Manchester United's parent company announces record £104.6m loss - 7M sport

Manchester United's parent company announces record £104.6m loss



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Posted Wednesday, March 23, 2011 by theguardian.com

• Red Football Joint Venture Ltd's loss due to loan repayment
• Total debt now £590.4m, up from 2009 figure of £566.1m

Manchester United's parent company announces record £104.6m loss
Red Football Joint Venture Ltd put the loss down to a bank loan repayment and a reduction in player sales.

Manchester United's parent company, Red Football Joint Venture Ltd, has announced a record pre-tax loss of £109m for the financial year ending June 2010. This represents an additional £29m from the £80m pre-tax deficit posted for the same period by Red Football Limited, the football club's immediate holding company, in October.

Most of that £29m is the interest accrued on the club's payment-in-kind loans, which stood at £233m in June, and this debt has since been cleared. Mystery, though, still surrounds how the monies were sourced to pay the PIKs. They were removed from the parent company's financial burden in December and the accounts were signed off in September, meaning that there was no requirement to offer a clarification in the accounts notes concerning post-balance sheet events.

It was thought the owners, the Glazer family, might have sold part of United or refinanced other loans and assets to pay the PIKs, though a spokesman has recently said the family still own 100% of the club.

While United declined to comment regarding the PIKs when contacted by the Guardian, the club is not concerned regarding the £109m loss. It points to the last quarter's accounts, which were published in February, offering the most recent picture of the finances.

These stated that commercial revenue was a success, showing a rise of 35.5% from £37.2m in 2009 to £50.4m, due to the new deal with Aon, a trend that should allow United to become the first club to draw a £100m profit or more from this stream. This helped raise overall revenue from £144.7m to £156.5m, a year-on-year growth of 8.2%, which indicates the club's earnings are increasing even while it services the huge debt the Glazers imposed.

Red Football Joint Venture Ltd's accounts state that when the Glazers took out their £500m bond refinancing last January, repaying the previous bank loan cost "an exceptional loss on interest rate swaps of £40.7m" and an unrealised currency exchange loss of £19.3m. That is a total of £60m, cash, which the refinancing cost Manchester United.

The company's previous accounts, for the year up to June 2009, had posted a pre-tax profit of £21.6m, due in the main to the £81m sale of Cristiano Ronaldo to Real Madrid. The total borrowings at June 2010 stood at £522m, up from the 2009 figure of £514m.

Following the announcement of the £80m loss in the autumn David Gill, the chief executive, said United were in a robust position. He said then: "We are not a club that needs to sell. We have money in the bank so there is zero pressure on that, no pressure at all to sell any star player whether it is Wayne Rooney or X, Y or Z. I can categorically say that. The philosophy is to retain and attract the best players. We have £165m in the bank but in some ways we would prefer to have £80m in the bank and Ronaldo on the pitch."



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