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·Hopes for greater financial transparency in football take another hit as the champions' loans are traded around the City
How are we to make sense of the news that Manchester United's enormous debts – £667m as of last year's accounts – are being sold at a loss by crisis-stricken financial institutions in the City of London? Banks, hedge funds and private equity speculators, all wrestling with the economy's general collapse, are, according to the financial data company Markit, flogging off United's steepling loans at 70% of their value.
One well-informed City source said that is the price only of United's "senior" debt, the £425m secured on Old Trafford, the Carrington training ground, the gilded players, season tickets, commercial contracts, on the lock, stock and corporate barrel of English football's most glittering club. A further £90m of loans, which are not secured, are being sold for 50p in the pound, while the rest of the £667m – £152m "payment in kind" debt, loaned originally by hedge funds at a swingeing 14.25% interest – is said to be available for buyers who can name their price.
In 2006–07, the club's profit was wiped out by the eye-watering interest, £81m, payable on the Glazers' loans; this time the interest will certainly be higher, but there may even be a little profit left over.
First, United's debts are up for sale to any financial outfit, including the merciless and ruthless, who would leap punitively on United if the club were to breach any covenant, however minor.
Second is the question of accountability. The public, including United fans, cannot know who holds the debt in United. When the Glazers bought the club for £831m, the family itself paid £272m cash, £284m was loaned by their bank, JP Morgan, and "syndicated" to other banks, and the other £275m, which the family could not borrow at standard rates, was advanced at very high interest by three hedge funds, Citadel, Och-Ziff and Perry Capital. In 2006 the Glazers managed to refinance those original loans, but there has been no public disclosure of who holds the £425m, the other £90m, orthe high-interest £152m "payment in kind" loans.
Full story..David Conn: Manchester United's massive debts now at mercy of market | Sport | The Guardian
How are we to make sense of the news that Manchester United's enormous debts – £667m as of last year's accounts – are being sold at a loss by crisis-stricken financial institutions in the City of London? Banks, hedge funds and private equity speculators, all wrestling with the economy's general collapse, are, according to the financial data company Markit, flogging off United's steepling loans at 70% of their value.
One well-informed City source said that is the price only of United's "senior" debt, the £425m secured on Old Trafford, the Carrington training ground, the gilded players, season tickets, commercial contracts, on the lock, stock and corporate barrel of English football's most glittering club. A further £90m of loans, which are not secured, are being sold for 50p in the pound, while the rest of the £667m – £152m "payment in kind" debt, loaned originally by hedge funds at a swingeing 14.25% interest – is said to be available for buyers who can name their price.
In 2006–07, the club's profit was wiped out by the eye-watering interest, £81m, payable on the Glazers' loans; this time the interest will certainly be higher, but there may even be a little profit left over.
First, United's debts are up for sale to any financial outfit, including the merciless and ruthless, who would leap punitively on United if the club were to breach any covenant, however minor.
Second is the question of accountability. The public, including United fans, cannot know who holds the debt in United. When the Glazers bought the club for £831m, the family itself paid £272m cash, £284m was loaned by their bank, JP Morgan, and "syndicated" to other banks, and the other £275m, which the family could not borrow at standard rates, was advanced at very high interest by three hedge funds, Citadel, Och-Ziff and Perry Capital. In 2006 the Glazers managed to refinance those original loans, but there has been no public disclosure of who holds the £425m, the other £90m, orthe high-interest £152m "payment in kind" loans.
Full story..David Conn: Manchester United's massive debts now at mercy of market | Sport | The Guardian