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Dissecting Ed Woodward’s comments about Manchester United and the Glazers

Ed Woodward, possibly in response to Manchester United‘s much-discussed opening to the season, took the unusual step of conducting an interview around a variety of topics, not least his belief that the Glazer family are “in it for the long-term” at Old Trafford.

“With regards to offers or asking prices, my understanding is that there have been no discussions for a price for the club or anything like that. Every conversation we have is based on the long-term,” Woodward said, seemingly in response to reports of a renewed takeover approach from Saudi Arabia.

Woodward also commented on Manchester United‘s finances in a chat with fanzine United We Stand.

Here is what he said and some brief context around his comments.

In relation to Manchester United‘s debt, Woodward said:

“The debt is a long-term, structured and similar to some other football clubs. It’s a fixed amount for a fixed period of time which results in it being fairly cheap to service. It’s just under two per cent our annual revenue each year, so it doesn’t really have any impact on us.”

 

According to Manchester United‘s latest financial report for the year ended 30 June 2019, Manchester United‘s total borrowings were a little north £511million – more than 99% of which is due after more than a year (that is, non-current).

This is a legacy from the leveraged buy out of the club by Malcolm Glazer – the father of the Glazer siblings who died in 2014.

Of the long-term debt amount, £331million of loan notes, which have annual interest of 3.79%, are due in June 2027.

Another £175million is due in August 2029, after the club amended the terms of that loan facility in August 2019. This debt again carries interest payments.

 

“We continue to evaluate our financing options and may, from time to time, take advantage of opportunities to repurchase or refinance all or a portion of our existing indebtedness to the extent such opportunities arise,” the club’s financial report spells out.

Manchester United may also borrow up to a further £150million from a revolving line of credit – £125million plus a further £25million in increments – though they have yet to tap this resource.

Woodward said that the cost of servicing this debt pile is “just under two per cent our annual revenue each year.”

In 2018/19, Manchester United had net finance costs almost entirely related to the debt of £22.5million – which amounts to 3.6% of total revenues (£627.1million).

These finance costs do not include income tax expenses or credits.

 

Net finance costs have hovered between £18million and £35million from 2013/14 to 2018/19, while revenues have in that time risen by almost £200million – from £433million in the first season post Sir Alex Ferguson to the £627million last time out.

This means that the club since 2013/14 have incurred around £147million in finance costs on revenues of approximately £3.14billion – amounting to around 4.7% of revenues.

Prior to 2013/14, the club was paying serious money in finance costs almost entirely related to the club’s debt pile.

From 2008/09, finance costs never fell below £50million, from a peak of £117million in that season – or greater than 42% of revenues that season (£278million) – to £109million the year after; and still as high as £71million in Ferguson’s last season.

 

On top of interest, Manchester United are among the select group of clubs to pay out a dividend to shareholders – which are not treated as part of finance costs.

The club pays out approximately £23million per season, depending on the exchange rate to the US dollar, with the lion’s share of this amount going to the six Glazer siblings as holders of the vast majority of issued shares.

Manchester United‘s net debt – its gross debt minus cash and cash equivalents at hand – sat at a little under £204million as of the end of last season, as that £511million debt pile was offset by a £308million cash pile.

The club underlined earlier this year that this was the lowest recorded net debt since 2005 – the year Malcom Glazer first took ownership of the club.



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