Manchester United Football Club Debt Story

Manchester United owner Malcolm Glazer has hit up a debt that holds more than £2bn in assets.
This could ruin Manchester Uniteds football career and may have to sell their quality high valued players.

The glazers

More information about the financial agreements of the owners also come at a time where the FA (Football Association) may strip Malcolm Glazer from ownership of the club. The Premier League debts have gone up to a combination of £3.4bn and the growing popularity of leveraged buyouts in English clubs. An example of situation as this is Portsmouth football club who were relegated last season because the club had over a £500bn debt and had gone into administration, owner after owner came up and could not help the situation, which caused the failure of the club.

The BBC show found out Malcolm Glazer borrowed £388m ($570m) against shopping malls and £66m ($95m) against their American National Football League team, the Tampa Bay Buccaneers. In addition to this a portion of the Glazer family's £700m Manchester United debt will soon see them charged interest at a rate of 16.25%.

Green and gold

What the fans fear is that, due to this debt and interest rate that means there might not be any more spare money, The club may not be able to buy a new generation of star players to help the glory of the club stay alive. What fans are doing currently is the " Green and Gold " campaign in protest over the Glazers ownership. What they mean by Green and Gold is the clubs Original colors from when it was established in 1882 when it was unknown to the world and that's what the club may go back to if this debt keeps going on. Even former Manchester united star David Beckham supports this campaign.

They point to the £80m sale of star striker Cristiano Ronaldo last year and note that he has not been replaced by a player of similar quality. Yet ticket prices have gone up by more than a third. The club's management denies any lack of commitment to buying new talent and says that cash is available for Sir Alex Ferguson to buy players.

Bankruptcy

Lehman bros. Bought Manchester United in 2005. Malcolm Glazer borrowed £500m and paid the remaining £272 million in cash. That financial picture has analyst Mr Green questioning how the Glazers will service their £1.1bn debt. The owners have been true to their word since they took over the club in 2005. They've brought commercial expertise and commercial benefit to us in a numbers of areas, and we've seen our revenues grow significantly.

The Glazers' most troublesome debts are held by Red Football, the parent company that owns Manchester United.

They are payment in kind loans, or PIKs, worth £200m and the interest owing on them will soon rise to 16.25%.

Only time will tell what will happen to the club in the future.

Source http://www.bbc.co.uk/news/10237268