The Times:
Manchester United's owners, the Glazer family, are considering plans to ease the club's interest bills by refinancing the £540 million of debt taken on when they bought the club last year, The Times has learnt.
The prospects for a successful refinancing have brightened because United's financial outlook has improved since the takeover, on the back of more lucrative TV and shirt sponsorship deals. It is estimated that these are together worth about £19 million a year more than the Glazers anticipated in the confidential business plan that was leaked to The Times last year — more than offsetting the loss of income from the failure to qualify for the Champions League knockout stages. The timing of a refinancing is unclear, but the Glazers are understood to be pleased with United's financial prospects despite warnings at the time of the takeover that they were overloading the club with debt.
The family used NM Rothschild and JPMorgan to advise them during the takeover, and the banks are likely to be involved in any future work. Most of the extra money comes from the FA Premier League's television rights deals. According to the business plan, the Glazer family expected TV income of £28 million a year between 2007 and 2010. The actual figure is likely to be about £42.5 million a year. A shirt sponsorship deal with the insurer AIG will generate £14.1 million a year over the next four seasons — £4.5 million more than forecast by the Glazers.
The family took on borrowings with punitive interest rates to help them to buy the club, including £210 million of preferred shares that accumulate interest at a rate of 20 per cent, and a further £65 million at 14 per cent. A further £265 million of bank borrowings attract rates of between 7.3 and 11.1 per cent at current rates.
Comment from Rob Cole in The Times:
Malcolm Glazer and sons took a real financial gamble when they took over Manchester United, saddling the iconic club with expensive debts totalling £540 million so they could claim their prize. Leeds United gave borrowing a bad name in football, and fans across the Pennines are right to be concerned about the risk that the clubs' new owners have taken, supposedly on their behalf.
One year on, though, and the Glazers, and Man United fans, have reasons to be more optimistic. With broadcasters tripping over themselves to show Premiership football, domestic TV income will leap by about two thirds, helping the club to £14 million a year not anticipated at the time of the Glazer buyout. Meanwhile, Vodafone's decision to cut short a shirt deal turned out to be another boon, because along came AIG to pay £5 million a year more.
It is too soon to be definite, but these kinds of solid commercial deals should herald good news. At the very least, they help to offset some on the pitch mishaps, such as the failure to qualify for the knockout stages of the Champions League — although they would not be enough in the event that Man United somehow failed to qualify for Europe at all.
So it is hardly surprising that there is growing talk that the Glazer family has an opportunity to refinance their debts. The timing is uncertain but the quicker they take advantage of the more positive sentiment (what better backdrop than a World Cup?) the better for the Old Trafford faithful. If the opportunity is there, it should be seized — a motto that hopefully England will also pursue.