Old Traf­ford in tur­moil as Glaz­ers re­struc­ture crip­pling debts

Weekend Argus (Saturday Edition) - - GOODWINES -

THEY boast of hav­ing 469 mil­lion fol­low­ers around the world but then warn that they may have to sell their own sta­dium.

They are the most valu­able club in the world – worth £1.2 bil­lion (R14.5bn) ac­cord­ing to Forbes – but have no money of their own to buy play­ers. This is Manch­ester United 2010; Manch­ester United the Glazer way.

Fears of fi­nan­cial melt­down have stalked the dreams of sup­port­ers since the Glazer fam­ily took their club into pri­vate own­er­ship in 2005. Now – as they tour the world try­ing to raise £500 mil­lion to ease the bur­den of debts worth £699m – United’s own­ers have put down in black and white just what their four-and­half tur­bu­lent years have done to United.

Here are five warn­ing signs from the “Pre­lim­i­nary Of­fer­ing Mem­o­ran­dum” dis­trib­uted to po­ten­tial in­vestors this week. 1. SELL­ING OLD TRAF­FORD AND THE CAR­RING­TON TRAIN­ING GROUND

United need to raise money and quickly. One way they can do this is to sell their as­sets and then lease them back. Pre­vi­ously, they have de­nied they would do this but in the doc­u­ment the club ad­mit that: “The in­den­ture gov­ern­ing the notes (bonds) will limit our abil­ity to sell or trans­fer, but not pro­hibit us from sell­ing or trans­fer­ring, our train­ing ground fa­cil­i­ties and our sta­dium. In the sale or trans­fer of any of th­ese prop­er­ties, the trans­feree will be re­quired to en­ter into a long-term lease with us to en­able us to con­tinue to have sub­stan­tially the same ac­cess to such prop­erty as we cur­rently do, if we sell or trans­fer ei­ther or both of th­ese prop­er­ties, we will no longer con­trol them.” 2. PLAYER SPENDING IS ZERO

The club made a £7m profit on player spending over the last three fi­nan­cial years end­ing June 20, 2009. In other words, they have spent noth­ing. Now they are ad­mit­ting they will have to use their re­cently ar­ranged £75m credit fa­cil­ity to buy play­ers this sum­mer and the prospec­tus says: “Al­though we have not his­tor­i­cally drawn on our re­volv­ing credit fa­cil­i­ties in the sum­mer win­dow, if we seek to ac­quire play­ers with val­ues sub­stan­tially in ex­cess of the val­ues of play­ers we seek to sell, we may be re­quired to draw from our re­volv­ing credit fa­cil­i­ties.” 3. THE DEBT COULD GET WORSE

The doc­u­ment warns the Glaz­ers may need to re­fi­nance their debts again in the fu­ture. It says: “We be­lieve the pro­ceeds of this of­fer­ing ... will be suf­fi­cient ... to meet our cap­i­tal re­quire­ments and pay our in­ter­est. How­ever, if cash flows are less than pro­jected, we will re­quire ad­di­tional debt or fi­nanc­ing in amounts that could be sub­stan­tial.” 4. THIS COULD RE­QUIRE UNITED TO SELL PLAY­ERS

De­spite their mas­sive turnover and un­ri­valled in­come streams, United broke even last year only be­cause of the £80m sale of Cris­tiano Ron­aldo to Real Madrid. The prospec­tus warns that player sales could be nec­es­sary again and adds that the club’s debts could: “Re­quire us to ded­i­cate a sub­stan­tial por­tion of our cash flow to pay the debt, thereby re­duc­ing the avail­abil­ity of our cash to fund the hir­ing and re­ten­tion of tal­ented play­ers.” 5. SPENDING MONEY THEY HAVEN’T GOT

This sum­mer United will of­fi­cially be­gin a lu­cra­tive four-year shirt spon­sor­ship deal with fi­nan­cial gi­ant Aon. The con­tract is worth £80m but the prospec­tus re­veals that United have al­ready had an ad­vance of £36m. We are told that: “Our net cash in­flow for the year ended June 30, 2009 was £111.2m – a sig­nif­i­cant in­crease that re­flects an ad­vance pay­ment of £35.9m as part of our new shirt spon­sor­ship agree­ment.” – Daily Mail

SIGN OF THE TIMES: In Oc­to­ber 2004 Man United sup­port­ers demon­strated out­side Old Traf­ford against a pos­si­ble takeover of the club by Amer­i­can busi­ness­man Malcolm Glazer. Seven months later the takeover was com­pleted.

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