Manchester United's global popularlity pulls in the punters

Paul Kelso

Manchester United’s £500m (€575m) bond issue is expected to be successfully completed today, with investors likely to receive a return of between 8.75pc and 9pc.

City sources revealed the bond had been split into two tranches, with the sterling portion of £300m (€345m) delivering a return of 9pc. The balance of $325m (€230m) will offer a rate of approximately 8.75pc.

The final rates will be announced today when the club begin their final sales roadshow in New York. These rates are slightly higher than the initial market guidance, but the fact they remain in single figures is an indicator of the popularity of the United brand around the world.

Club chief executive David Gill and chief of staff Edward Woodward have spent the last two weeks marketing the bond to investors in Asia Europe and the United States.

Sources have suggested that the bond has had strong support from private investors and individuals with major investment houses less enthusiastic because of the inherent risks in the football business.

But the success of the bond issue will be taken by the Glazer family as vindication of their stewardship of the club despite fierce criticism from supporters’ groups.

There has been great unease in particular at the scale of the dividends that the bond permits the Glazers to draw down to pay off the most expensive portion of the £716m (€823m) debt burden the club carry. They will be able to take out about £125m (€144m) this year.

The revelation that Malcolm Glazer’s six children have also taken personal loans from the club at more favourable rates than they have secured for the club also caused concern.

On Wednesday accounts for the United’s holding company revealed that total debts had grown by £17m (€19.5m) last year and that interest payments totalled £68m (€78m).

It was also disclosed that interest on the most expensive “payment-in-kind” loans would increase by two points to 16.5pc this year. The rising interest rate helps explain the Glazers’ motivation for issuing the bond, which will help them tackle the PIK debt.

The bond issue has been well timed, coming before any fears over on-field performance this season coalesced into genuine concerns. They have also taken advantage of Sir Alex Ferguson’s continued presence.

One source suggested that a bond issue would be impossible for at least three years after Ferguson left Old Trafford because of the uncertainty over performance that would follow.

There was a warning, however, for other clubs considering using a bond issue to raise finance.

“If United have had to go around the world to get this away at just under 10pc it means that there’s not a lot in the bond market for other football clubs, because United is the best there is,” a banking source said.