Manchester United decide to review recent transfers

The extraordinary power struggle at Manchester United took another twist yesterday when the football club agreed to launch an unprecedented "internal review" into all their recent transfer dealings.

While the Old Trafford board believe the investigation will unearth nothing significant, they feel it is the only way to halt a stream of negative publicity.

The review was announced in response to pressure from the club's major shareholders, the Irish horse-racing tycoons John Magnier and JP McManus, whose former close friendship with United's manager, Alex Ferguson, has been torn apart in recent months.

Mr Magnier and Mr Ferguson are fighting a legal battle over the rights to stud fees from the racehorse Rock of Gibraltar. Mr Ferguson believes he is entitled to half the fees, which could run to more than £250m over the next decade, because the horse used to run in his colours. Mr Magnier says that Mr Ferguson only ever had a nominal half-share in the horse, as a favour. He claims Mr Ferguson never paid a penny for that privilege and that he is entitled to nothing. The pair's falling out was a catalyst for the current crisis at United.

Mr Magnier and Mr McManus, who have been using the corporate investigators Kroll to dig into Mr Ferguson's professional and personal business, have played a behind-the-scenes role in publicising several issues of potential embarrassment to Mr Ferguson and United in recent weeks.

Among the accusations levelled at the club are that a business associate of Mr Ferguson's son, Jason, received a payment from a deal that saw the American goalkeeper Tim Howard join the club last summer.

It has also been alleged that United demanded the removal of the agent of another player, Kleberson, from all negotiations over the Brazilian's move to Manchester. Further, it has been suggested that United inexplicably paid three times as much as necessary to buy the Portuguese teenager Cristiano Ronaldo last summer. Shortly before his move, he had reportedly been on his way to Arsenal for a much lower figure than United paid.

Mr Magnier and Mr McManus, who own just over a quarter of the club between them, implored United's board to investigate the deals. They have also demanded that Mr Ferguson should not be offered a proposed two-year extension, worth £5m a year, before a full review of transfers is complete. His current deal is due to expire in spring next year. If United's board agree any such deal, it seems inevitable that Mr Magnier will call an emergency general meeting, as he is entitled to do, and demand an independent investigation into United's financial affairs.

The crisis represents a threat not only to the future of Mr Ferguson, widely regarded as the most successful manager in English football history, but also to the short-term stability of United. As a Stock Exchange statement yesterday indicated, the club is hopeful its review will lead to greater accountability. "Any changes or improvements required ascertained from this review would be published and implemented before the next transfer window in June 2004."

That may not be enough to appease Mr Magnier.