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Under the Thumb of Debt: United’s financial future under Glazer ownership

Today gave us the chance to see United’s latest financial results and what the IPO now means for the club. While the IPO has reduced Manchester United’s debt by £62.7m, which is a good thing, there is still a huge outstanding debt of £359.7m from the Glazer takeover in 2005. There is also the hidden question of the old and forgotten Payment In Kind Debts. The belief is that it has been hidden away in Delaware in another form. When that disappeared over a year or so ago it was £249m.

The overvaluation of the shares which the Glazer family wanted has been proven to be just that. Overvalued. They at first wanted between $16-20 per share and that was later lowered to $14. They’ve been hovering between $12-13 for the last month or so.

My view is that surely the Glazers would like to put more shares on the market and keep the same limited rules in place. Limited or next to no voting rights with the Glazers keeping complete control over the club for a slight overvaluation. Pulling that off again is very questionable due to the lower value of the current shares. The possible lower value of future shares would surely reduce demand and further devalue the club.

How the debt will be reduced in the future remains unknown but there are options. Using the club’s future cash flow from increased sponsorship deals such as the one signed with General Motors or the increase from future television rights, could see the debt reduced. The increase in TV rights next season could see the winners bank over £100m and the teams in the relegation zone could possibly be banking more money than the Premier League winners last season.

The next question isn’t just for United fans but for fans of all clubs. How do the Glazers and other owners plan to use the huge increases from selected revenues over the next few seasons? At United it could go many ways but the most likely two are an increase in players wages and reducing United’s or ‘Glazer’s’ debt. Neither are good in my eyes and both can be seen as a waste. The players are already paid huge amounts of money and it would be better if the debt was paid from other sources rather than the clubs revenues.

With United’s spending on debts and fees now reaching over £550m, it’s scary that there is £359m of debt still on the club with another £249m+ of Glazer’s personal debt hidden away. They have even resorted to selling of part off the club to achieve this. The press and fans have all been told the Glazers are meant to be long term owners but it’s certainly questionable now they have shareholders to impress.

Check out Andy’s blog on the ownership of Manchester United and follow him on Twitter – @WEWANTGLAZEROUT

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8 responses to “Under the Thumb of Debt: United’s financial future under Glazer ownership”

  1. ChrisW says:

    Please, just stop this scaremongering. The debt is now small compared to the value of the club – £360m versus 1.5bn. The club is profitable even including interest payments and transfer fees. We don’t have any financial problems. There are many ways of reducing the debt, or they can just leave it in place and pay the interest. Either is fine.

    No one likes the Glazers. Without them we would be better off. But even with them we are fine. That’s mostly down to luck rather than good judgement but its a fact.

  2. ChrisW says:

    Please, just stop this scaremongering. The debt is now small compared to the value of the club – £360m versus 1.5bn. The club is profitable even including interest payments and transfer fees. We don’t have any financial problems. There are many ways of reducing the debt, or they can just leave it in place and pay the interest. Either is fine.

    No one likes the Glazers. Without them we would be better off. But even with them we are fine. That’s mostly down to luck rather than good judgement but its a fact.

  3. Andy says:

    Writing down the facts and looking at where the next big debt drop will come from is now scaremongering is it? You just can’t face some of the facts. Fact is it took a share sell to reduce the debt and there is still £359m on the club and £250m in the states. It’s Real facts not scaremongering and someone has to pay. It will either be another share sale or the clubs cash flow. One of the two. Second one is what we don’t want to see and you should not accept that. Anyone who does needs a head check.

  4. Andy says:

    Writing down the facts and looking at where the next big debt drop will come from is now scaremongering is it? You just can’t face some of the facts. Fact is it took a share sell to reduce the debt and there is still £359m on the club and £250m in the states. It’s Real facts not scaremongering and someone has to pay. It will either be another share sale or the clubs cash flow. One of the two. Second one is what we don’t want to see and you should not accept that. Anyone who does needs a head check.

  5. depo says:

    Talking about facts, show us the facts that says £250M is hiding somewhere in Delaware. It’s all speculation, like majority of your blog.

  6. depo says:

    Talking about facts, show us the facts that says £250M is hiding somewhere in Delaware. It’s all speculation, like majority of your blog.

  7. ChrisW says:

    “… Someone has to pay it”

    No Andy, the debt does not have to be paid off. It’s not like a mortgage. It can be refinanced indefinitely. The only penalty to that is that the club has to keep paying interest indefinitely.

    So the question is: can we afford the interest? The answer is clearly yes.

    And the other debts in the US, if they still exist, are the Glazers’ debts. United’s stock market listing allows the Glazers to sell shares at any time to pay this off, should they need to.

  8. ChrisW says:

    “… Someone has to pay it”

    No Andy, the debt does not have to be paid off. It’s not like a mortgage. It can be refinanced indefinitely. The only penalty to that is that the club has to keep paying interest indefinitely.

    So the question is: can we afford the interest? The answer is clearly yes.

    And the other debts in the US, if they still exist, are the Glazers’ debts. United’s stock market listing allows the Glazers to sell shares at any time to pay this off, should they need to.