I was watching my "History of Manchester United" DVD this weekend and remeber hearing the following... It was turned into a PLC because 1. there was a major controversy where a buyer turned up and then his backers pulled out and left him high and dry. The second reason was to raise money to make improvements to Old Trafford including the rebuilding of the Stretford End.
IIRC (don't trust me on this) the chairman was Martin Edwards and the club was majority owned by his family and had been for a few generations I think? They sold to Michael Knighton who famously did some keepy-uppy in front of the fans, then the whole thing fell through. The reason for selling was probably partly because there was pressure on Martin Edwards to step down (it was felt that he wasn't a good businessman) and partly to realise money from the sale (ie I think they did very well out of it!). Being a public company is a major pain IMO, all the regulations to declare everything mean we are hampered in all kinds of ways. Particularly when dealing with transfers. On the plus side, we are profitable (no Leeds United situation here) and we have a fully owned ground that we managed to find the finance for to get built.
Sorry but does this mean that any transfers need to be approved by a group, who makes these decisions, is anyone familiar with how they operate behind the scenes? Say Ferguson decides there is a player he rally wants to acquire, what is the process for attempting to sign this player?
He and David Gill discuss the transfer target, come up with an acceptable fee for the player, and then David Gill takes it to the Board. If/when the Board approves the move, Gill approaches the club, negotiates the transfer fee, and takes it back to the Board to make the money available for the transfer. Gill then faxes the offer sheet to be completed by the other club. Somewhere in this process, personal terms are agreed between the targetted player and the club for wages, etc. as well.
The usual reason for turning a private company into a PLC is because the owners want to cash in on their ownership. Up to that point the equity in the company is merely paper money - the PLC allows the owner to sell his shares and walk away with the cash. Being a PLC also allows you to raise cash by releasing more shares. You need to expand the stadium - release new shares and use the cash (assuming shareholders by the shares) to expand or whatever you wished to do. Being a PLC gets you away from eccentric owners who like to do peculiar things - usually to boost their own ego. There's no shortage of those in the EPL. In a PLC, your owners are a million guys none of whom can impose their views on the others. The theory is that decisions will be rational decisions made through a consensus of what is best for the company. Unfortunately short termism has crept into the share market. Investors no longer look to invest in the company with the idea of staying there for a few years while it grows. Today investors are in and out in months, weeks even days - their sole purpose to make themselves quick money. This means financial decisions that grasp at the immediate returns - sell the player now and improve profits and therefore dividends - and to hell with what happens in the future - we'll have sold our shares by then. Being a PLC also means that all significant financial dealings have to be open and public so that all shareholders can make informed decisions on whether to buy/hold/sell their shares. That makes life difficult for Utd when they're competing with the likes of Real Madrid, Chelsea or Barcelona who can keep their negotiations secret in the transfer market. These clubs can operate deviously behind the scenes while Utd have to be open and honest. Not only that but Utd are not able to completely rule out the sale of a player - RvN for example. The board's first, indeed only, priority is the financial interest of its shareholders. If the sale of a player will bring significant gains for the shareholders then they must go along with the sale. They might argue that selling a player would not be good in the long term but, as indicated above, most shareholders couldn't care less about the long term. So, we get away from idiotic, egotistical owners but we're put into a straight jacket in which the financial interest of shareholders defines all priorities. Frying pan to the fire, maybe