The following clarification was published on Sunday 21 March 2010

Alex Ferguson has asked us to confirm that, contrary to claims from City sources reported in "Alex Ferguson 'backing bid to buy Manchester United', say City financiers", The Observer, 7 March 2010, he is not involved in the Red Knights and does not support their proposed bid to take over Manchester United. If this was not clear in the article, we regret any misunderstanding.

Senior City financiers allied to the wealthy consortium planning a takeover of Manchester United claim Sir Alex Ferguson is supporting the controversial bid.

Several key sources have told the Observer that they believe that the Old Trafford manager would be prepared to invest his own money in the club if the bid by the group known as the "Red Knights" were to succeed.

"Alex Ferguson is not only supportive of the bid but would be prepared, if successful, to back it," claimed one source who described it as a "killer blow" for the American Glazer family who bought the club in 2005 and who are now facing massive protests from fans because of the club's debts.

Another senior City figure, who also requested anonymity, said: "We all know we have his support, that he likes the people involved, but we can't embarrass him."

Last night Ferguson furiously denied that he was supporting the buyout in any way. "It's absolute rubbish. Not an ounce of truth in it," he said.

A spokesman for the Red Knights refused to discuss Ferguson's position. Leading their bid is Jim O'Neill, chief economist of Goldman Sachs, a member of the United board before the Glazer takeover and a close friend of the United manager. O'Neill has angered the Glazers by criticising the debt United have been forced to carry.

Any sign of Ferguson's support would galvanise the takeover bid which could see Manchester United being sold for as much as £1.2bn even though the Glazer family consistently say the club is not for sale. The latest figures show that it has debts of £716m.

The Observer's revelation of these claims will raise the stakes at a sensitive stage in the bid but may encourage some of the wealthy waverers who have shown tentative interest in signing up to the consortium.

Ferguson has declined to attack the Red Knights' plans, saying they were entitled to protest against the Glazers. He said: "I know some of them, I'm quite friendly with a couple of them. If they want to try to buy the club, it's entirely up to them." But he has never criticised the US owners of United despite allegations from fans that his transfer kitty is being affected as money is draining out of the club to service its huge debt.

Last month the United manager told the Observer: "I've got owners who have never caused me any bother. Any time I've asked for money they've given it to us. The Glazers have been fine with me, I've never had any problem."

The club's chief executive, David Gill, has said a takeover from the Red Knights would be unworkable while adding he was "confident" that the Glazer family retain the support of Ferguson.

Yet those close to the consortium claim they would not have launched their audacious bid to buy United without believing the manager was behind them.

High-profile figures involved in the Red Knights include investment banker Keith Harris who has called on fans to boycott games.

Yesterday it also emerged that another City grandee had joined the team. The former chief executive of Centrica, Sir Roy Gardner, is said to have emerged as another investor.

Gardner, a former chairman of Manchester United, resigned soon after Malcom Glazer took control of the club for £800m in 2005.

Since the Red Knights' takeover plans emerged last Monday, the Manchester United Supporters' Trust has seen membership soar in a show of support for the potential new owners.

Last night membership was inching towards 120,000 – more than double the figure when the Red Knights bid was announced. Many fans are angry over rising ticket prices in tandem with the amount of money being taken out of the club by the Glazers to service the debt.

Ferguson is attempting to guide United towards an unprecedented fourth consecutive Premier League crown and a third Champions League final in a row, an achievement never before realised by a British club.

The manager, who has won 26 trophies in 24 years at Old Trafford, has refused to criticise fans wearing gold and green scarves, which symbolise opposition to the Glazers, saying "all sinners welcome".

The campaign, based on the colours of United's forerunners, Newton Heath, was conceived as a visible statement against the club's US owners and the growing level of anti-Glazer sentiment is evident in their rising presence on the terraces.