Football finance expert Stefan Borson has warned Manchester United that their proposed new 100,000-seater stadium could cost in excess of £2 billion, and that the current economic climate is 'not the right environment' for such a project. Rising interest rates will significantly increase the cost of moving from Old Trafford.
Financial hurdles and government funding doubts
According to CityAM, there are doubts about the club's finances, with United reportedly seeking government help to pay for infrastructure around the stadium, while private funding would be required for the ground itself. The club recently restructured £410 million of its debts, which exceed £1 billion, at interest rates of 5.36 per cent.
United secured a return to the Champions League after a third-place Premier League finish last season, boosting finances by nearly £100 million. However, that sum is expected to be absorbed by pay increases and transfer spending this summer under manager Michael Carrick.
Funding options and investor interest
United have indicated they are open to various funding options, including private or ownership investment, and have engaged with 'several' potential investors. However, it remains unclear whether the Glazer family or minority owner Sir Jim Ratcliffe intend to fund the stadium themselves.
“Of course, if the owners stick £2bn in and build the stadium themselves, then there’s no issue. But that’s not what’s been touted at the moment,” Borson told City AM. “The environment is not right to build a stadium. We have very high interest rates that don’t look like coming down and it doesn’t look like the owners will underwrite it. Is Man United, even with a 100,000-seater stadium, a football club able to deal with £3.5bn-£4bn of total debt? I say no it can’t.”
Existing debt burden
Borson added: “Their starting point is a heavy existing debt profile. You have the senior debt, the secured loan and the revolving credit facility – effectively the overdraft – and a substantial amount owed to other clubs for historic transfers. Presumably because United have made the senior facility a little bigger at $550m (£415m), they won’t need to rely on the overdraft quite as much. But they’re still in an investment phase in the first team, so you would think they’re going to need cash for that. The top and bottom of it is: the existing debt isn’t coming down anytime soon. They’re not going to be in a position where they’re throwing off loads of excess cash to start repaying debt.”
Stadium plans advance
Plans for a Wembley-style venue took a major step forward this week. The new stadium would allow United to join rivals Manchester City, Everton and Liverpool in having a multi-functional site generating extra revenue from concerts and other events.
Former Greater Manchester mayor Andy Burnham, who advocated for the plans, recently left his post after winning a local election to become MP for Makerfield. Burnham had previously ruled out using public funds for the stadium. A United spokesperson said: 'Our proposed new stadium will be financed privately, and we continue to have positive conversations with potential investors and all stakeholders.'
