Manchester United plans 2nd refinancing

Ferguson.jpgThe downside of the credit bubble continues to impact the UK’s Premier League, and the blog’s own soccer club, Manchester United.

Today’s Guardian notes that United were bought by the US Glazer family for £810m ($1.3bn) in 2005, using £540m of debt. Since then, it says this debt has “cost United £340m in cash” in interest/fees. “Over £200m” of interest is also secured on the Glazers’ own shares, via PIK (payment in kind) loans at 14.25% interest.

Now the club intends to refinance again. The Guardian says this will allow the Glazers “to reduce the amounts they owe in PIK” loans, and to “take almost £130m cash out of the club next year“.

This financial engineering is clearly a short-term win for the Glazers. But longer-term, the picture is not so rosy. The interest bill on the new £500m bond will be £45m alone. This cash might otherwise have enabled United’s manager, Sir Alex Ferguson, to buy new players to support his title hopes. Equally, ticket prices have doubled, which will no doubt reduce the fan base for the future, as families can no longer afford to attend.

About Paul Hodges

Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry. He also serves as a Global Expert for the World Economic Forum. The aim of this blog is to share ideas about the influences that may shape the chemical industry and the global economy over the next 12 – 18 months. It looks behind today’s headlines, to understand what may happen next in critical areas such as oil prices, China and Emerging Markets, currencies, autos, housing, economic growth and the environment. Please do join me and share your thoughts. Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.


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