LONDON, England (Reuters) -- The world's richest soccer club, Manchester United, is about to become one of the world's most indebted, but failure on the pitch has driven many of the sport's biggest borrowers to financial ruin.
U.S. sports tycoon Malcolm Glazer won a protracted battle for the soccer team nicknamed the Red Devils on Thursday, bypassing the club itself and amassing a controlling stake of about 70 percent by striking deals with other shareholders.
Key to his takeover, which values the 15-times English soccer champions at about 790 million pounds ($1.5 billion), is a plan to raise about 300 million pounds from the club itself.
The Manchester United board has long rejected Glazer's overtures, precisely because of his plans to saddle the 127-year-old club with debt.
And with good reason, say some analysts.
"Soccer clubs do not have a good track record with managing debt," said Bill Gerrard, professor of sports management and finance at Leeds University Business School. "Manchester United will clearly be in a weaker position financially."
To repay debt requires a steady, reliable income stream. And soccer clubs, whose finances can hinge on a missed penalty or a referee's decision, simply do not have this.
Debt burden
Recent history is littered with examples of clubs which have borrowed heavily to buy players or upgrade stadiums, only to fall into financial ruin when success ran out on the pitch.
In England, Leeds United splashed out on players in a spree that carried it to the semi-finals of Europe's lucrative Champions League in 2001. But debts of over 100 million pounds forced it to sell all its big name players and last year the club was relegated from England's Premier League.
In Germany, Borussia Dortmund, which won the Bundesliga as recently as 2002, agreed a rescue plan with creditors in February after saying it could go bankrupt.
Debt-free Manchester United knows only too well the financial cost of failure on the pitch.
The club, home to England star Wayne Rooney and Dutch striker Ruud van Nistelrooy, said in March first-half profit took a 5.8 million pound hit from a third-place finish in the Premier League last year compared with first the year before.
European soccer's governing body UEFA, eager to clean up soccer's financial reputation, warned earlier on Friday that heavily indebted clubs could be refused access to competitions.
However, analysts stressed that Glazer's plans as they stand pose little risk to Manchester United's future.
Glazer gold
"If there's any soccer club that you could say does have a reliable income stream, it's Manchester United," said John Williams, Director of the Centre for the Sociology of Sport at the University of Leicester.
Its home games are routinely sold out, its merchandise sells across the world and it generates steady income from sponsors such as U.S. sportswear giant Nike Inc, he said, adding the debt being considered by Glazer was similar to the level required by London rival Arsenal to build a new stadium.
Gerrard of Leeds University Business School agreed but added Glazer's plans did have a downside in a sport where financial clout is more important than ever in securing the best players.
"This level of debt will not put the future of Manchester United at risk, but it will reduce their ability to compete financially with the likes of Chelsea," he said, referring to the recently crowned English champions whose Russian owner has spent over 200 million pounds on players in the past two years.
Even as Glazer was cementing his control of Manchester United on Friday, Nigerian teenage star John Obi Mikel announced he wanted to play for Chelsea, despite signing a deal to join Manchester United last month.
The challenge for Glazer, a self-made millionaire who also owns the Tampa Bay Buccaneers American football team, is to generate new income for Manchester United, said Leicester University's Williams.
"It could be a push in the United States, it could be TV deals. It won't be easy, but the man's no fool," he said.
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