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Man U's Financing Under the Microscope

Manchester United's massive debt refinancing program does not in fact mean more money for extra players, according to the UK's Daily Telegraph. The £660 million package increases the amount of money borrowed against the club's assets, but it cuts back on interest payments owed by more than 30 percent. All this does is further secure the Glazer family's hold on the club, a spokesman tells the Telegraph. The impact on Sir Alex Ferguson's transfer budget is actually "neutral." Fourteen months ago, the Glazers completed a hostile £790 million takeover of Old Trafford, forcing the family to borrow heavily to complete the deal. The renegotiated financing represents "good housekeeping" with investors, the club said. Under the new deal, arranged by American bank JP Morgan Chase, the underwriters have agreed to take on a greater degree of risk, giving the club slightly more room to breathe in paying back debt. Had the Glazers failed to pay back money owed in the first year, the hedge funds could have demanded seats on the United board and a portion of the Glazer's share in the club. Interest in the first year alone amounted to £63 million. The road back to financial parity will be paid for by a combination of greater seating capacity at Old Trafford, now 76,000, a raise in ticket prices, a new £56.5 million, four-year shirt sponsorship deal with insurance company American International Group, and a renegotiated TV deal with Sky and Setanta Sports with the top English clubs estimated to be worth £1.7 billion. Overseas TV rights have yet to be determined, but are expected to rise from £23 million last year to more than £30 million.

Read the whole story at The Daily Telegraph »

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