Glazers open the door to sale of Manchester United's training ground

Posted Wednesday, January 13, 2010 by theguardian.com

The Glazers could sell and then lease back Manchester United's training ground.

The ownership of Manchester United's Carrington training complex could be transferred to a holding company controlled by the Glazer family and leased back to the club, according to the prospectus circulated to potential investors in a £500m refinancing scheme this week.

The £500m bond and a new £75m credit facility, which will add to an overall debt pile of more than £700m, will be secured on the majority of property owned by Manchester United, including Old Trafford.

But Carrington, the state of the art complex that opened in 2000 to replace Manchester United's old training ground The Cliff, is specifically exempted.

"The Carrington training ground will not be encumbered and may in due course be transferred to a holding company or affiliate of the Parent. In the latter event, we will be granted a lease in respect of the Carrington training ground," said the offer document in a section describing Manchester United's business and assets.

The club currently own the freehold on Carrington and the idea of one of the assets most readily associated with them being transferred to the Glazers' own holding company, and potentially sold, will cause further disquiet among fans concerned that money continues to flow out of Old Trafford despite consistent success on the pitch.

The prospect of the club losing the training ground has disturbing echoes of Leeds United, who during their financial collapse were forced to sell their Thorp Arch training ground and lease it back.

Covering 108 acres near the village from which it takes its name and dubbed "Fortress Carrington" by locals thanks to the high security fences that surround it, the complex contains 14 pitches of varying sizes as well as physiotherapy and rehabilitation areas, restaurants, conference rooms and a TV studio.

Companies undertaking a bond issue are legally bound to list all kinds of potential risks attached to the offer, and the MU Finance plc prospectus contains warnings over everything from the potential impact of Sir Alex Ferguson's retirement to terrorist attacks and the danger of football becoming less popular.

But here too it is made clear that the indenture covering the bond issue's notes "will limit our ability to sell or transfer, but not prohibit us from selling or transferring, our training ground or our stadium". If either is sold, it says it will enter into a long-term lease "to enable us to have substantially the same access to such property as we currently do".

Representatives of fans' groups that have long opposed the Glazer takeover said that the detail contained in the offer document, including the revelation that the family had taken £22.9m in management fees and loans out of the club, would increase levels of discontent. "People are starting to connect the fact that they are asking us to stump up more in ticket prices and they're not investing in the squad and on top of that they are taking money out for themselves. That is going to make it difficult to get away with another rise," said Duncan Drasdo, chief executive of the Manchester United Supporters' Trust.

The 322-page prospectus, the basis for a bond offer that most experts expect to be priced at around 9%, sets out in great detail the "high degree of risk" involved, together with the Glazers' strategy for continuing to maximise revenues.

Results released this week showed that income from matchday operations, TV contracts and commercial activities continued to rise, contributing to an increase in turnover to £276.8m. But without a £80.7m profit from transfer activities, including the sale of Ronaldo to Real Madrid, the club would have made a substantial loss. It also reveals that United have already received almost half of a new £80m four-year shirt sponsorship deal with Aon upfront, despite it not beginning until next season. It prioritises the targeting of new sponsors in areas not traditionally associated with football as a means of generating further revenue growth.

City sources expect the bond issue to succeed if it is priced and marketed correctly. But there were some dissenting voices yesterday, arguing that the yield from the bond should be closer to 9.5% given the company's profile and questioning the wisdom of investing in an unrated bond in such an uncertain sector.

"Most traditional high-yield investors won't touch this," Jonathan Moore, a high-yield analyst at Evolution Securities told Bloomberg yesterday. "It's unrated, so some investors can't take it, and there's a very busy new-issue calendar so there are plenty of alternatives. Most people just won't focus on something with far too much leverage, limited free cash flow and lumpy earnings."