Friday, 12 February 2010

Mortgages, filings and security

There's been some excitement in the last day or so about the filing of two security documents by Manchester United Limited relating to the recent bond issue. Bloomberg covered the story here:

and various wire services and blogs have now run with it.

You can download the two documents here:

MU Ltd mortgage
MU Ltd debenture

The first thing to say about this is that there is nothing really new in this. All the club's property was mortgaged after the takeover (with these arrangements amended after the August 2006 refinancing). The new documents are merely the latest arrangements now the bonds are in place. Bloomberg say:

"Manchester United, the 18-time English soccer champion, included its stadium and training ground as security in its 504 million-pound ($785 million) bond sale, according to documents filed with U.K. regulators."

This is wrong because Carrington is actually explicitly excluded from the mortgage. As I described here, Carrington is not part of the security because the Glazers want the ability to take it from the club (for no cost) and then sell it. Ironically, it would be better for the club if it was part of the mortgage security as it would be more protected from such an action. I say more protected because Old Trafford itself can be sold under certain circumstances. I don't for a minute think this is their "Plan A", its more a fallback arrangement if things go wrong, but its instructive that provisions to do a sale and leaseback (where its called a "Specified Asset Sale and Leaseback") were included in the bond document - it shows what sort of "custodians" of our club they really are.

In the centenary year of our stadium (which the club are actively promoting of course), the news is not that the Glazers have mortgaged our heritage, they did that five years ago, its that they have deliberately reserved the right to sell Old Trafford if things don't go their way....