Manchester United add US$125m debt in refinancing deal

Manchester United have issued US$550m of senior secured notes to refinance debt due next year and provide additional cash for general corporate purposes.The new notes replace US$425m of debt due to mature in June 2027, adding US$125m to the club’s long-term borrowing and carry a fixed interest rate of 5.36% and are due for repayment in 2031.The previous US$425m tranche had an interest rate of 3.79%, meaning United will pay a higher rate on a larger amount of debt.The refinancing is expected to increase annual interest costs by about £10m at current exchange rates.United paid £37m in interest during their previous financial year and another £28m across the first three quarters of the current period.The transaction takes the club’s estimated total debt to around £728m, close to the £773m peak recorded during the 2009–10 season.United were debt-free before the Glazer family’s leveraged takeover in 2005, which placed £604m of borrowing and related liabilities on the club.Interest payments since the takeover have totalled approximately £886m, placing a sustained burden on cash that could otherwise have been directed towards football operations or infrastructure.United stated in a filing that proceeds from the new notes will repay the existing US$425m balance, cover associated costs and support “general corporate purposes”.The club’s debt also includes a US$225m secured term loan from Bank of America, which has now been aligned with the new notes and is also due in 2031.A third component is United’s revolving credit facility, which functions as a flexible source of short-term borrowing.The maximum facility has increased from £300m to £400m over the past year, with £150m drawn as of May 27 and a further £250m available.United have relied more heavily on the facility since cash reserves were depleted during the Covid-19 pandemic, including to help finance transfer spending.Omar Berrada, Manchester United chief executive, stated: “The club has shown that it can be not only profitable but, more importantly, win trophies with the current structure that we have and continue to do that.“I think our role as management is to be able to operate competitively with a financial structure that is sustainable. We also want to aspire to build a new stadium, but we have to do it in a way that allows us to continue being competitive.“We need to continue staying very disciplined and continue to take the right decisions on the pitch and put us in a position where we can do everything, where we can sustain the debt, aspire to build a new stadium, and importantly try to win as much as we can.”The additional US$125m from the refinancing may reduce the need for further short-term drawdowns and provide greater flexibility during the summer transfer window.Some of the proceeds could also be required to manage the club’s net transfer debt, which stands at around £360m, with £209m due within the next year.The refinancing also has implications for co-owner Sir Jim Ratcliffe’s ambition to build a new 100,000-capacity stadium next to Old Trafford.United are expected to require substantial external financing for the project, and taking on further debt while existing borrowing becomes more expensive adds pressure to the stadium business case.