By Paul Nicholson
May 24 – Manchester United will cut their interest payments by £10 million a year under a new loan secured with the Bank of America at lower interest rates.
The club were paying interest of about £31 million a year on loans of about £192 million. The new payment schedule will see this drop to £21 million. The club has total debt of £370 million.
The breakdown of the refinancing centres around £177.78m of outstanding 8.75% interest sterling bonds and $22.09m (£14.6m) of 8.375% dollar bonds.
United say the new loan would have an estimated starting interest rate of around 2.78% and that interest payments should come down from around £31m to £21m per year.
Whoever gets the job will join a club laden with almost £370m of debt, and tightly controlled by the Glazer family.
When the Glazer family controversially bought the club for £790m in 2005 the club was loaded with the £370 million debt mountain as part of the financing. Criticism of the debt was fierce.
The Glazers floated 10% of the club in New York in August 2012 – 16.7 million shares – which have risen 34% since flotation.
Shares dipped slightly (1.8%) when Sir Alex Ferguson announced his retirement, but the removal of the high interest debt to a lower interest rate by the Bank of America indicates that the bank is confident in the Manchester Untied business.
In January this year Forbes magazine valued Manchester United as the most valuable sports franchise in the world, worth more than $3 billion, the first sports franchise to break this mark. Real Madrid replaced Manchester United at the top of Forbes’ rich list in April with a $3.3 billion valuation.
Contact the writer of this story at paul.nicholson@insideworldfootball,com