MU — Why defeat to Leeds could matter

In Uncategorized on 09/01/2010 at 5:21 am

If no regular decent runs in Champs League and FA Cup could end up bit like Leeds.  Third run KO is not a decent run.

But isn’t Liverpool a better candidate to be another Leeds? Relegated to Europa League, not challenging for EPL top 4 position, no $ for players. The problem is MU’s debt: more than £700m, bigger than that of any other EPL club. And growing: it could amount to  £1.1b by 2017 according to a Guardian piece (Warning: not an easy read if not into finance.). By contrast Liverpool’s debt is only £350m (though like MU’s rising).

It’s all because of the $ owing to three hedge funds. By the time that debt is due for repayment, in August 2017, the accumulated capital will have risen from an initial £138m when the Glazers refinanced in August 2006, to £580m. Then there is another £524m of bank and other borrowings which United owed at June 2008.

MU analysed in this  article (warning: another boring read if not into finance) by Robert Peston, BBC’s financial editor. So that footie fans can focus on games, the impt bits of his analysis:

“One banker with a close knowledge of the club put it like this to me: Manchester Utd as a business is a delicately balanced financial machine, which works when the team is winning and revenues are pouring in, but where there is not much of a financial cushion to absorb the inevitable occasional flop.

‘He said that the huge debt that was taken on when the Glazer family bought the club was predicated on the basis that Man Utd would have decent runs in the Champions League and FA Cup in most years – which of course is typically what has happened.”

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