Papers reveal creditors' hold on Glazer

Shock, horror - ticket prices to rise 54%. Well, yes, but do the maths: the increase is over five years, so it equates to a rise of 9% a year. It is higher than the rate of general inflation, but Manchester United fans surely will have feared they would be hit with annual hikes of 25%-plus.

That is the point about Glazer's business plan: on the face of it, it is not radical at all - it is a continuation of the old board's strategy. Glazer is assuming a top-four Premiership position; so did the old guard. In the Champions League, he expects no better than the knockout round of 16; United's directors had previously assumed the quarter-finals.

In terms of transfer budgets, Glazer is promising more money - a net £25m a year. During its past seven years as a quoted company, United had averaged about £20m.

If any United fans had seriously expected the old board to do anything different on ticket prices they were living in dreamland. In the heat of the takeover shenanigans, next season's prices were quietly jacked up 10% on top of last year's 8% rise. It is simply the commercial logic of being the biggest name in club football.

But that is where the (vaguely) reassuring news for fans stops. The leaked document should be put in context - it is just a business plan. Sometimes companies meet their business plans; sometimes they do not.

In United's case, the consequences of failure are now deadly serious. They are revealed in separate documents currently on display in the Canary Wharf offices of Allen & Overy, the American's lawyers.

These documents (available for public inspection until the offer closes, which could be as soon as next Monday) are the legal agreements between Red Football, Glazer's takeover vehicle, and its financial backers - JP Morgan for the senior debt of £265m, and three New York hedge funds for the so-called pay-in-kind, or PIK, loan of £275m.

Once you get past the legal jargon, the hedge fund agreement is sensational. It shows the three funds - Perry Capital, Citadel Horizon and Ochs-Ziff - will be breathing down Glazer's neck from the off. They will receive monthly management accounts and the right to request "further information regarding the financial condition, assets, operation and financial prospects of the group".

The documents speak of a "test period" to run from August this year until July 2007. If United, in the guise of Red Football, fail to achieve 85% of their target operating profits in that period, the hedge funds start to accumulate extraordinary powers.

For a start, they would be able to appoint 25% of the directors of Red Football and all its related companies. If they are still holding their strange bits of paper in August 2010, they could claim 30% of Glazer's shares in United. Retaining the services of Wayne Rooney would not be their priority.

It means the impression in the business plan that life at Old Trafford can carry on serenely is misleading. Beneath the surface, Glazer's sons will be paddling furiously to hit the financial targets; any slip and a chasm, in the shape of the New York funds, starts to open.

The big question is why Glazer has chosen to fund the takeover this way. After all, the interest on the hedge-fund debt runs at up to 20% a year - nobody chooses to pay such rates unless it is the best they can get.

The expensive borrowing needs to be cleared quickly, otherwise all Glazer's planned improvements in United's profits will be eaten up by the hedge funds. It all points to a refinancing to buy off the hedge fund - probably soon after the end of the "test period".

Glazer has three obvious routes - sell the club to a wealthy tycoon; sell part of his shares via flotation; or raise more cash himself to take full and permanent control.

It looks as if the American sees his takeover as a two-stage affair. If he likes what he finds at Old Trafford, he can raise money elsewhere to double his bet; but if the targets are not met, he will need to find an exit before the debts escalate.

No wonder Sir Alex Ferguson will be handed £25m for new players this summer - Glazer does not only need success, he needs it instantly.

· Manchester United's chief executive David Gill has sold 11,535 shares to Malcolm Glazer's company Red Football Limited. United's group finance director Nick Humby has also accepted the 300p-a-share cash offer for 2,546 shares.