No United ‘meltdown’

A LEADING analyst yesterday tried to allay fears that Manchester United, under Malcolm Glazer, are heading for a financial meltdown similar to Leeds.

The Yorkshire club’s debts spiralled to £103m, leading to a fire sale of players and eventual relegation from the Premiership.

Glazer’s formal offer document displayed a succession of steepling interest charges taking the approximate overall cost of a £265m loan to £570m.

On top of his loan, the owner of NFL gridiron franchise Tampa Bay Buccaneers has to pay back a bridging loan of £18.9m by March next year and another £90m as a credit and capital expenditure facility. There is also another £275m in preferred securities - and fans are horrified at the scale of the debt and fear for the club’s future. However, Hilary Cook, investment analyst at Barclays Stockbrokers, believes Glazer will look to reschedule the debt over the next 12 months, once he is in full control of the club.

“Before he got full control he wasn’t able to borrow very efficiently,” she said. “He did not have that much security to borrow against because until he had control of the company he could not borrow against the assets.

“He has got expensive debt because it is short-term. What you would expect him to do now is reschedule the debt at lower rates over the next year or so to reduce his interest payments.

“Glazer will be aware of the potential downside of borrowing so much and must have a convincing business plan or people would not have loaned him the money.”

“The problem with Leeds was their costs of borrowing were greater than their profits.

“It is not in Glazer’s interests to put so much expensive debt in that they cannot afford to trade any more. Glazer has other assets he will be able to borrow against if need be.

“It is in his interests that United remain a global brand. So he is not going to be running the club down.”