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The Glazers were lent £540m to complete their takeover but also borrowed to acquire some of the shares they already owned before making their bid. They owe £374m to a bank, JP Morgan, but this is a long-term loan, structured so that repayments are light for the first seven years. It is the pressure exerted by the Glazers’ other debts that makes United’s slump so difficult to allow.
During the "offer period" of their takeover, the Glazers were obliged to display at the London office of their lawyers, Allen & Overy, documents showing the agreements between themselves and their backers.
Besides their JP Morgan deal, these revealed the accord the family have with three New York-based hedge funds, from which a further £275m was borrowed. Of this debt, £210m is at 20% interest, the other £65m at 14%. The price of just this loan (ignoring the £374m) will be £51.1m in the Glazers’ first year, or £140,000 a day, and the interest is compound. If you want it in layman’s terms, it ’s squeaky-bum time. Should the Glazers fail to meet their repayments, the most important players at United will no longer be Rooney, Ronaldo and Ruud van Nistelrooy but Dan Och, Ken Griffin and Richard Perry. These are the respective owners of Och-Ziff, Citadel Horizon and Perry Capital, the hedge funds to which the Glazers are in hock. Hedge funds are bodies that specialise in risky lending — and they can be ruthless in protecting their investment.
The Glazer documents talked of a "test period" lasting until July 2007. If United fail to achieve 85% of their target profits during that period, the hedge funds are entitled to seats on the Old Trafford board.
If their debts are not repaid by 2010, Och, Griffin and Perry get 30% of United itself, something they would want to turn into hard cash immediately. Rooney, Ronaldo or Ruud? It would not be down to Sir Alex Ferguson, or whoever succeeds him as manager, which third of the squad was sold off. So a winning team is vital for United if the Glazer masterplan is to be a success.