Manchester United are evaluating options to refinance approximately $425 million (£318m) of debt due next year.
There has been a lot of uncertainty surrounding Manchester United’s finances under Glazer ownership following a leveraged buyout in 2005.
Much to the annoyance of United fans, the American family remains the majority owners of the club, with Sir Jim Ratcliffe listed as co-owner since the beginning of 2024.
Reports in the past week suggest some members of the Glazer family want to sell their shares, but the problem with that is they must vote as a block – rather than individually – which means the likes of Avram and Joel Glazer, who have been involved in running the club, hold the key.
When, if ever, will the Glazers SELL Manchester United? ➡️🚪
Fans have had ENOUGH
Man Utd considers refinancing $425 million of debt
United carries a huge debt burden stemming from the Glazers’ controversial 2005 takeover.
Over the past two decades, the Glazers have cost the club £1.2 billion in interest and related fees.
According to a Bloomberg report, United is exploring a refinancing through the private placement market to tackle $425m of debt.
Talks remain preliminary as United finally appear to be seeking solutions to refinance the existing debt.
To try to gain a better understanding of what this means, Head of Football Finance and Governance Adam Williams kindly explained: “At the moment, United owe money to a tonne of private institutional investors, the Bank of America, Santander, NatWest, HSBC and dozens of football creditors, i.e., the teams that United have paid in instalments.
“The total debt, including football debt, is in excess of £1bn, but it’s only the $425m of senior secured notes that mature on 25 June 2027. That debt is all private placement debt anyway, I believe, so this will be a case of going to the same market – which is made up largely of pension funds and asset managers – to roll over the debt at a new rate. That’s no surprise. We’ve been reporting that at United in Focus for some time.
“The big difference, though, between now and 2015, when the debt was taken out at fixed interest rate of 3.79 per cent, is that interest rates are up significantly since then, both in terms of central banks, the private placement market and every other layer of the financial system.
“Even if it’s just a two per cent rise, that could be nearly £10m per year extra in interest for United. That might not sound like a lot, but it’s part of a wider patchwork of debt. Last season, they paid £34m in interest. And remember, they have got a new stadium to build at a cost of probably more than £2bn and another refinancing juncture in 2029, when another £430m or so is due to be repaid. After that, you could genuinely be looking at interest payments in excess of £100m per season, depending on what central banks do with rates.
“And you’re paying that £100m pretty much in perpetuity, because that’s interest only – you’re not even touching the principal there.
“Not all debt is bad debt, yes, and the stadium debt certainly won’t fall into that category if it generates £250m in income per season. However, the borrowings at the moment are not good debt because the only thing they have got in return from it is a little extra liquidity in years gone by and the privilege of having the Glazers, via leveraged buyout, as owners.
“We knew the refinancing juncture was coming, but United’s profit margins – which, even in a Champions League season, are wafer-thin if they exist at all – are going to be squeezed thereafter. That’s more pressure on Ratcliffe and the players, who don’t have the grace for a bad season on the pitch every now and then.”
- ⚡️ NEWS IN BRIEF
- Manchester United is looking to refinance $425m (£318m) worth of debt
- The Glazers have already cost United £1.2 billion in interest
- Refinancing the debt would give United more financial flexibility
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Did Man Utd have debt before the Glazer takeover?
Yes, but not as much.
At the time of the takeover that shouldn’t have been allowed to happen, United reportedly carried around $67m (£50m) of debt.
It’s further proof – if you needed it – that they have provided hurdles to make it harder for United to be a success.
Ratcliffe has lots of work cut out for him if he wants the new stadium ready in the coming years.
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