Fresh financial strife awaits Manchester United tomorrow when a
damning fans' report accuses the Glazers of running up a
£100million interest bill this year.
The Independent United Supporters Trust insist the £660m debt
started by the club's American owners is spiralling out of control
and is now "a ticking time-bomb".
And in a statement to be released to the City tomorrow, the Trust
claim:
* The club's interest payments have INCREASED by a staggering £28m
this year.
* The Glazer family have passed on rising costs by HIKING ticket
prices by nearly 50 per cent.
* Some fans are taking LEGAL action.
* Other supporters have been FORCED to give up their season
tickets.
Owner Malcolm Glazer seems to have sunk the Red Devils so deeply
into the red following his £790m takeover in 2005 that even leading
City financiers believe his only lifeline is to sell up.
Trust spokesman Oliver Houston declared: "The Glazers got very
lucky with the increased television revenue and the new shirt
sponsorship deal with AIG.
"But people should realise this extra money is being used merely to
service the debt. The Glazers have not put any money in at all for
new players. A lot has been made of the £50m transfer fees spent in
the summer but this all came out of club funds and is being
financed on the never-never.
"The simple fact is prices are going up not just season tickets
but car parking, catering, everything."
"This has caused such a negative reaction from loyal fans priced
out of Old Trafford that, for the first time in a generation,
season tickets have not sold out and the much-vaunted waiting list
has disappeared.
"And some angry supporters are taking legal action against the club
over the new Automatic Cup Scheme (which requires all season-ticket
holders to pay for all cup games whether they want to go or not)
and the unfair way it was introduced."
As we exclusively reported last week, rival groups from China and
Dubai are ready to pay up to £1bn for the world's biggest club. Yet
the Glazers continue to insist they will NOT sell and are in for
the long term.
We probed the Americans in a bid to unravel United's financial
structure. But they politely refused our request to shed light on
the deepening concerns about the club's future in the climate of a
global credit crisis.
The Trust report claims the debt is split into five separate
loans.
The first loan of £75m was borrowed over seven years at a current
interest rate of 8.81 per cent producing annual interest bill of
£6.61m.
The second of £150m, borrowed over eight years at a current
interest rate of 9.31 per cent, produces interest of £13.97m. The
third, also of £150m, over nine years at 9.69 per cent, is running
up an annual interest bill of £14.53m.
Another 10-year £150m loan at 12.19 per cent is producing £18.28m
annual interest, while the final £135m "Payment in Kind" loan is
costing £23.3m in interest, although it is not payable this
year.
On top of that, City experts estimate United will pay at least
another £24m in capital repayments, bringing the total to more than
£100m.
A City expert told us: "The problem is the Glazers have entered a
deal which meant they put very little money in but have taken on a
lot of debt. They are clearly looking at all kinds of
securitization, like future season ticket sales to raise cash
immediately and cut the debt.
"In today's climate, it is clear with these levels of borrowing at
such high interest rates, the Glazers need to do something dramatic
and quickly. There are really only two options to somehow get the
cost of the borrowing down or sell the club."
And the Trust statement continued: "Taking the figures from the
July 2006 refinancing documents, copies of which we have seen, we
have calculated United's current interest and debt service
bill.
"Due to recent turmoil in the markets and cumulative interest rate
rises since July 2006, the total annualised debt cost to Manchester
United has hit £100m for the first time since the takeover in
2005."
It was only a year ago the Glazers refinanced and they recently
held talks with three banks JP Morgan, Deutsche Bank and the
Royal Bank of Scotland about a new debt structure.
Those talks failed to produce a deal, leaving United with a £62m
annual interest bill.
But the club still manage to make huge profits and there are
forecasts of operating profits of £90m for the year ending
2007.
This is due mainly to staggering gate receipts of around £87m, a
£14m-a-year sponsorship deal with US insurance giants AIG and the
Premier League's TV deal.
