United and that massive debt

Tracking the financial situations in football isn't that easy. Newspapers don't do a good job, the owners of clubs are cagey and as for financial institutions who trusts them.

Interesting story in The Guardian today by David Conn, he might be a bitters fan but he gets his homework right. It's about the Glazier debt being sold at a discount rate on the financial markets. As long as the repayments are being made then there is no problem. Sadly that money could be spent on better things. The article - "United's massive debts now at mercy of the market".

Crunch time is some way off. The debt is repayable from 2013, in lumps of £75m, then £150m in 2014, 2015 and 2016. The interest roll-up debt, currently standing at around £170m is repayable in 2017 when it will have increased to just under £600m.

Managing the interest is no longer a problem as lower interest rates have cut the bill by around £15m a year. Paying it back a bit tricky. Refinancing is the option - and I'd have thought United would be a safe investment. We'll see.

Record Profit Reds but where does it go?

Last week the media trotted out the press release of United's impressive financial results - turnover £245 million, profits £59m (up 93 per cent). All very rosy, and with the team playing well the future looks fine. Very little analysis, no mention that ticket prices have risen by about 33 per cent over the two Glazier years to help create those profits.

The club's EBITDA - an accounting measure which best reflects how much cash is generated by a business - in 2006/2007 was £79.8m. But £66m of that is needed just to keep the merchant banks happy with interest payments. That leaves about £13m - which doesn't buy many star players.

Next season - an increased in Tv income, and no doubt they'll be trying on another ticket price increase.

The only worry is these record figures have to be repeated year on year just to service that debt. As long as there is success on the trophy front, and in long cup runs it's not a problem. But what a waste - just think of the signings, the squad that could be built and the improvements to the stadium - but no, the money drains away to Wall Street bankers.

See Daily Telegraph - By David Bond, Chief Sports Reporter 11 Jan.