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Old 29th May 2010, 11:21   #1
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Default United Accounts Show Club Spent Ronaldo Sale Proceeds On Debt

Manchester United Accounts Show Club Spent Cristiano Ronaldo Sale Proceeds On Debt
By Kenneth on Friday, 28th May 2010

Manchester United have spent the money earned from Ronaldo's saleManchester United released their latest quarterly accounts today and they showed that the club had indeed spent part of the sale proceeds from Cristiano Ronaldo’s £80 million sale to Real Madrid on the club’s debts via interest payments.

United had consistently denied that this was ever the case and insisted that Sir Alex Ferguson had money to spend on new player acquisitions.

Indeed, the United boss did have an amount to spend on paper. However, a detailed look into the figures showed that at least half of the £80 million would be used on interest payments amounting to £45 million each year, which leaves Ferguson with considerable less to compete with other clubs in the transfer market. Clubs like Real Madrid and Barcelona do not think twice about spending £40 million on one player while Ferguson recently claimed that he had turned his focus on youth potential since they cost much less.

The accounts revealed that United incurred a £40.7m loss on interest rate swaps after modifying the existing deal due to a fall in interest rate which could have made it much worse. The revenue used to cover this loss has already wiped out that received from the club’s Champions League home games last season, with a further £28m to be absorbed in the following five years.

United’s overall debt had also increased by £12m with the £500m bond taken out by the club in January which was further used to refinance additional debt.

Interest rate hikes would also ring the alarm bells of financial analysts who have noted that a particular loan known as the payment in kind loans will experience steep hikes on their interest rates to 16.25 per cent in August, leading to a growth in accompanying debt to the tune of £225m.

According to reports, it would mean that United’s debt could easily go beyond £750m at the end of the financial year – something which would never be sustained by any other club, except that the Red Devils currently have a healthy turnover on a commercial and merchandising level. However, it could now be a question of when, and not if, the club’s debt would eventually bury it despite revenue intake.

The Glazers again issued a public statement today to stress that the club is not for sale, with observers pointing out the coincidence of its release on a day when the club’s accounts would be released publicly. United have been a subject of takeover interest by a consortium of investors known as the “Red Knights” recently although the latter have reportedly experienced internal strife of late.

United chief executive David Gill also claimed in an interview with the Independent that the club had a healthy financial foundation with Ferguson given up to £95m to spend on new players – although the accounts show that at least half of that will have to be used on debt financing.

The latest statement from the Manchester United Supporters’ Trust – who are in charge of the recent Green & Gold protest movement against the Glazers ownership of the club – continued to insist that the American owners are not putting any money into the club while loading more debt onto it.

“The Glazers have said almost nothing for the last five years but all of a sudden with a supporter friendly takeover bid being assembled and supporters threatening not to renew season tickets they are in a real panic,” Duncan Drasdo, chief executive of the trust said.

“Of course they won’t say anything in person – they hide behind their PR people and club employees. David Gill wouldn’t be defending them if he wasn’t an employee. When the Glazers go perhaps we’ll hear his true feelings.

“The fact is they’ve put no money in – not a single penny. The money used to purchase the club went to the shareholders, not the club and of course they borrowed the vast majority of that money and then transferred the debt to the club.”
Our lives begin to end the day we become silent about things that matter. Martin Luther King
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