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The current financial situation of Manchester United have been a hot topic over the past week or so.
Interviews from co-owner Sir Jim Ratcliffe have put the finances of the club at the forefront of the conversation.
Sir Jim even claimed that Manchester United would have gone bust without his investment into the club.
For a club that, pre-Glazers, was once the richest in world football, that’s a startling fall from grace.
One of the other topics of conversation for this week has been the new look Manchester United stadium.
Manchester United released official images of the new 100,000 seater stadium that would replace the existing Old Trafford one as the new home for The Red Devils.
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However, a question that has cropped up with this news is, how will United fund the new stadium?
At an estimated cost of £2bn, the monetary outlay for the club is going to be huge.
How is a club that is allegedly on the verge of bankruptcy going to pay for such a stadium?
According to Bloomberg, the club is expected to refinance its existing debt as part of any deal to raise funds for the stadium.
Such a move will see its interest payments basically double as a result.
Bloomberg detail that the club raised $425 million in 2015 for bonds due in 2027 – paying 3.79% when benchmark interest rates were historically low.
Lenders are unlikely to offer Manchester United terms below 6%-7% according to sources speaking to the financial publisher and that would mean more money coming out of the club on interest payments.
Interest payments have been a scourge of the United fanbase for a long time – with the club estimated to have lost £1bn on interest fees generated from the debt leveraged by the Glazer family.
Adding another layer on top of that for the new stadium would be another blow.
But there could be light at the end of the tunnel.
According to Bloomberg, once the stadium is complete, a refinancing on more attractive terms could happen.
If that were the case and the stadium was generating a significant level of revenue for Manchester United, then MUFC fans might find the short term pain palatable.
Anything other than that will go down like a lead balloon amongst the United faithful.
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Source: Centred Devils
