Manchester United confirmed last night what many fans have suspected – money the club made from the sale of Cristiano Ronaldo to Real Madrid is earmarked for debt. Buried within the club’s Prospectus, promoting the Glazer family’s £500 million debt swap, is the revelation that £70 million of United’s cash will be set aside for debt repayment.
United has £116.6 million in available cash, says the Prospectus, which is used for ongoing operations, tax, interest and repayments on the club’s £500 million senior loan. But in refinancing, the club intends the release £70 million – the bulk of the Ronaldo cash – to Red Football Joint Venture Limited, United’s parent company.
Reading between the lines, £70 million will pay down some of the Glazers’ Payment in Kind (PIK) debt, which is attracting 14.25 per cent annual interest. A further £75 million is being borrowed as an ongoing credit facility – essentially to pay interest on United’s loans, which will grow substantially as a result of the bond issue.
The next time the Glazers says there’s money for transfers – ask where its from. Because the only available source will be debt.