United Goes Into The Red - 15/04/2007

The Glazer family's takeover of Manchester United has resulted in a pre-tax loss of £137.7m in the club's holding company, known as Red Football which was set up for the deal. The accounts filed at Companies House show for the first time that the actual amount paid by the Glazers to acquire the club was £809.1m. Interest payments on debt of £598m totalled about £85.2m in the 14 months between May 1 2005 and June 30 2006, divided between £27.2m from cash flow and £57.9m in high-yielding payment-in-kind notes. The club's success on the pitch has eased financial pressures. The Glazers refinanced the debt last August, raising the total debt to £660m but reducing the debt servicing to about £60m. The club is enjoying record revenues and made a £31m profit in the 12 months to June 30. Glazer family sources told the Financial Times that the accounting losses were expected and reflected the cost of financing the old capital structure of the club, the depreciation of goodwill and exceptional one-off takeover costs.