Accounts for United and the club’s parent companies published this morning reveal that the club’s ultimate parent company Red Football Joint Venture Ltd made a pre-tax loss of £44.8m in the year to June 2008.
Manchester United chief executive David Gill was paid £1.7m during the year and the club paid an astonishing £470,000 to former commercial director Lee Daley who was at the club for just five months.
The company made interest payments of £68.8m on loans totalling £692m in 2007-08. The level of debt increased by £24m in the year as interest on “Payment in Kind” loans worth £152m at the start of the season was rolled over.
United’s complex ownership structure means the total debt is split into two strands. The senior debt of £511.6m, which is secured against the club and its assets, cost £45.5m in interest. The PIK loans, now worth £175.5m and accruing interest charged at 14.25 per cent, are secured against the Glazer family equity.
Thanks in part to the heavy debt burden the club’s immediate parent Red Football Ltd made a loss of £21.4m for the year. Profit before tax and other charges was £80.4m.
The increase in the debt carried by the club will fuel unease among supporters and within the Football Association and government about the financing of England’s leading club.
The Glazer family have long argued that the structure is sustainable and point to increases in commercial and other revenue. Despite carrying a huge debt burden the club has been able to continue to invest in playing talent and compete at the highest level.
With the financial crisis affecting the willingness of banks to extend credit however there will be concern over whether the heavily-leveraged model is sustainable in the medium term.
The club’s record turnover, up by nearly 20 per cent on the previous season, is largely attributable to increase Premier League television Champions League media revenue. Combined the two contributed £90.7m.
Matchday revenue at Old Trafford brought in £101m and the club’s commercial operations generated £64m. The club also made a profit of around £20m on transfers.
The club also signed new commercial deals with Saudi Telecom, Diageo, the Seoul Metroplitan Government and renewed agreements with Budweiser, Travelcare and GSK.
United and the Glazer family are not commenting on the latest accounts. The Telegraph (UK)