Long live the Glazers

Manchester United are facing a hefty interest rate of 16.25 per cent as of August after breaking financial rules governing their loan.

The 2 per cent rise will strengthen fears that the Glazer family, United’s unpopular owners, will try to pay off the high-interest loans rather than spend money on the team, a move that would infuriate supporters.

With the season over, it is almost certain that United will breach the financial rules set out in the Payment in Kind (PIK) loan taken on by the Glazers to fund their investment in the club. The rate hike means that United will owe an extra £75 million in interest on an already ruinous £138 million loan taken out in 2006. That total will have ballooned to £662.6 million by the maturity date of 2017.

If, as the club hope, they can move back within their financial covenants quickly, the PIK debt will still rise to more than £590 million.

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Manchester United Supporters Trust said yesterday that the club have racked up £437 million in advisory fees and interest under five years of Glazer rule, while debts have soared to more than £700 million. The fees are before any dividend taken out by the Glazers this year.

Under the terms of the PIK notes, United must keep the debts of their operating company at less than five times the level of their profits before interest — which will be tested on August 14. Company debt stands at £539 million but the club’s profits will result in a shortfall of several million.

It is understood that United’s commercial management team believe they can increase profits through a series of new deals, allowing the club to get their interest rate back to 14.25 per cent next year.