1999 he was again ready to seel the club to BskyB for a total of 625 million pounds, but this time was thwarted by the fans and the Government. The Edward’s family share investment acquired with subterfuge around the streets of Manchester in the 1960’s and ‘70’s, and the initial rights issue, the total outlay of which was around 800,000 pounds, yielded over 100 million pounds to Edwards Junior! On top of his investment in United, you also have to take into account that Edwards was also paid a massive salary each year which through the 90’s was well into the six figure bracket. Nice work if you can get it! It’s no wonder he gets my name of Martin and the Several Noughts! Other directors also made fortunes selling off shares, including Maurice Watkins. He sold shares immediately upon the flotation making a quick profit of 676,000 pounds. His remaining shares at the time of the takeover were worth in excess of 11 million pounds.

Sadly the time of being a football club is gone – probably forever. Newton Heath; Bank Street; Ernest Magnall; Duckworth, Roberts, and Bell; the Davies family; the Gibson family; Louis Rocca; Walter Crikmer, Matt Busby; Jimmy Murphy; Johnny Carey; Jack Rowley; the “Babes”; Best; Law; Stiles; Foulkes; Buchan; Macari; Whiteside, Robson; Cantona; beckham; Scholes etc etc are names that just echo throughout Old Trafford with no real meaning to the suits. It has become “Glory, Glory, Man United – surrender or you’ll cry!”

Adapted from David Conn's "The Football Business"
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