Fergie's bond is a bind for everybody else
While Sir Alex Ferguson gets on with the job of getting his players ready to face Birmingham City's challenge on Saturday (frozen turnstiles permitting), far more significant preparations are being made elsewhere in the Manchester United empire.
United's key fixtures this month will not be at St Andrew's, the City of Manchester Stadium, the Emirates or even Old Trafford, no matter what clash-of-civilizations hyperbole the footie scribes attribute to those Manchester derbies.
No, the real action will take place over breakfast at Claridge's or at a long lunch at a City institution (the London kind, not the Gallagher brothers) - somewhere private, somewhere a dozen business acquaintances can eat, drink and discuss the sale of £600m-worth debt.
The type of players who replace Giggs, Neville and Scholes, how much of the Ronaldo windfall can be reinvested, what Fergie does about the minted arrivistes at Eastlands and how he closes the skills gap to Barca, all this and more will be decided by blokes (for the most part) in suits over the next week or so. Welcome to British football in 2010.
OK, fair cop, I've been guilty of a little bit of hyperbole there myself. Sorry, I wanted to make sure you got past the "Read the rest of this entry" hump. But last weekend's report that Manchester United's owners are considering a bond issue to refinance debts believed to total £700m was, in my opinion, the most interesting football story for months.
Why? Because it gets to the heart of what modern British football (the Premier League, in particular) is about and where it is going.
I will leave the intricacies of the bond market to others more qualified than me but if you want a primer you could do a lot worse than this guide I found on a United fans' site or Robert Peston's analysis on Tuesday.
For those of you still with me, here's my take (and please accept my apologies for any Horrible Histories-like liberties with dates or numbers).
Bryan Glazer and his brothers Avram and Joel are regular visitors to Old Trafford; father Malcolm rarely comes
The Glazer family bought United in 2005. The completion of that deal came at the end of a lengthy process that saw the shy and retiring Americans borrow an awful lot of money from lots of different lenders.
A year later, they refinanced all of this borrowing and split it between themselves and club. But, in a crafty move popular at the time, the interest on this debt would be paid by the club.
Some stunt, hey? Get a 100% mortgage to buy a successful business and then use the business's profits to meet your repayments. Brilliant, my loan application to purchase Claridge's is in the post. And I will never pay for breakfast again.
But not everybody admired their chutzpah. Some, including a large section of the Old Trafford faithful, wondered how transforming the world's richest football club into the world's most indebted football club could possibly be a good thing.
And they had a point, particularly as the list of IOU-holders includes three New York hedge funds charging the kind of interest that is currently causing Joe McIntyre so much grief on Coronation Street. These loans account for only a quarter of the total debt but they have skewed an otherwise decent mortgage deal into the financial equivalent of a ball and chain.
Which brings us back to what those City chaps will be talking about over choice cuts of Argentine beef.
Give or take a million quid or two, Manchester United's proven ability to earn pots of cash is being cancelled out by the debt burden placed upon it by its American owners. And that burden is growing.
The main culprit here is the ball-breaking vig (as Goodfellas' Morrie the wigmaker might put it) on those hedge fund loans. They have pushed up the average annual interest rate for the total debt to close to 10%.
Hold on minute, didn't capitalism almost come to an end last year? Aren't interest rates at historic lows? Surely only an idiot or somebody completely desperate would be paying double-figures interest on anything right now? Yes, yes and yes.
The "Man U bond" is simply the corporate finance equivalent of those "consolidate your debts and build a conservatory" offers you see during the ad breaks in Countdown. But instead of Ocean Finance, the Glazers have asked JP Morgan and Deutsche Bank to repackage their loans.
And where is the best place for large businesses to borrow lots of money right now (apart from the bank accounts of mega-rich Arabs and Russians)? That will be the bond market.
Right, Peston stuff out of the way, what does this actually mean for Fergie, Manchester United, the Premier League and British football in general?
Sir Alex Ferguson's side has struggled for consistency this season and recent recruits have not impressed
For Fergie, it should mean he gets to spend a bit more money. With an annual interest bill of £70m, each percentage point the suits can knock off that 10% puts £7m back on United's profits. Those in the know tell me 8% is achievable (with some caveats I am happy to discuss below). Another Nani, then. OK, not him, but somebody in that bracket.
The ability to replenish the squad is vital for Manchester United's prospects in more ways than one. It won't just help them win games now, it keeps the whole "business model" on track. The assets the Glazers have put up to secure all that borrowing are the ground, the players and all the other bits that constitute a football club (apart from its soul, the fans own that). But most of all, the Glazers are trading on United's continuing "success", the ability to pack them in at Old Trafford, earn prize money and sell shirts around the globe.
I should probably make something clear at this stage. I am not predicting imminent doom for Manchester United or even the Glazers, far from it. A bond issue makes sense and I still have Fergie's men as marginal favourites for a fourth straight title.
What does concern me about a Man U bond is what it says about the Premier League as a fair and genuine competition, and that, in turn, makes me deeply worried about British football's future.
United are one of only two or three clubs in Britain that could even consider pulling this off. And they are only doing it in order to keep pace in a market that follows no ordinary rules of business or common sense (wages to turnover ratio, anybody?!?).
Hats off to the Glazers if they can borrow £600m in this economic climate but what must the rest of football think? "Bugger," is my guess, "I suppose we're going to have keep spending money we haven't really got as well."
Every expert I spoke to about this story said pretty much the same thing: "Yeah, the bond will work, depending on price, but I won't touch it - football finance is a fad, it makes no sense whatsoever and the whole thing is heading for a crash."
The truth of it is that there are very few "business models" in British football (Arsenal's springs to mind as an honourable exception). Proper businesses are not based on endless supplies of free money, whether that money comes from old-fashioned banks, clever-clever hedge funds, Arab sheikhs or Russian oligarchs. There is no such thing as free money. It always runs out or gets bored and goes home in the end.
United will be OK. They're a global brand now, too big to fail. I fear for Portsmouth, West Ham, Hull City, Crystal Palace, Stockport, Southend, Notts County, Accrington, Chester...it's an age of austerity, alright.