Is INEOS starting to fall out of love with sport?

Sir Jim Ratcliffe had already taken on New Zealand once and lost.

October’s America’s Cup was a galling experience for the billionaire businessman. The Ratcliffe-funded INEOS Britannia team reached the final of sailing’s oldest race against Emirates Team New Zealand, hoping to become the first British team to win the trophy. Instead, they were pummelled 7-2.

This week, New Zealand Rugby (NZR), the governing body of the three-time World Cup-winning All Blacks and six-time world champion Black Ferns, signalled its intention to take INEOS to court.

Both were significant moments but, while the first was simply a sporting setback — albeit a chastening one — it was the second that posed more intriguing questions about the long-term future of INEOS’s sporting portfolio.

In 2021, INEOS signed a £22million ($27m) sponsorship deal to become NZR’s official performance partner. It was a sign that the petrochemical firm formerly known as ‘the largest company you have never heard of’ had become ubiquitous — and that was before it had even invested in Manchester United, one of the world’s biggest football clubs.

INEOS did not hold any sporting control of NZR, with its director of sport Dave Brailsford instead speaking of “collaborating on performance innovation”. Later, he boldly added that the All Blacks, the most successful team in rugby union history and one of the planet’s best-known sporting brands, would be the ones to integrate into INEOS rather than the other way around.

The deal has not worked out.

“New Zealand Rugby is disappointed that INEOS has breached its sponsorship agreement,” the organisation said in a punchy statement originally released to The Daily Telegraph on Monday. “Most recently, (INEOS) failed to pay the first instalment of the 2025 sponsorship fee, confirming its decision to exit our six-year agreement.

“Having learned of INEOS’ decision to walk away three years early, we have moved to protect the interests of New Zealand Rugby and the wider game. We have been left with no option but to launch legal proceedings to protect our commercial position.”

Appearing to default on a deal with global sports stars is not a good look — and more on INEOS’ explanation later — but it is not the first time it has happened this year.

Two weeks ago, INEOS released its plans for the next edition of the America’s Cup. It had previously blown other investors out of the water in a bid to be sole funders of the British effort, helmed by Ben Ainslie, the sailor who has won four gold medals at the Olympic Games. Now, it was going it alone, without its longtime skipper. Ainslie reacted by threatening “significant legal action”.

The reason for the split has not been made public, with INEOS merely stating it had “not found agreement on terms to move forward”.

In cycling, the most well-known of INEOS’s sporting investments before Manchester United, questions have been raised about its long-term commitment. Standards have slipped since their peak of the 2010s and the squad lacks elite talent. The team’s CEO, John Allert, publicly stated that INEOS “does not want to spend more money”, with the team actively looking for a new co-title sponsor to relieve the burden.

It has led to commentators wondering whether INEOS has simply lost interest. “Ratcliffe is tired of his toy,” Johan Bruyneel, the tactical mastermind behind Lance Armstrong’s seven Tour de France wins (he was later stripped of these titles after an investigation into doping allegations), told The Move podcast. “You also see it in the riders they’re recruiting. They’ve mainly recruited young talents and haven’t signed any expensive contracts. I see it as the beginning of the end.”

It is not just sport — rollbacks are being made in Ratcliffe’s businesses, too.

At the Grangemouth oil refinery, run as a joint venture with PetroChina as PetroINEOS, redundancy letters were sent out to around 450 staff members last week, against the wishes of both politicians and unions. INEOS says the decision was necessary due to market conditions, with the facility set to become a fuel imports terminal, with just 65 workers expected to stay on. The oil refinery was Scotland’s last facility of its type.

Separately, Sky News reported last week that Ratcliffe is planning the sale of INEOS Hygienics, which was set up during the Covid-19 pandemic to distribute hand sanitisers, while four months ago, INEOS Automotive stated that it had temporarily stopped manufacturing its Grenadier SUVs and Quartermaster pickup trucks — citing a lack of crucial components. Production only resumed last month.

The pattern is clear: a slowing down or outright cutting of investment in what had been flagship businesses.

On Wednesday, the INEOS Group received a further blow when leading agencies Fitch Ratings and Moody’s downgraded their credit rating to “negative”, citing mounting debts of almost €12bn (£10bn), over five times larger than INEOS’ annual earnings. There is an irony to Ratcliffe becoming embroiled in a dispute with the All Blacks when so many of his businesses are in the red.

INEOS has provided justification — albeit, the same justification each time.

In June 2024, while lobbying for inter-governmental support for a planned new INEOS facility in Belgium, Ratcliffe told Bloomberg: “Europe’s a mess for petrochemicals today… everybody’s leaving petrochemicals in Europe, which I’ve never seen in my working life before.”

Last month, concerning Grangemouth’s closure, Ratcliffe was quoted in an INEOS press release as saying: “We are witnessing the extinction of our major industries as chemical manufacture has the life squeezed out of it.”

Then, reacting to their credit downgrade, an INEOS spokesperson told The Guardian that the move reflected “broader economic challenges facing the European manufacturing industry, including sluggish GDP growth and ongoing deindustrialisation pressures”.

Protests aimed at saving the Grangemouth oil refinery did not succeed (Jeff J Mitchell/Getty Images)

That brings us to INEOS’ rationale for quitting its sponsorship deal with New Zealand Rugby, which is worth reading in full. It is highly unusual for a sporting contract.

“INEOS has greatly valued our sponsorship of New Zealand Rugby, having contributed over $30m (£24m) to the teams in recent years,” it begins. “However, trading conditions for our European businesses have been severely impacted by high energy costs and extreme carbon taxes, along with much of the chemicals industry in Europe, which is struggling or shutting down. We are witnessing the deindustrialisation of Europe.

“We have had to implement cost-saving measures across the business. We sought a sensible agreement with the All Blacks to adjust our sponsorship in light of these challenges.

“Unfortunately, rather than working towards a managed solution, New Zealand Rugby have chosen to pursue legal action against their sponsor. We remain in ongoing discussion with New Zealand Rugby.”

There is some justification for this argument. INEOS’ overall profits are down — from £3billion in 2021 to £2.2billion in 2022, to just over £1.2billion in 2023. According to leading consultancy McKinsey & Company, the petrochemical industry has reached “the bottom of the cycle”, but the organisation has said it expects “moderate improvement in the near term”. Both Fitch and Moody’s cited weakness in the European chemical industry as reasons behind the downgrade.

INEOS itself has several projects on the go, such as its work in Antwerp, where it has announced plans to build Europe’s most sustainable ethane cracker to produce ethylene, one of the world’s most important manufacturing chemicals. Ratcliffe recently secured a €700m (£583m; $725m) investment from the UK government for that project.

Still, with these numbers, and profits which still exist beside the debt, it is a strange decision to get into a PR battle with an iconic sporting brand over what effectively amounts to pocket change.

INEOS paid $30m for the boon of having its logo on the All Blacks’ kit and has now lost any advertising benefit that came with it over a renegotiation.

Sir Jim Ratcliffe has led a cost-cutting drive at Manchester United (Paul Ellis/AFP via Getty Images)

But this is also a standard move from the INEOS playbook. Go in, strip down the asset, and raise profits — it happened at Grangemouth, Imperial Chemical Industries (ICI) and BP, and now appears to be taking place across his sporting investments.

Ratcliffe also has a history of making wider social statements with a view to securing investment for INEOS — whether mourning deindustrialisation to fund petrochemical plants or rhapsodising about the need for a ‘Wembley of the North’ to convince the UK government to pay for a new 100,000-capacity stadium for Manchester United. There is always a reason, even if it is not the publicly stated one.

“We were opportunistic,” Ratcliffe explained to the Sunday Times in 2018, celebrating his place atop Britain’s Rich List.

“We’d look at businesses that were unfashionable or unsexy, facilities owned by large corporations where you’d know they would be sloppy with the fixed costs. We’d run them a bit better, reduce the costs, make them busy, and over the cycle they are very profitable.”

Ratcliffe has never been afraid of making unpopular decisions to maximise yield. His decision to move the headquarters of multiple companies overseas for tax reasons is another.

But it is also fair to point out that questions arise from these choices and those are now coalescing around Manchester United.

INEOS’ recent business decisions have the appearance of stripping back to protect the motherlode, but even United have not escaped the cost-cutting.

On Tuesday, The Athletic reported that Ratcliffe was following up 250 job losses last summer by making another 100 staff roles redundant over the upcoming months.

This is just the latest in a string of what Ratcliffe has termed “right-sizing” measures — such as removing club credit cards and cutting Sir Alex Ferguson’s ambassadorial deal, as well as raising ticket prices and eliminating concessions for children and pensioners on unsold tickets.

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According to the club’s financial results, these are part of a “club-wide business transformation plan” to “improve operating efficiency via cost-savings, headcount rationalisation and changes to the organisational structure”.

In December, United’s chief executive, Omar Berrada, told staff that 2024 had been “a difficult year and I can’t promise next year won’t be difficult too”. Ratcliffe, for his part, told the United We Stand fanzine in the same month that INEOS had to “make some difficult and unpopular decisions. If you shy away from the difficult decisions, then nothing much is going to change”.

But all of these seem to go against another of Ratcliffe’s previous assertions to The Times in an interview in 2019.

“It’s invest for success, invest wisely for success,” he said of his sporting strategy before investing in United. “We haven’t bought Nice (another of INEOS’ football clubs) to make money, that’s clear. If we want to make money, we’ll do that in chemicals — not football.”

This season has been a struggle for Manchester United (Michael Regan/Getty Images)

So what is the vision for United? If the deals with other sporting investments are falling by the wayside to fund them, that is at least a strategy, but recent actions point in the other direction. Is INEOS refocusing, streamlining, or even beginning a managed withdrawal from sport? There is an argument to be made for each.

Ratcliffe needs to answer why the Old Trafford cuts are taking place despite INEOS’ overall profits — and justify that they are not linked to the lingering debts which are worrying ratings agencies. If cuts at Manchester United are part of a strategy to manage the financial health of the overall group, that is a very different prospect to what was initially sold to the club’s fans. When INEOS took over their stake, it was meant to be with different ideals to the Glazers.

A request to INEOS to discuss what recent business decisions meant for Manchester United went unanswered, so we are left with what Ratcliffe has stated before.

“INEOS never wants to be the dumb money in town, never,” he told The Times in 2019, but this absolutism comes with risks. In the exchange of EQ for IQ, cuts that seem insignificant leave lasting damage.

In this apparent move to protect the trunk of the business, he is at risk of becoming the tree surgeon who has lopped off every bough, only to discover he has no way to get down.

(Illustration: Demetrius Robinson / The Athletic; Photos: David Klein/Sportimage/Cal Sport Media via AP Photos, Hagen Hopkins/Getty Images)