Man United could face '£3bn' hit after confirmed news

Man United could face ‘£3bn’ hit after confirmed news – Stefan Borson

Manchester United’s financial situation has been firmly in the spotlight over the past few months after Sir Jim Ratcliffe has implemented several cost-cutting measures.

The Premier League side have announced plans to build a 100,000-seater stadium as part of the government’s regeneration of the Old Trafford area.

Man United’s expert task force – which includes Manchester mayor Andy Burnham and ex-defender Gary Neville – recommended the new development over the prospect of improving the club’s existing home.

Ratcliffe has insisted he wants the new stadium, which will cost around £2billion, to be the “world’s greatest” and potentially be completed within five years.

Former Man City financial adviser Stefan Borson exclusively told Football Insider the project could cost the club around £3billion due to the interest costs during the build process.

United posted a club-record revenue of £661.8million in 2023-24 despite recording a net loss of £113.2million.

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The Manchester giants’ existing debt currently stands at around £1billion after they have faced financial challenges in recent years.

Man United debt could soar after new stadium plans revealed

Borson insisted United’s debt could continue to increase during the new stadium build process.

He told Football Insider: “I think financing it is a big question generally because obviously United already have quite a lot of debt and this is not a cheap stadium.

“What’s happened over the years in stadium building, particularly in the UK, is there’s been a huge amount of inflation in the cost of these stadiums and we’re now looking at £2billion.

“If you do the maths on it, this isn’t starting tomorrow. The likelihood is that, even during the period of the build, you’re going to have not just cost inflation in that it’s going to run over budget, but also just general inflation.

“It’s hard to know what the assumptions are within the £2billion, but it could easily turn into £2.5billion or even £3billion because they’re clearly not going to have the benefits of the additional revenue that the stadium is going to generate during the build.

“If the stadium generates in today’s terms £150million a year additional revenue, that essentially falls to the bottom line because a lot of that will be ticket revenue. Let’s say even in the best case, the stadium is worth another £150million a year of profits, that’s not available during the build.

“What that means is that you’ve got to fund it in stages, you’ve got to fund the cost of the stadium, so during that five years, it could be easily be £500million a year.

“In the first year you’ve got £500million, in the second year your debt’s up to £1billion, in the third year it’s up to £1.5billion and all the way along that’s generating interest cost but you don’t have the revenue that’s coming in from the stadium to pay for the interest cost.

“The likelihood is that what happens during the build process is that the club rolls up the interest onto the principal amount. That could easily be another £500million of interest over that five-year period during the build process.

“All of a sudden, a build that just on its own in terms of the build cost of £2-2.5billion has the interest cost for paying for the stadium as it’s being built before you’ve got revenue. The bottom line is, it’s a very expensive project.”

Ranking Stadium Capacity 1 Old Trafford (Man United) 74,197 2 Tottenham Hotspur Stadium (Tottenham) 62,850 3 London Stadium (West Ham) 62,500 4 Anfield (Liverpool) 61,276 5 Emirates Stadium (Arsenal) 60,704 6 Etihad Stadium (Man City) 52,900 England’s six biggest club stadiums

Jim Ratcliffe could make Man United takeover demand to fund new stadium

Ratcliffe is considering options for financing the new stadium development after taking control of the footballing operations at Old Trafford in February last year.

Football Insider revealed on 13 February Ratcliffe could demand more United shares to help fund the project.

The INEOS chief owns a 28.9 per cent stake in the club, while the Glazers have recently seen their shareholding diluted to 48.9 per cent.

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