Glazers could take £130m out of Manchester United next year

Rooney9 SG

The calls are growing for Sir Alex Ferguson to put the Glazers’ money, or at least a portion of the sum they have borrowed, where his mouth is.

Two independent Manchester United supporters’ groups have arranged an open meeting before this afternoon’s Barclays Premier League match against Burnley at Old Trafford to voice concerns about a lack of investment in the team.

Ferguson has repeatedly claimed since the £80 million sale of Cristiano Ronaldo last summer that money is there to strengthen the squad, although he has been reticent when it comes to spending it. Antonio Valencia, Gabriel Obertan and Michael Owen were his only signings last summer and the manager is adamant that there is no need to enter the transfer market this month.

Ferguson has claimed that it is impossible to complete good-value deals as a result of the inflationary pressure caused by Real Madrid and Manchester City, an argument that tells only half the story. The biggest names — Franck Ribéry, Sergio Agüero and David Villa — may be overvalued as a consequence of the Ronaldo deal and the suspicion that Real are waiting in the wings, but it does not say much for United’s scouting network if they cannot give Ferguson alternatives.

Ferguson has rarely shied away from splashing out — he is responsible for three of the top five transfer fees in British history — and the suspicion will remain that the funds are not available until more signings are made. The Scot is also not usually one to hide behind the common fallacy that good players are not available in January, two of his best recent signings having arrived in this window.

Ferguson signed Nemanja Vidic and Patrice Evra within a week in January 2006, players who contributed more than most to United’s overhauling of Chelsea in the subsequent seasons. A similarly dramatic intervention may be needed to prevent Chelsea leaving United behind.

Goalkeeper

Edwin van der Sar will make his first appearance since November against Burnley, but it could merely be the start of a long farewell. The 39-year-old is out of contract in the summer and will soon announce his plans for the future, with his wife’s brain haemorrhage last month increasing the likelihood that he will retire. Ben Foster is suffering a crisis of confidence and Tomasz Kuszczak has never been viewed as a genuine No 1.

Ferguson has looked at Sébastien Frey, of Fiorentina, and Igor Akinfeev, of CSKA Moscow, but Sergio Romero may be a better long-term option. The 22-year-old has done enough at Alkmaar to put himself in contention to be Argentina’s first-choice goalkeeper at the World Cup, after which his £5 million valuation is likely to rocket.

Central midfield

United’s need for a dominant presence has been clear since Barcelona passed them to death in last season’s Champions League final, but Ferguson has trusted in what he has, not least because Paul Scholes, Michael Carrick, Darren Fletcher and Anderson do not object to squad rotation.

The aura of invincibility exuded by Roy Keane is a thing of the past, however, because the former captain was never adequately replaced, so what better than to bring in a carbon copy of the Irishman’s nemesis, Patrick Vieira? Moussa Sissoko, the 20-year-old box-to-box midfield player, has ushered Vieira towards the international wilderness with France and although Toulouse felt able to reject a £12 million offer from Tottenham Hotspur last summer, double that fee from United would surely be too much for them to resist.

Width

If Ferguson thought that replacing Ronaldo gave him a headache then the United manager will soon face an even bigger problem, because not even Ryan Giggs can go on for ever. Ángel Di María is closer to Ronaldo than Giggs in that he possesses electric pace and can operate on either flank, and the Argentinian may make a bigger impact than Valencia. The 21-year-old would not come cheap, but Benfica can look forward to a huge profit on the £6 million they paid Rosario Central three years ago.

Strikers

Ferguson would have more money to play with had he not spent £30.75 million on Dimitar Berbatov 18 months ago, a triumph for Daniel Levy, the Tottenham Hotspur chairman. Berbatov’s contribution has been so limited that he needs to be supplemented, if not replaced, as Ferguson implicitly acknowledged last summer by offering Lyons £30 million for Karim Benzema.

United may attempt to sign Benzema from Real in the summer as part of the deal that is likely to take Vidic to the Bernabéu, but Nilmar would be a cheaper option. The 25-year-old Brazilian made little impact in his first spell in Europe with Lyons, but has enjoyed a new lease of life since his £10 million signing for Villarreal last summer and is expected to be one of the stars of the World Cup.

Rooney9 SG

The Glazer family, who own Manchester United, can take almost £130m cash out of the club next year alone if enough lenders sign up for the bond they have launched to borrow £500m for United.

Nestling in the small print of the 322-page bond prospectus are provisions allowing the Glazers to take £70m out of the club's cash reserves, which includes the money they have received from selling players such as Cristiano Ronaldo. The document also reserves for the Glazers the legal right to pay £25m out of the club in a dividend, and half of what is termed "consolidated net income". This is effectively the club's cash profits, which based on the most recent accounts would have meant £23m being paid out last year.

The bond's terms also note that the Glazers will have the right for £6m a year to be paid to companies they own "for administration and management services", and a further £3m "in respect of services provided by directors, officers or employees" of companies the Glazers use to hold their shares in United.

That money, added to the £70m and £25m one-off payments, plus the half of United's cash profit they can take out each year (equating to £23m last year), add up to £127m next year alone.

That huge figure is in addition to the straightforward payment of interest (yield) on the £500m the club will have borrowed via the bond, which at a mooted 9%, will be £45m. That will bring the total taken out of United to service the Glazers' borrowings, which were loaded on to the club after the family bought the club in 2005, to £172m next year alone.

It has become increasingly clear since the prospectus was launched last week that its principal purpose is to allow the Glazers to take cash out of United to reduce the amounts they owe in "payments in kind" to hedge funds, which are running at a punitive £14.25% interest. Standing at £175m in the year to 30 June, 2008, the "payments" accrued £25m interest in the year to 30 June, 2009, and so stand now at over £200m. That debt is secured on the United shares the Glazer family own, and it is clear their financial priority is to use United's giant turnover and profits to pay down that debt before the interest "rolls up" dramatically.

A calculation of the total cash which the bond would entail being paid out of United in dividend payments, the yield from the bond, management fees and the possible requirement for the club to lease the Carrington training ground, is more than £500m between next year and the maturity of the bond in 2017.

If the bond issue is fully taken up by lenders, it will mean that since the Glazer family bought United in May 2005 for £810m – £540m of it borrowed from banks and hedge funds – their takeover will have already cost United £340m in cash. That comprises £220m in bank interest plus "early-repayment premiums" made when the borrowings were first refinanced in August 2006. A further £120m will have been incurred in fees paid to bankers, lawyers and other professionals – the fees for this bond issue are noted as £15m – plus £35m incurred by the club's interest rate hedging arrangements.

On top of that, the "payments" have incurred interest payable of around £124m since the Glazers first borrowed the money to buy United.

A Glazer family spokesman, who also speaks for United on financial matters, declined to comment.

Nick Towle, chair of the Manchester United Supporters' Trust, said: "It is a shocking picture. These are immense amounts of money being leaked out of United to pay banks, lawyers, the Glazers themselves and interest, to pay for a takeover none of the supporters, or the United board itself, wanted.

"United's success and profits could have been used to keep ticket prices affordable or invest in the team but instead we see this heartbreaking waste, just because one family ultimately hopes to make a profit from the club."

grandmaster89 SG

Dear Mr Towle, Glazer didn't steal United shares or magically became its owner through a fire-sale. It was a willing buyer-willing seller situation. Our dear former owners (hundreds of shareholders) sold United willingly to Glazer. The fans have no say in this matter since they are not the owners of United - they are United's repeat customers. If they didn't like this bitter truth, they would have joined FC United but instead over 99% stayed true to United because this is the hard but bitter truth.

iceFatboy SG

yep, the ones who sold to Glaciers are the culprits same as the ones who sold Pool to the americans.