Manchester venue the Victoria Warehouse claims that the term ‘Madchester’ was coined in 1989 by Factory Records video director Philip Shotton, and the end of the 80s saw the scene burgeoning in popularity. Shotgun is one half of the Factory Records video directors 'Bailey Brothers' (the other half being Keith Jobling).
In "The Stone Roses", by Simon Spence, (excerpts presented on The Manchester Confidential), Jobling is quoted as saying that the phrase originated while developing a script about car thieves and, to avoid potential legal issues, needing to change the setting of the film from Manchester to a fictional setting: "Madchester".
Approximately a month later, Tony Wilson, head of Factory Records, instructed the Happy Mondays to rename their respective cord from "Rave On" to “Madchester Rave On".So, the name "Madchester" predates the record by approximately one month.
Shaun Ryder, the lead vocalist of the Happy Mondays remembers:
It was our video directors, the Bailey Brothers, who came up with the term "Madchester", but we said, "Great, yeah, go with it", because Manchester was mad at the time.
The likelihood is that the term "Madchester" came out of the script must meeting between Shotton and Jobling and neither can quite remember who originated it.