ARSENAL LEAD WAY FOR THE GLAZERS

'Manchester United Plc, the world's second-largest soccer club by revenue, may follow the lead of rival Arsenal Holdings Plc and sell bonds backed by ticket sales to cut its interest charges.

Deutsche Bank AG and Royal Bank of Scotland Group Plc are looking at ways of raising money for United later this year, including a sale of asset-backed bonds, said people familiar with the club's plans who declined to be identified because the discussions are private.

United needs to refinance debt because it's accruing interest as high as 20 percent on loans used by U.S. billionaire Malcolm Glazer for his $1.4 billion takeover of the team in 2005. London-based Arsenal cut the cost of borrowing by 50 percent when it sold debt secured by ticket sales in July, the first public issue of asset-backed debt by a European team.

The club "should dramatically lower debt service charges, assuming they do it right,'' said Stephen Schechter, who has helped U.K. soccer clubs Leeds United, Leicester City and Newcastle United raise money through his London-based firm Schechter & Co.

Philip Townsend, director of communications at the club in Manchester, England, declined to comment.

Manchester United reduced its annual interest costs by 28 million pounds when it refinanced debt in July, even though it increased its total borrowing to 660 million pounds ($1.3 billion) from 580 million pounds.

The club's outstanding debt includes 135 million pounds of high-interest loans known as payment-in-kind notes, Townsend said earlier this month. The interest becomes payable when the club decides to repay the debt.

By selling debt secured using income from ticket sales, Manchester United may be able to get the highest AAA credit ratings for itsbonds, reducing interest costs.

Arsenal's 210 million pounds of 25-year bonds pay interest at 5.142 percent a year. The money was used to pay for its new Emirates Stadiumin London.

By insuring its securities with New York-based Ambac Assurance Corp., Arsenal obtained AAA grades from Standard & Poor's and Fitch Ratings.Without the insurance, known as a wrap, the bonds would have thelowest investment-grade rank of BBB-, according to S&P.

Companies rated BBB on average in July paid about 105 basis pointsmore than the U.K. government to borrow in pounds for 15 years andlonger, according to Merrill Lynch & Co. indexes. Arsenal paid half ofthat, with a yield premium, or spread, of 52 basis points more thanthe 4.75 percent U.K. government bond due 2020.

The spread on Arsenal's bonds due in 2029 has narrowed to 46 basispoints more than the benchmark, according to the Royal Bank ofScotland. A basis point is 0.01 percentage point.

Manchester United said sales were 165.4 million pounds for the yearending June 2006, compared with 157.2 million pounds for the 11 monthsthrough June 2005. Pretax profit was 30.8 million pounds compared with10.8 million in the period a year earlier.