Reports have surfaced recently indicating that the interest rates on Manchester United’s infamous PIK loans have increased from 14.75% to 16.75% because of an inability to repay funds owed to Citadel, Och Ziff and Perry Capital (the three hedge funds with whom the debt was originally taken out), as specified in the terms of United’s debt restructuring back in 2006. So what does this mean for United? Is the price to pay for this situation a scaling back of investment in new players or price hikes as we fans often fear? It’s probably best to start from the beginning to see where this could lead to.
While most fans are only interested in what’s happening on the pitch, the financial mess that many clubs currently find themselves in has to be a major concern. After all, no fan want to see their club going down the same disastrous path that Portsmouth has.
There is some light on the horizon however which is predicted to change football as we now know it. The Glazers’ timing of the extension of the club’s debt maturity dates to 2017 offers an unmistakable clue. It may also explain why despite the huge debts forced onto Manchester United, the family is intent on hanging on to the club.