Poor Pitch: ManU Records $113.3M Loss, Owes Up To $1.5B To Creditors
English Premier League (EPL) club Manchester United for the year ending June 30, 2007, recorded an overall loss of $113.3M (all figures U.S.), and accounts for ManU holding company Red Football Joint Venture Ltd. show total borrowings were up to $1.3B, "by far the highest of any English football club, ever," according to David Conn of the Manchester GUARDIAN. The total "owed to all creditors, including the banks," was up to $1.5B and includes $109.4M that ManU owes to other clubs in transfer fee installments on players signed. The total interest payable by the club on its borrowings was $158.2M, although "only [$82M] was actually paid." The rest, which "accrued on the millions owed to hedge funds," is "allowed to roll up until the whole amount has to be repaid in 2016," or until club Owner the Glazer family can refinance. The Glazers currently owe $296.8M to hedge funds at 14.25% interest a year, or $50.0M in '07-08. The Glazers in '07 "tried to refinance but were unable to strike a deal with financial institutions," and a spokesperson acknowledged that the "credit crunch is making it more difficult now" (Manchester GUARDIAN, 5/6).
ON THE PITCH: SI.com's Gavin Hamilton noted ManU "invested heavily in new recruits on the back" of their EPL title in '07. Now, it "appears, that those players have yet to be paid for. It's a high-risk strategy that is dependent on further success." ManU in the coming weeks "could land an historic domestic and European double," by winning the EPL title and the UEFA Champions League. But if the club loses to Chelsea in the May 21 Champions League final, the Glazers' "complicated finances could start to unravel" (SI.com, 5/6).
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