It is a club that has built its success on a twin policy of winning on the field while conquering the corporate world but this week Manchester United, the world's most financially successful club could be plunged into the biggest crisis in its history.

Its largest shareholders have threatened to call an emergency general meeting (e.g.m.) if manager Alex Ferguson is given a contract that they do not approve of and their demands for greater financial transparency are not met.

United's fans were expecting to see Ferguson sign a two-year extension to his contract this week, worth around £4 million which would keep him at the club until 2007. Both the United board and manager claimed that they were close to agreement. The Irish racing tycoons, John Magnier and JP McManus, beg to differ.

Magnier and Ferguson have fallen out over the breeding rights to Rock of Gibraltar, a horse that they once owned together. The champion horse of 2002 is worth up to £200 million at stud and Ferguson expected to collect half of it once the horse retired. Magnier refused, saying he was only entitled to breed one mare a year for five years from the horse.

Ferguson duly started legal action against him in Ireland last year and rejected a settlement of £7 million. Magnier's response appears to have been a series of stories placed in the press attempting to destabilise the manager and the implication that he is prepared to go much further.

Over the past few weeks, newspapers and television have been full of questions about fees that have been paid to agents over players that United have signed, including the goalkeeper Tim Howard who was signed last summer. There have been suggestions that some of the agents who have received payments have had connections with Elite sport management agency, which is part-owned by one of Ferguson's sons, Jason.

Yesterday, it was revealed that Cubic Expression, the vehicle that Magnier and McManus have used to buy a 25 per cent stake in the club, has issued an ultimatum to Roy Gardner, the chairman of Manchester United, demanding that negotiations over Ferguson's contract be halted while a thorough investigation is conducted into recent transfer dealings.

Last night it became clear that they were prepared to call an e.g.m. to prosecute their case. Sources close to the Irish duo said yesterday that, if the Manchester United board announced Ferguson's contract without their support and failed to meet their demands for a full, independent investigation into the club's finances, there would be further action: "If we are not satisfied then we will seriously consider calling an e.g.m. We would only need three to four weeks notice. At the e.g.m. we will be demanding that independent auditors be appointed to look at all financial aspects of the club, particularly transfers and the use of agents.

"United is a big public company not just one of the world's most famous football clubs and the highest standards of corporate governance must apply. This is not the case at the moment, a lot of money is being spent and it is not quite clear where it is going." In their last and most hostile letter to the United board, Magnier and McManus warned that they would "reserve all our rights as shareholders to take such action as we may be advised".

For a motion at an e.g.m. to be successful, the Irish duo would need to get 50 per cent of the polling vote.

They own 25.49 per cent but would be expected to be joined in any vote by Dermot Desmond, who owns just under three per cent of the club and Harry Dobson, the Scottish mining tycoon, who owns 6.5 per cent. City sources expect that the Tampa Bay Buccaneers owner, Malcolm Glazer, who has 14.31 per cent would not vote on any such motion, leaving Cubic Expression very close to a simple majority on any motion.

Shareholders United, an umbrella group that represents small shareholders in the club, who hold approximately 17 per cent of the stock, however issued a statement in support of Ferguson. Shareholders United spokesman, Oliver Houston, said: "Sir Alex is undoubtedly one of the club's and the company's best assets. It would be a disgrace if personal score-settling, bullying and dirty tricks were allowed to win the day."

The two camps spent most of yesterday suggesting that it was the other side that was unwilling to settle the dispute.

The Irish claimed that they sent a seven- page letter to the United board more than a month ago with 63 questions they want answered relating to financial affairs. They claim that they have still not received a reply and have not received replies to any other letters they have written.

United claimed yesterday that they had twice tried to meet Magnier and McManus but on both occasions they had cancelled at the last minute.

Roy Gardner, chairman of the United board is understood to have offered to break his holiday to meet the two men in Barbados but once again the meeting was cancelled.

United also claim that they have already put in place measures for greater financial transparency such as publicly announcing an agents fee for transfers over £5 million.

A club source said: "We have been trying to meet with them so that we can discuss their concerns. They have obviously raised a number of issues and we want the chance to address them but have not been able to do so as yet. It's difficult to tell what their motives are but they have not asked for a seat on the board and we need to sort out this situation as soon as possible."

During the FA Cup tie at Northampton Town yesterday, the club's fans made no secret of where their loyalties lay, chanting: "United not for sale" and colourfully suggesting that John Magnier desist in his crusade.

The Northampton fans responded with cries of: "Fergie's going to get the sack." It may not come to that, but Ferguson is in danger of experiencing his most significant defeat as Manchester United's manager.

Guardian Service