DEBT AT '656m'

Last updated : 22 December 2006 By Ed

Manchester United will restrict Sir Alex Ferguson's annual transfer expenditure to £25 million except for a one-off "superstar" purchase who meets the Glazer family's desire for an icon to play alongside Wayne Rooney and Cristiano Ronaldo, according to documents seen by The Times.

In two 60-page presentations outlining their business plan for the refinancing of the club earlier this year, the Glazers made clear that United's annual transfer kitty will remain £25 million, despite their belief that operating profits will increase to more than £100 million by 2011. The only exception relates to an extra £25 million set aside for a "superstar", seemingly a headline act who would raise the club's profile off the pitch as well as on it.

Last year, The Times disclosed details of the Glazers' original business plan, including controversial ticket-price rises. The new documents reveal the latest debt figure as £656 million, which is forecast to reach £733 million by 2012, and that the total costs of the takeover were £831 million, including bank and legal fees of £41 million. Annual interest payments have risen from £20 million to £40 million as a result of the refinancing.

The documents also reveal the Glazers' belief that no other English club comes close to United's commercial prowess and that "Chelsea's lack of brand appeal and limited fan-base beyond the UK make it a less compelling commercial partner".

They say that tickets at Old Trafford, which were subject to a minimum 12.5 per cent price rise this season, remain "undervalued" and will increase by a further 36 per cent by the start of the 2012-2013 campaign.

Television contracts will continue to soar, increasing the club's annual media revenue from £46 million to £78 million by 2012. It is also revealed that players' salaries will soar as a result of new television deals, with the squad's wage bill (including bonuses) increasing from £53.2 million last season to £78.1 million by 2012. Increased sponsorship prospects will see the club's annual commercial revenue rise from £56 million to £78 million by 2012 while the documents also recommend that the team should travel "to all corners of the globe" on pre-season and end-of-season tours to exploit the club's brand.

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In the summer financing package, the risky high-interest, accumulating borrowings were cut to £131 million, although that means that the Glazers have more interest to pay.

The result is that the annual interest cash bill increases to £43 million this year, swallowing up just over half the club's trading profit.

By far the biggest problem would be caused by a failure to qualify for the Champions League. If United only made the Uefa Cup, that would come at a cost of about £5.6million, a deficit that could be absorbed if it happened once or twice in the next few years.

However, each year, overall borrowing will continue to creep up, from £669million at the end of this season to £708million in 2010, when the next television deal ends.

So the banker's grip remains. The Glazers are yet to see any profit on their purchase of one of the world's most famous football clubs and they will have to undertake even more financial engineering.

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