Manchester United’s parent company’s borrowings have rocketed towards £700m – despite the club winning the Champions League and achieving a record turnover of £256m.
Accounts published on Thursday reveal that Red Football Joint Venture Ltd – who ultimately own the club – made a pre-tax loss of £44.8m in the year to June 2008. ‘‘
The group’s net debt rose to £649.4m from £604m in the previous year.
In the same period United’s chief executive David Gill was paid £1.7m while the former commercial director Lee Daley was paid £470,000 despite spending just five months at the club.
The company made interest payments of £68.8m on loans totalling £699m in 2007-08. The level of debt increased by £24m in the year as interest on “Payment in Kind” loans worth £152m at the start of the season was rolled over.
Of the total debt, £518.7m is secured against the club and its assets, with £45.5m paid in interest in the year beginning June 2007. A further £175.5m in PIK loans, with an interest rate set at 14.25%, is secured against the Glazer’s family equity.
The Glazers have maintained that the present ownership structure and debt level is sustainable, and the club has consistently outspent its rivals in the transfer market.
The club’s record turnover, up by nearly 20% on the previous season, is partly attributable to rises in Premier League and Champions League media revenues, totalling £90.7m.
The club also generated £101m in match-day revenue and the club’s commercial operations generated £64m. The club also made a profit of around £20m on transfers, thanks mainly to the sale of Kieran Richardson, Alan Smith and Gerard Pique, although the eventual cost of the loan signing of Carlos Tevez is likely to wipe out that surplus.
The club also signed new commercial deals with Saudi Telecom, Diageo, the Seoul Metroplitan Government and renewed agreements with Budweiser, Travelcare and GSK.
Courtesy : www.guardian.co.uk
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