The club played few recorded matches in their early years, initially playing against other teams of railway workers, within their own company and against teams from other companies. The 1882–83 season saw the Heathens play a total of 26 recorded friendly matches, and the next season they applied for the Lancashire Cup. However, they were knocked out in the first round by the reserve team of the previous season's FA Cup winners, Blackburn Olympic, losing 7–2.
Perhaps viewing the county cup as too much of a challenge, Newton Heath applied for the Manchester and District Challenge Cup in 1884, reaching the final at the first attempt. The team never failed to score at least three goals in each of the rounds leading up to the final, including a first round match against Eccles that had to be replayed after the Eccles management protested about Newton Heath's third goal. Unfortunately, the team lost their goalscoring form in the final and lost 3–0 to Hurst at Whalley Range. The club's failure to progress past the second round of the Lancashire Cup, however, caused them to refrain from entering for the next four seasons.
After that, Newton Heath reached the final of the Manchester and District Challenge Cup five times, only losing once. Meanwhile, in 1886, the club decided to expand by turning what was a "junior" club into a senior one. They signed players of national reputation such as Jack Powell, who became club captain, Jack and Roger Doughty, and Tom Burke. The club's greater stature meant an increased level of opposition, and they entered the FA Cup for the first time in 1886–87. They were drawn away to Fleetwood Rangers in the first round, and managed to earn a 2–2 draw by the end of normal time. However, the referee had turned up to the game expecting to play extra time in the event of a draw; the Newton Heath captain Jack Powell refused to play the extra period, though, and Fleetwood were awarded the tie, after a protest to the Football Association. Newton Heath then went into a self-imposed exile from the FA Cup, not entering again until 1889.
In 1888, having been spurned by the Football League earlier in the summer, Newton Heath entered their first ever league competition, becoming founder members of The Combination. Their first season of league football began brightly enough, but in April 1889, the Combination hit financial difficulties and was wound up before the season could be completed.
The next year, Newton Heath began to sever their railway ties, dropping "LYR" from their official name. However, strong connections remained intact, although they no longer were sponsored by the company, most of their players were still LYR employees.
1892 proved to be a successful season for the "Heathens", as they finished second to Nottingham Forest after losing only three times all season. That same year, the Football League enlarged and, with the merger of the Alliance, divided into two divisions. Newton Heath and Nottingham Forest were invited to join the First Division. They finished last and needed a win against Small Heath in the playoff against the Second Division champions to preserve their First Division status.
In 1893, the team moved to a new ground in Bank Street, Clayton, next to a chemical plant. It was said that when Newton Heath were losing, the plant would belch out acrid fumes in a bid to affect the visiting team.
The 1893-94 campaign, however, was no better, and they once again were in the relegation playoff against Liverpool. This time Newton Heath were defeated 2-0 and had the dubious honour of being the first team to be relegated to the Second Division.
It was the escape and recapturing of the dog which led to the meeting between team captain Harry Stafford and Davies, who would lead a group of businessmen. Together, they came up with £2,000 to save the club from bankruptcy.
John Henry Davies became the club president, and on 28 April, 1902, the new owners renamed the club Manchester United Football Club, after considering the alternate names "Manchester Celtic" and "Manchester Central". They also changed the team's colours to red and white. The cavalry arrived just in time as Newton Heath ended a disastrous season 15th with only 28 points.
Having been saved from oblivion by four wealthy businessmen, the club played its first season as Manchester United in 1902/03. The badly needed injection of cash, plus some new players, gave the flagging side the boost it needed. They won 15 league games, notched up 38 points and finished fifth.
After a bad start to the season, the club took another important step in 1903 in hiring their first real team manager, J. Ernest Mangnall, a charismatic publicist who knew how to work the media. His dynamic style forced the side to go up a gear. By the end of the season 28 players had figured in first team games. He believed the ball should be kept away from players during training to make them even keener to get hold of it on Saturdays. Under his leadership, the team finished third in the Second Division. The following season, Manchester United set a record when they went 18 games undefeated after losing to Bolton 2-0 in September 1904 up until they lost to Lincoln 3-0 in February 1905. During the season they finished 3rd with 53 points. Off the field the club suffered a financial setback when they were banned from selling alcohol inside the ground.
Mangnall created United's first successful side with a series of signings, eventually winning promotion in 1906. They finished second overall and reached the quarter-finals of the FA Cup, beating Aston Villa 5-1 in the fifth round. Among these signings was Billy Meredith, the legendary winger who was probably the greatest player of that era.
Ernest Mangnall managed to sign star defender Herbert Burgess, Alec "Sandy" Turnbull, and Jimmy Bannister after a scandal hit Manchester City and forced them to sell off most of their team. It paid off, and Manchester United won their first League Championship in 1908. At one point they won ten games on the trot. They even attempted to sign Australian rugby footballer, Dally Messenger, a man recognised by some to be the top footballer of any code in his day. It was, without doubt, a classic season, marred only by the first signs of crowd trouble at Sheffield.
The move inflamed the players, Manchester United's especially. They refused to give up union membership. Most clubs turned to amateurs to replace their professional players, but United were unable to sign enough. It was during this period that the famous "Outcasts FC" photograph was taken. Finally, the day before the season was due to begin, the League gave in, removing the suspensions and recognising the union.
Ernest Mangnall's leadership brought United to their first successful era. They would be the first winners of the Charity Shield in 1908, and the League again in 1911 pipping Aston Villa on a tense last day of the season. The Charity Shield victory in 1911 would be the end of this era and J. Ernest Mangnall would leave the next year for Manchester City.
Without Mangnall, the club stumbled to 13th place in 1912. Attendances slumped to 15,000 and the squad started to age under the leadership of JJ Bentley. They narrowly escaped relegation in 1914-15 by one point; three of United's players were later found to have conspired with Liverpool players in fixing a United win in the match between the sides, in the 1915 British football betting scandal. The United players were found guilty of match-fixing and banned for life.
Demoted to Division 2, United were a mere shadow of the former team. None of the big names from the pre-war era remained and fans had to get used to seeing the likes of Clapton and South Shields visit Old Trafford. Having finished 4th in their first season after relegation, they ended up 14th during the 1923/24 season, losing to sides like Clapton.
United finally returned to the top flight under John Chapman in 1925, finishing second to Leicester City. But in 1927, one of the great builders of Manchester United died. John Henry Davies, who had saved the club from extinction and brought them to Old Trafford, died and was replaced by G H Lawton as club president. That same year, Chapman received a lifetime ban from involvement with football for reasons known only to himself and the F.A., and was replaced for the rest of the season by experienced player Lal Hilditch. The team lost 15 games and finished a disappointing 15th.
A new manager, Herbert Bamlett, was appointed but his reign was not a successful one as United slowly slipped in the standings, never finishing higher than 12th in 1929 and finally finishing bottom of the league in 1931 after starting the season losing twelve times in a row. The finances were once again in a mess, and the much criticised Herbert Bamlett lost his job. Secretary Walter Crickmer was given control of the team for the next season, and was aided by chief scout Louis Roca, largely because the club couldn't afford a new manager. The players had gone to collect their wages on Christmas week and were told there was no money available. Another financial bailout was needed.
Enter James W. Gibson, who was approached by a Manchester sportswriter, Stacey Lintott. He met with the board and offered to help on condition that he became chairman and could choose his directors. They had little choice but to agree, and Gibson invested £30,000 into the club. A new manager was found, Scott Duncan, one of the new breed of managers who were retired players, now common, but an innovation in those days.
The next season saw an improvement with the side winning ten out of eleven games during October and November 1934. It seemed things were back on track and the fans started to flock back to Old Trafford as United finished 5th, and they announced their return to the top flight with a shout as they won the Second Division title in 1936 after being unbeaten in the last 19 games of the season. The title was won with a 3-2 victory at Bury, where over 31,000 fans invaded the pitch to celebrate a return to the big time.
Their joy was short-lived, however, as they were relegated back to the Second Division the next season. Scott Duncan resigned, and Crickmer resumed the manager's chair. Although now £70,000 in debt, United picked themselves up and finished runners-up in 1938, returning to the First Division, with future stars such as Johnny Carey, Jack Rowley and Stan Pearson. They would stay there for 36 years; after finishing 14th the next season, World War II broke out.
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