Manchester United: Debt

Football clubs like Manchester United and Chelsea trade in players like most similar businesses and Manchester United is some £500m in debt. The recent benchmark 'wage' bill is reportedly between £130,000-£100,000 a week per player as offered by 'struggling' West Ham to Ruud Van Nistelrooy. This equates to about £1m weekly or £50m annually for just one team and excludes any other salaries etc. A huge outlay expected to be financed partly (presumably) by the loyalty of the 'fans'.

High risk mortgage loans and lending/borrowing practices
Debt

The mortgage qualification guidelines originally required a Stated Income, Verified Assets (SIVA) to acquire a loan. Proof of income was no longer needed and borrowers were only required to "state" it and show that they had money in the bank. This was followed by the No Income, Verified Assets (NIVA) loan. The lender no longer required proof of employment. Borrowers just needed to show proof of money in their bank accounts. The qualification guidelines kept getting looser in order to produce more mortgages and more securities. More virtual debt and virtual money. This led to the creation of NINA: No Income No Assets (sometimes referred to as Ninja loans: No Income, No Job (and) no Assets). Basically, NINA loans are official loan products and let you borrow money without having to prove or even state any owned assets. All that was required for a mortgage was a credit score. The requirements were becoming almost non-existent and just the application itself should secure the loan. This effectively led to the financial crisis.

A similar outcome could be envisaged by investing in debt and this seems to be precisely what is being proposed. A bond issue raised the £500m investment from some 50 low risk investors (pension fund) managers and insurance groups in the UQ (aka UK) Ltd. The growth rate may appear (theoretically) attractive, but investing in debt does not make sense and there is no obvious method to create income. These football clubs with an enormous debt that will not shrink naturally, taking into account the difference between imagined income and certain outgoings, should scream DO NOT TOUCH. Any expected (virtual) return on investment is highly doubtful and such finance is destined to be lost.