Going through the terms of the finance deal put together for Malcolm Glazer’s acquisition of my beloved Manchester United, I am appalled. As a fan, I am horrified at the amount of debt that will be put on its balance sheets. Quite frankly, this level of debt – even without performing any in-depth analysis – looks unsustainable with the interest costs alone coming up to over GBP100,000 per day. I would love to be the bank doing this deal because the returns look amazing. I mean, 6.5% above LIBOR (currently 4.6%)? Those are junk (now known as high-yield) terms! However, as with any deal with high returns, it entails high risk. That’s why the interest is so high, because the (quite high) probability of default has already been factored into the terms of the financing.

And with Manchester United’s assets as collateral? It’s an asset-light company. What assets does it have other than Old Trafford, its players and merchandising rights? Once the bank moves to enforce its collateral rights, what will happen then? Given the lack of experience the bank has in dealing with the sales and purchase of football players and property, it’s most likely going to be a fire sale.

But of course, before it gets to that stage, I envision Messrs. Glazer and sons will attempt to capitalize on Manchester United’s fame and build a block of apartments a la Arsenal’s Vi7ion. And as I jokingly called Arsenal then, Manchester United will be a real estate company masquerading as a football club.