Joy Division's Unknown Pleasures was released in June 1979, the month after Margaret Thatcher had been elected Britain's first female prime minister with 13.7m votes (44%). Produced by Martin Hannett at Strawberry Studios, it was the first LP to be released on Factory Records, now based on Palatine Road in West Didsbury. Its dark sound reflected a darkening mood in the north of England at the time (1975-80 being the period of the Yorkshire Ripper), complimented by Peter Saville's sleeve design. In May 1980, as Joy Division were preparing to tour North America, singer Ian Curtis committed suicide. Ultimately this tragic moment resulted in increasing popularity for the band as their single 'Love Will Tear Us Apart', already a hauntingly beautiful song, became a chart success, as did their second album Closer. The remaining members of the band decided to carry on as New Order, with Bernard Sumner taking over vocal duties. In June 1981, as youth unemployment and racial tensions took their toll across the country, Moss Side became the latest inner-city area to erupt in mass riots, following on from the Brixton riots in April, and preceding the Toxteth (as well as Chapeltown and Handsworth) riots in July. A period of disenchantment seemed to be reflected in attitudes towards the city's architecture, with the Arndale Centre and the Hulme Crescents both coming to represent a cold, non-people-friendly austerity.
Factory Records had a forward-looking, civic-minded agenda so it was decided that profits from the sales of Joy Division and New Order's albums would go towards the creation of a new nightclub, based in a former warehouse building on Whitworth Street. Mike Pickering (who can be seen watching Manchester City with Noel Gallagher in the film Blue Moon Rising) was invited back from Rotterdam to book acts for the venue. It was to be called The Hacienda, based on a slogan from the situationist movement which had inspired Tony Wilson: '...the hacienda must built.' Punk rock had acted as a great leveller, demolishing everything that existed before, and now something had to be built in its place. Heavily influenced by the clubs in New York which Factory and New Order were now becoming familiar with, The Hacienda was to be a mixture between live music venue and nightclub, although it eventually came to be associated with DJ-only nights. The interior was designed by London-based Ben Kelly who used the distinctive yellow-and-black colour scheme which has since come to be closely associated with the club and the city itself. At a cost of £344,000, it came in way over budget (as had the Manchester Arndale Centre at £11,500,000), creating financial problems its owners were never fully able to overcome.
Modern, over-the-top, ahead of its time, The Hacienda was opened in May 1982, the same year as the formation of The Smiths. It was one of the first clubs to have no dress code. The emphasis here was to be on the music rather than fashion. In March 1983, New Order's Blue Monday was released. A dance classic, it was to become the biggest-selling 12-inch single of all time. The Smiths played at The Hacienda in July and the stage was strewn with flowers, with singer Morrissey describing the iconic Manchester venue as "sterile and inhuman". In January 1984, Madonna made her first UK TV appearance on The Tube, performing at The Hacienda. A month later, The Smiths released their debut album, the first of four to be released over a four-year period. In the miners' strike of 1984, Lancashire miners were not as militant as their Yorkshire counterparts but it was a period of conflict and hardship nonetheless. July 1986 saw Factory Records organize the Festival of the Tenth Summer (it being the tenth summer since the Sex Pistols had played their seminal gigs the Lesser Free Trade Hall), with The Fall, The Smiths and New Order playing at the G-Mex (an exhibition centre based in the building which had housed the Manchester Central train station). In November, Alex Ferguson was appointed manager at Manchester United, beginning a reign that was to outlast that of fellow Scotsman Matt Busby. The club had won the FA Cup in 1983 and 1985 (reaching the semi-finals of the European Cup Winners' Cup in 1984) but had not won the league since 1967.
The summer of 1988 was known in Manchester as the second summer of love (a term which also covers the summer of 1989), with ecstasy becoming popular amongst club-goers and The Hacienda in particular becoming a centre for the new genre of Acid House (symbolised by the yellow smiley face). Whilst the drug-fuelled euphoria of the period is seen as a highpoint for the club (and the city itself), it also marked the beginning of its demise. Sales of alcohol decreased and gangs started causing trouble on the door and inside the venue as guns gained prominence, making young men from inner-city areas like Salford, Cheetham Hill and Moss Side effectively untouchable. The Stone Roses released their debut album in 1989 (since described by the NME as the greatest British album ever) and played at Spike Island in May 1990, the month New Order released World in Motion, the band's only number one single. On 4th July, England lost on penalties to West Germany in the semi-finals of the World Cup, the furthest they had gone in the tournament since winning it in 1966. The Happy Mondays released their album Pills n Thrills and Bellyaches (which contained the single Step On) on 27th November 1990. The next day, Margaret Thatcher left 10 Downing Street for the last time as Prime Minister. It was an exciting moment for a city that stood on the verge of greatness but still had a lot of problems to overcome.