Manchester United FC
Manchester United FC's Old Trafford

Respect Malcolm Glazer.

Despite fierce resistance from Manchester United fans and key stakeholders of the club, the Glazers successfully acquired Manchester United on May 16, 2005. And by the following month, on June 22, 2005, turned the football club, a Public Limited Company (PLC), into family business. Shares in Manchester United were delisted from the London Stock Exchange, ending the club’s 14-year spell as a publicly traded company. The Athletic reports that they’ve since collected about £200 million from their investment in the club.

“So how did they negotiate their way to such a great investment?” Anna Faelten, Michel Driessen, and Scott Moeller, ask in their book, Why Deals Fail & How to Rescue Them: M & A Lessons for Business Success. “Good industry knowledge and target selection took them part of the way, but their negotiating tactics made the difference.”

Anna Faelten, et al., write that in 2003, Man United was one of the most successful football teams in Europe with a history that gave the club a uniquely popular global fan base. It was a time when a number of outside investors saw the UK football market as an attractive investment for either prestige or money.

However, United remained a no go for these investors. Rupert Murdoch, the owner of Fox News and The Wall Street Journal, attempted to buy the club but the regulators stamped on his bid as the fans launched a public campaign to stop him. Others, such as Russian oligarch Roman Abramovich (who purchased Chelsea Football Club), had already dismissed United as too difficult to buy and too costly.

“But Glazer, who already owned the Tampa Buccaneers, relied on his sports industry knowledge to identify extra value in Manchester United,” Anna Faelten, et al., write.

Malcolm Glazer manoeuvred his acquisition of United by using the salami tactic, also known as the salami-slice strategy or salami attack. The takeover wasn’t done through a single bid, but piece by piece, spanning over a period of two years, from 2003 to 2005.

The Athletic reports that the fans vehemently opposed the takeover. Ole Gunnar Solskjaer, the current manager of the club, signed up to the resistance movement in February 2005. The then CEO of the club, David Gill, sold £1.3 million of shares to a board member to try to prevent them from being bought by Mr. Glazer and made a sizable donation to Shareholders United.

However, by the time Mr Glazer launched a formal bid for Man United, The Guardian reports that “United fans, who have campaigned vigorously against Mr. Glazer over the past few months, have been fighting a losing battle.”

“The ‘salami’ tactic has the object of presenting a demand bit by bit,” Jacques Rojot explains in his book, Negotiation: From Theory to Practice.  “Once that or a small part of an item’s agreement is won, the party will move its demands to another small part of the item and build upon concession after concession to try to reduce the other party’s resistance. As soon as a minor concession is institutionalised as being past practice, the party asks for more on the same item.”

In essence, the tactic involves dividing a big goal into smaller goals, while conquering the smaller goals piece by piece until the big goal is achieved.

Mr. Glazer’s big goal was to buy Man United. His smaller goals were to purchase shares in the company with small incremental stakes.

According to Anna Faelten, et al., by March 2003, Mr. Glazer swept the market for available shares of the company and started purchasing them. By the end of the year, he had amassed over 14% of the shares from the market sweeps and smaller shareholders. And by November 2004, he had acquired 28% of the company’s shares. He then demanded and received three board seats. But at this point, he was nowhere near being able to force through a deal.

Mr. Glazer, however, had a trump card in his negotiating strategy. The club’s second-biggest shareholder with 29% was Cubic Expression, the investment vehicle of two Irish financiers and horseracing buffs, J. P. McManus and John Magnier. They also had a board seat. Combining his stake with Cubic’s would give him more than 50% of the club – certainly enough for control and also sizeable enough to try to force out small investors.

In May 2005, the Glazers finally secured Cubic’s stake, giving them a majority of the company’s shares. Only at this point – though confident that they could squeeze out the remaining shareholders as would be possible under UK takeover regulations – did the Glazer family launch a formal bid for Man United.

The Glazers bought United for £790 million in a highly leveraged deal by putting in £270 million of their own cash (34% of the borrowed money).

The Glazer Family
Malcolm Glazer (Getty Images)

Salami tactic is one of the best-known negotiation techniques used by both the buy-side and the sell-side, and in different circumstances. Phrases like “just one more thing”, “affordable weekly payments” and “payments in instalment over a period of five years” are examples of salami tactic.

Assuming you are a newly recruited employee of a company in the process of negotiating your employee benefits package, you can employ the salami tactic by presenting each of your demands for discussion and pushing hard to reach an agreement.

For instance, you may start by negotiating your salary from the initial offer of $1,500 from the employer, to $1,650. Once an agreement is reached, you can proceed to draw the employer’s attention to your health insurance. And after a long discussion and some haggling, both of you agree that the employer would pay all of the premium for the health insurance.

Just when the employer is thinking a final agreement has been reached, you may pretend to go through your employment contract once again, and wonder, “Oh! Just one more thing. We haven’t talked about the annual leave.”

You continue to table your demands “slice by slice” before the employer while they’re potentially moved to grant more concessions than they would do if all demands were presented at the same time. Using this tactic may take days, weeks, months or years to achieve your goal. With this tactic, patience is a virtue.

Salami tactic is necessarily offensive. And like any form of attacks, there are ways to defend against it.

One of the best defensive tactics is referring to an offer as your Best and Final Offer (BAFO). Stefanie Jung and Peter Krebs note in their book, The Essentials of Contract Negotiation, that referring to an offer as the last or very final offer, can therefore be a tactical means to avoid making further concessions, or at least to signal that from this point onwards, concessions will be considerably more expensive.

Another way is to label your concessions and/or demand reciprocity. By labelling your concession, you’re bringing to the consciousness of your negotiating partner what you’ve done for them. You may even go further to explain what it costs you to concede to their demand. This helps to trigger an obligation to reciprocate and weakens their plan to make demands “bit by bit”. You may also demand reciprocity for your concession, where your counterpart tends to ignore, overlook or downplay it.

Salami tactic is an effective way to overcome anticipated or exhibited resistance in achieving your goal. The inconspicuousness of your individual demand deludes your negotiating partner from seeing the bigger picture. And by the time they realise what’s going on, they would be afraid to walk away as they feel committed to reaching an agreement already. However, this offensive tactic can be defended against so you don’t fall victim to it.

Malcolm Glazer had a dream. Came to the Theatre of Dreams. And watched his dream become reality through effective use of the salami tactic. He died in May 28, 2014, leaving behind his children, Avram, Joel, Kevin, Bryan, Darcie and Edward Glazer, as executive co-chairmen of Man United. All six sit on the club’s board of directors.

How Glazer bought Manchester United Timeline
Source: Why Deals Fail & How to Rescue Them: M&A Lessons for Business Success

Special thanks to Oluwadunni Oni for taking the time out of her busy schedule to edit and review this article. Thank you.