The Sweeper: Man Utd to Sell Old Trafford?

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Yesterday’s diagram may have helped explain to readers smarter than yours truly the financial situation at Manchester United, as the club embarks on a bond issue. And there is much more in the papers today about the details of the club’s financial situation.

One passage from the bond issue document has been picked up on by the Guardian, noting the line saying the issue “will limit our ability to sell or transfer, but not prohibit us from selling or transferring, our training ground or our stadium”.

Curiously, the piece focuses solely on the prospect of Man Utd losing control of their training ground, and does not mention the stadium itself. In either case, it appears United would lease back the property, and it seems unlikely either step would be taken unless the financial situation worsens.

That, though, is not far-fetched, as the document itself explains. The bond issue notes legally had to explain the risk in Manchester United as a business, and these are very well analysed (as ever) by David Conn. From Alex Ferguson’s impending retirement to “strong competition” from other clubs enjoying “recent investment from wealthy team owners”, there are many scenarios addressed in stark black and white that detail what could essentially bring down a club currently wallowing in £700m of debt.

The Telegraph, meanwhile, focuses on the document’s emphasis on revenue generation through increasing ticket prices: “The prospectus highlights match-day income as a key plank of the club’s income, and suggests that further rises are likely. The document even talks with some pride of rises in excess of inflation.”

The Independent notes that the document warns investors about UEFA’s new financial fair play requirements, which by 2012 will require clubs entering the Champions League to be debt-free, ending “success on credit”:

While United run at an operating profit, it is the repayments on the loans taken out by the Glazers that drag them down. As United say in the bond prospectus: “These rules are intended to discourage clubs from continually operating at a loss. There is a risk that, in conjunction with increasing player salaries and transfer fees, the financial fair play initiative could limit our ability to acquire or retain top players and, therefore, materially adversely affect the performance of our first team.”

The bond prospectus also revealed that the Glazers now have a facility that allows the parent company to take up to £70m from the club’s profits to pay down the £202m debt on the family’s payment-in-kind loans. This is the part of the debt that the American owners are personally liable for and taking money out of United’s profits to pay it is likely to go down as badly with Uefa as it does with the fans.

With the Glazer debt now at more than £700m and no Ronaldo to sell next summer to balance the books, it would appear that United will attract the interest of Uefa if they are still under the same ownership come 2013. Their business plan includes a £75m rolling credit line which United could use in the transfer market. Buying players on credit is the exact opposite of what Platini wants clubs to do.

Roman Abramovich, the owner of Chelsea, and Sheikh Mansour, Manchester City’s owner, have both converted their extraordinary investment in their clubs into equity in order to fall into line with the new Uefa rules. Making the debt disappear at United will require much wealthier owners than the Glazers.

There are few ways United could raise that much money fast. But United fans will surely be concerned that the club’s ownership of both their training ground and their stadium could change in not-too-distant future, should one of the negative scenarios so well explained by United themselves unfold.

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The Sweeper appears every weekday, and once at the weekend. For more rambling and links throughout the day every day, follow your editor Tom Dunmore @pitchinvasion on Twitter.

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