United bond raises £504m

MANCHESTER UNITED have successfully raised £504 million (€574 million) through a bond issue but the move will have both positive and negative effects for the club, according to one football finance expert.

The bond issue, which has caused huge controversy and opposition from some fans, has been over-subscribed and should allow the club’s owners more flexibility in running United. It will enable them to pay off most of the club’s outstanding £509m debt to the banks and possibly help the Glazer family tackle the £202m payment in kind (PIK) loans which continue to grow.

However, the interest payments on the bonds will be £45m compared to the current £41m on the bank loans – and they have only delayed a decision on the whole debt until 2017.

Professor Simon Chadwick, head of sports business at Coventry University, said: “On the positive side, it effectively cuts Manchester United’s owners some slack. They are released from the strict terms and conditions that accompany bank loans.

“That could mean some leeway for making new signings, and the annual interest payments will be fixed so there will be more stability up to 2017.

“On the negative side they have stalled on decisions that they will have to take in seven years when the bond offer matures.”

A spokesman for the Glazer family claimed the deal brought a “transparency” to United’s finances. But numerous clauses appear to be aimed at allowing the Glazer family to take £70m out of the cash raised by the club to set against the PIK notes, whose interest rises to an eye-bulging 16.25% next year.