Manchester Utd to face sanctions if shareholder concerns not allayed

Manchester United PLC's board must satisfy the corporate governance concerns of its largest shareholders, John Magnier and JP McManus, or face possible sanctions, including the requisitioning of an extraordinary general meeting.

Reports say that Magnier and McManus' Cubic Expression vehicle, which holds a 25.4%s take in the Premier League football club, has been in correspondence with the board since before Christmas, inquiring about corporate governance issues.

In letters to Manchester United chairman Sir Roy Gardner, the Magnier and McManus expressed concern at what they believe is a lack of transparency from the club regarding player transfers, particularly the club's reluctance to disclose a list of agents it is paying.

They want an independent audit of Manchester United's recent transfer deals, including the £12.2m (€17.70m) acquisition of Portuguese winger Cristiano Ronaldo from Sporting Lisbon.

Magnier and McManus are also uneasy about granting team manager Alex Ferguson an extension of his contract until 2007.

Ferguson and Magnier are also locked in a legal dispute over ownership of the stud rights to champion racehorse Rock of Gibraltar, and have a Dublin court case scheduled for next year.

Industry sources say that although Magnier doesn't oppose Ferguson's continuation as manager, he wants only a one-year rolling contract to be offered in accordance with best corporate governance practise.

As the board has refused to engage with them, Magnier and McManus are considering their options which include making an official complaint to the Financial Services Authority, seeking board representation, or calling an EGM.

The ultimate sanction would be to launch a takeover bid for Manchester United, but Cubic is not believed to want to pursue this course, seeing its stake as purely an investment.

Manchester United denies all allegations of wrongdoing regarding its transfers, insisting all negotiations are conducted by executive directors with legal advisers.

It said any fees to agents are disclosed to the Premier League and, with effect from the current transfer window, to the Stock Exchange.