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Glazers to pay off £220m debt

The Glazers have proved widely unpopular in Manchester © Getty Images

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The future of the Glazer family's ownership of Manchester United is shrouded in further mystery after it was announced that a £220 million loan they themselves owe as part of their takeover of the club will be paid off on November 22.

Speculation is mounting about where the cash to pay off the loan has come from in the light of United's increasingly tightly-geared finances. October 8 saw the club's financial figures meet with dismay when a record loss of £83.6 million for the year ending June 30 was announced.

However, the awarding of a highly lucrative contract to Wayne Rooney in recent weeks looked a shift from a previously parsimonious policy of cost-cutting, and came after Rooney had demanded the club match his own ambitions in the transfer market.

The £220 million payment-in-kind (PIK) loan was taken out in August 2006 as a consolidation of the Glazer family's £790 million takeover that took place in May 2005. Now, according to a corporate filing by Red Football Joint Venture Ltd, the club's parent company, that loan will be exorcised in one payment. The source of these funds is yet to come to light though there is some speculation that new investment has been attracted to the Glazers, whose American-based business interests are said not to be in particularly rude health.

The PIK loan was initially taken out as a £138 million facility with exceptionally high interest of 14.25%, which in turn was raised to 16.25% as the club breached a debt-to-earnings ratio agreement. The loan was due to mature in 2017 when the Glazers would have owed almost £600 million though the family themselves purchased between 15% and 20% of the debt in 2008. According to Bloomberg, the money for repaying the PIK will not come from the club itself, despite a controversial January bond issue that allows the Glazers to take a one-time £70 million from the club. A refinancing via a different loan arrangement is mooted as a possible source of the £220 million.

United chief executive David Gill told the Daily Telegraph: "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 and we can afford the interest on our long-term finance."

While the Green-and-Gold protests that publicly levelled anger at the Glazer family may have lost their initial impact of early this year, suspicion of the Floridian owners remains rife among United supporters. The bond issue threw some light on the financial state of Manchester United, and was met with dismay and anger among fan activists.

A 'Red Knights' group of well-connected financiers and economists expressed interest in purchasing the club back in February but that approach coolled as it became clear the current owners had no intention of selling. A price of £1.5 billion is widely quoted as the threshold expected for a wholesale buy-out of the club.

© ESPN Sports Media Ltd.