Manchester United have announced that they expect to cut £10 million a year in interest costs because they have refinanced £192 million of their debt. Here are some of the details:
'United have refinanced £177.78m of outstanding 8.75% interest sterling bonds and $22.09m (£14.6m) of 8.375% dollar bonds.
United say the new loan would have an estimated starting interest rate of around 2.78% and that interest payments should come down from around £31m to £21m per year. The club have a total debt of £370m.'
Source: Associated Press
I'm definitely not an authority on the financial matters of the club. However, this refinancing certainly appears to be a positive because the £10 million saved in annual interest payments could theoretically be used towards possible transfer fees and player wages.
In another TBB thread, jdw.karasu -- a valued community member that regular readers are likely to be familiar with -- had these thoughts on the refinancing of the debt:
'Andersred (a very insightful blog that 'is primarily about the financial affairs of Manchester United Football Club') predicted back in February that given the revenue and profitability that United should be able to easily renegotiate the bonds down from the 8%+ rate. Nice little cost savings here. It will likely go into reducing the balance of the debt, but all of these little items assist in moving that along more quickly and put less pressure on keeping the transfer budget tight. I tend to agree with Andy that as the debt goes down (i.e. driving debt costs down), the Glazers will move to paying out dividends to extract cash out of the company that they use to pay the bankers. Still, it's good financial health, increased revenue, and we'll have money to spend at a comfortable level. We'll never go bats*** crazy like PSG has done, or [Manchester] City did at their peak., but there will be loads to fund the club.'
Of course, United could have also saved an additional £10 million or so (i.e. transfer fee + wages) had they never signed Bebe.