Thanks, Malcolm Glazer: It just became harder to see a Man U game

Man Utd – Results 2005
Total turnover £157m
Pre-tax profit £11
Matchday revenue £66
TV revenue £48m
Wage bill £77m
Last week it emerged that the Glazer family, United’s American owners, are in talks to borrow up to £500m against the value of future ticket receipts to pay off the debts they acquired during their controversial £800m purchase of the club just over a year ago.
£500m on ticket receipts! This is twice as much as Arsenal’s ticket revenues and the Gunners have borrowed money for the new Emirates stadium on the strength of those ticket sales. They have also impressed financial institutions into giving the Gunners a good interest rate for their asset backed bonds of 5.28%.
The Glazers owe £265m to JP Morgan, secured against the club’s assets, and – most pressing of all – £275m to three US hedge funds, at a short-term rate of up to 20 per cent. For anxiuos supporters of the club, it could mean 25 years of paying of the debt with a huge principal upfront.
This is a big reason that Man U is falling short in recruting the big names in international soccer. They have spent £60m less this summer than arch-rival Chelsea, whose purchases of Michael Ballack and Andriy Shevchenko were financed by the bottomless resources of Roman Abramovich, billionaire owner of the London club.
Ticket revenues are not the most assured way of generating revenue. In fact, a lot of Mancusians have turned their back on the club and are supporting their own local club, called FC United of Manchester, in a division 10 places removed from the EPL. The tickets cost £7, you can eat fish and chips, drink beer, and segue into obscenity laden tirades against the other team. The plumber who fixes your toilets is the likely to be the club goalkeeper. You can take him out to the pub for a beer or two and give him tips on how to stop PKs. Imagine doing that with Edwin van Der Saar!
More on Man U and its finances
Here are two cautionary tales:
Leeds United
The club raised £60m six years ago through mortgaging its future gate receipts over a 25-year period. This contributed to a massive debt stockpile, and when heavy spending on players failed to secure Champions League qualification, the club struggled to meet its debt repayments.
Leicester City
The East Midlands club borrowed £28m in a securitisation, saddling itself with about £2.5m of repayments a year. But then it was relegated in 2001. The stadium it had raised the money to build hosts the likes of Plymouth Argyle and Burnley, rather than Man U and Arsenal, as it had hoped.

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