Manchester United’s owners _ the U.S.-based Glazer family _ are prepared to pay off a $353 million (£220 million) debt they took on to acquire the team in 2005, Sky Sports reported today.
According to a voluntary free-payment notice, the Glazers’ holding company Red Football Joint Venture will settle the high-interest payment-in-kind (PIK) loan next week. The loans _ which were reportedly made by U.S. hedge funds, and carry an interest rate of 16.25 percent _ have sparked the fans’ ire toward the Glazer family since their leveraged £790 million takeover of the club.
Joel Glazer, the co-chairman of Red Football, delivered a signed document to the lenders saying 100 percent of the outstanding loan will be paid back on Nov. 22, sources said.
The Glazers are expected to use their own money, and not the team’s, to settle the debt, which will leave the £526 million bond agreed earlier this year as the Red Devils’ sole debt.
The move may help to reassure United fans who have been concerned about the debt burden on the club after both Sir Alex Ferguson and then last month Chief Executive David Gill insisted supporters should not be unduly worried by the figures.
Gill said: “I can’t speak for any other club, but the United fans should not be concerned … We have a long-term financing structure in place, excellent revenues that are growing, we are controlling our costs — total wages are 46 percent of turnover — and we can afford the interest on our long-term finance.”
“We still have cash to invest in players and to give good contracts to players and we are comfortable with the business model,” he added.
Manchester United reported in early October a record yearly loss of $52 million. But the gross debt dropped $20 million from $840 million on June 30 to $820 million by Sept. 30; and Forbes magazine recently estimated that United is worth $1.8 billion, the most valuable soccer team on ther planet for the sixth straight year.
