BoyBrumby
Englishman
You have a slight misunderstanding of the nature of the debt. United, as a business, are liquid, but like most companies don't hold a lot of cash in reserve so aren't earning interest on anything. The debts the Glazers' holding company have secured against United, meanwhile, are accruing interest at a phenomenal rate. The recently published accounts show, despite the £80m for the Winking Chav, United's parent company made a gain of just £6.4 million for the last year & the debt has increased to a whopping £716.6 million.It makes no difference whether United are in debt or not, either they pay interest on their debts or they pay their debts off and stop earning interest on that money in the business. All the headlines with lots of big numbers are just being sensationalist.
The concern isn't whether they're in debt, it's whether they're making money. The figures quoted in the press don't really mean anything because you don't know whether the business is actually losing money or has just had a lot of its assets revalued. You'd have to look at their accounts to find out whether they're really in trouble. But they've managed to run up more debt in a period of almost unprecedentedly tight credit, so someone obviously has a great deal of faith in their business model. When notoriously cautious banks are willing to stake another $200m of their money on United's future I don't think we have too much cause to worry. Not just yet anyway.
The trouble is the hedge funds they borrowed some money from charge Shylockesque usury rates. The £138 million borrowed in June 2006 now stands at £202m. & the good news, for non-United fabs everywhere, is the original terms expire in August (hence the bond issue), when the rate the debt attracts interest at jumps from 14.25% to 16.25%.
I'd be worried if I were a United fan.