United has struck a new loan deal with Bank of America which is expected to reduce its debt burden by GBP10 million
Popular Premier League club Manchester United has refinanced its GBP178 debt burden that would free it from shelling out GBP10 million annually to finance the debt. The club was bought by the Glazers family, who undertook huge debt to finance the takeover. This has during course of time impacted the funds flow and financial stability of the club.
It has over GBP307 million additional debt, but has managed to meet the ends through ticket sales, commercial revenues and merchandizing sports goods and accessories. The debt burden on the club rose following big names signings such as Robin van Persie. A major channel of funds inflow is from tele-broadcastings and advertisements.
Last season, United earned over GBP60 million as TV revenues. United's latest refinancing deal is struck with Bank of America. The interest rate on the loan is expected to be range between 8.38 and 8.75 percent. The club paid GBP50 million in interest alone in 2012.
The club's strategy is to boost its global revenues by taking its brand beyond Europe, especially to the Asian countries. Signing up of Japan's Shinji Kagawa was widely rumored as one such move which helped it to boost viewership and sale of sports merchandise in Asia.