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Report: Man U prices may soar

The Times of London also reports that Manchester United likely will play an annual match in Tampa.

By LOUIS HAU
Published June 11, 2005

The English soccer team Manchester United could see its ticket prices surge by as much as 54 percent over the next five years under preliminary plans being considered by new owner Malcolm Glazer, the Times of London reported Friday.

Citing "previously unseen documents," the newspaper also reported that Glazer, the owner of the Tampa Bay Buccaneers, plans to boost Man U's revenue by 52 percent during the same period, which would include a 61 percent increase in game-day revenue and a 13 percent rise in media revenue.

The Times of London also reported that Glazer "is likely to have agreed" to a deal with his bankers that could constrain his ability to sign more top starters to Manchester's roster and Man U is expected to play an annual showcase match in Tampa.

The newspaper quoted a "source close to the Glazer camp" as saying, "It is important to stress that these plans are fluid and nothing is set in stone at this stage."

Glazer and Man U officials couldn't be immediately reached Friday for comment.

The Times of London hasn't been a wholly reliable source of information on Glazer. On May 22, the newspaper reported that Glazer's son Joel would attempt to win over Man U diehards by including an open letter to fans in Glazer's formal buyout document. No such letter was included in the buyout document, which was released the next day.

Glazer's investment vehicle Red Football Ltd. will pay among the highest rates levied on a European buyout loan to finance his 790-pound ($1.4-billion) acquisition of Man U, which previously had been virtually debt-free.

JPMorgan Chase & Co. is charging Red Football interest margins starting at 2.75 percentage points over benchmark interest rates, half a percentage point more than rates for most seven-year buyout loans.

"This level of debt can kill you," said Stephen Schechter, former head of cross-border debt at Lazard Ltd. "This isn't a leveraged buyout of a nice, boring manufacturing company."

Of the 187 seven-year buyout loans tracked by Bloomberg News since 1999, only 14 have margins higher than 2.25 percentage points above benchmark lending rates.

Red Football will also have to repay pay-in-kind securities it sold at a discount to hedge funds managed by Citadel Investment Group LLC, Perry Capital LLC and Och-Ziff Capital Management Group.

The pay-in-kind securities pay interest of as much as 20 percent, which accumulates and pays out when they mature in 2015. With the securities, Red Football could forfeit its shares in Man U to the hedge funds if the notes are outstanding after 63 months.

The pay-in-kind securities "are a ticking time bomb," said Howard Lacy, director of London-based Inner Circle Sports, a sports finance adviser. "Manchester United is now in a dangerous position."

Red Football's formal offer to buyout the remaining shares of Man U at three pounds ($5.40) each expires on Monday. Man U said Friday in a regulatory filing that team chief executive David Gill had exercised options on 11,535 shares of Man U stock at a strike price of 96.5 pence ($1.75) a share and then sold the shares to Red Football.

Information from Bloomberg News was included in this report.

[Last modified June 11, 2005, 00:25:17]