For the Man Utd wait-and-see crowd...

blastman

That Malcolm Glazer, what a guy. Best thing to ever happen to United.

The Telegraph
By Andrew Murray-Watson
(Filed: 09/07/2006)

Man Utd seeks £500m loan

Manchester United is in talks with financial institutions to borrow up to
£500m against the value of its future ticket sales at the club's giant Old
Trafford stadium.

It is believed that Royal Bank of Scotland is drawing up a plan that would
see the club securitise future match-day revenues over a 25-year period. The
Edinburgh-based bank recently undertook a similar deal for Arsenal FC.

The new funds could be used by Man Utd to replace the £540m of more
expensive debt used by the US-based Glazer family to fund its controversial £800m takeover of the club last year. Man Utd is expecting revenues of £3m per match this year following the expansion of Old Trafford's capacity to 76,000. Any securitisation deal would take into account gate receipts as well as associated revenues such as food and drink sales.

More here

el rabitos

lol, battered

WhiteWashMan

i wonder was ronaldo one of those players being insured as an asset?

Dave Larkin

Heh, didn't see that one coming...

PHB

Yeh that rumours being doing the rounds, but it doesn't really make any sense. First off, they have already borrowed against the future ticket sales, how would they let him do taht again?

Also a 25 year period? That makes absolutely no sense, cause the Glaziers had a 10 year plan, which was to take over the club, make it more profitable, and sell it off at a higher price. 25 yaers makes no sense.

Dont be at yourself

Well securing over the next 10 years' match day revenue wouldnt be enough for security against such a large loan, hence 25 years, I presume. But hey, keep your head in the sand, eh?

mike65

Match day revenue of 3 million would require 167 games to pay off the loan. Which is only about 5 years of home matches but this is a deal for 25 years. So in fact the bank would only get about 20% of match day revenue. Thats 2,400,000 left for the club from each home gate. Does any of this take TV money into account? The club got £39.9m from BBC/ITV/SKY last season, maybe they should just sign over the tv money.

Mike.

PHB

Yeh, it is a possibility, but it's not exactly a bad thing.

Replacing a more expensive debt with a cheaper debt, with no real negatives that are visible. If it happens It'll probably be good, but I can't see how it will happen

Mitch Connor

PHB wrote:

Yeh, it is a possibility, but it's not exactly a bad thing.

Replacing a more expensive debt with a cheaper debt, with no real negatives that are visible. If it happens It'll probably be good, but I can't see how it will happen

that is exactly the goal, and it is standard business practice. Refinancing the loans was always going to happen, considering the reason for the large interest rate was the uncertainty of the take-over.

In all honesty, I am surprised the loans were not refinanced a long time ago.

I do not think United are in great shakes financially, and i do not believe the Glazer ownership is good for the club, but this piece of news is not startling, or any reason for alarm, in my opinion.

BaZmO*

securitisation

Is that even a real word? It sounds like a Bush-ism to me!

johnos

BaZmO* wrote:

Is that even a real word? It sounds like a Bush-ism to me!

Another sign of the madness that money is bringing to football. I read somewhere yesterday (was in S. Times?) that the latest trend is for investors to buy stakes in players, and that this already applied to ManU's Ronaldo.
Seems the argument for FC United is growing all the time.

kippy

Is that even a real word? It sounds like a Bush-ism to me!

Most certainly:
http://en.wikipedia.org/wiki/Credit_derivatives
Looks a bit out of place in a soccer forum but its relevant.
Nothin strange about that news-banks refinance debt all the time.

BaZmO*

Well then in that case, I'll have to retractify my statement.

blastman

PHB wrote:

Yeh, it is a possibility, but it's not exactly a bad thing.

Replacing a more expensive debt with a cheaper debt, with no real negatives that are visible. If it happens It'll probably be good, but I can't see how it will happen

For starters, one rather large negative is that the amount of money secured against the club is being doubled. The Glazers are effectively transferring their loans (the hedge funds) on to the club, secured against club assets. The total level of debt will now be more than the amount rejected by the board in Glazer's original takeover offer, the same offer that was rejected for "not being in the best interests of the company".

PHB

The Glazers are effectively transferring their loans (the hedge funds) on to the club, secured against club assets.

They have already done that, all the debt is currently against the club.

The total level of debt will now be more than the amount rejected by the board in Glazer's original takeover offer, the same offer that was rejected for "not being in the best interests of the company".

While technically the total amount of debt will increase, it will make is much more managable, and greatly reduce the pressure upon the board for instant increases.

el rabitos

you could find the positives in any disaster

zAbbo

consolidate all your loans into one monthly repayment

astrofool

As much as people love to jump on bandwagon's, all it seems to be doing is changing the debt to be on lower risk, lower interest assets. Also, IF it is being secured on match day tickets, then he has to keep the stadium full, which is also a good thing.

zAbbo

astrofool wrote:

Also, IF it is being secured on match day tickets, then he has to keep the stadium full, which is also a good thing.

and increased ticket prices.

county

zabbo wrote:

and increased ticket prices.

true,my season ticket went up about 60 euros

The Muppet

county wrote:

true,my season ticket went up about 60 euros

It's still one of the cheapest in The Premiership though.


This is old news, it boils down to cheaper money for Glazer, I was not all that happy when he took ove but to date none of the doom and gloom stuff predicted during his takeover has happened , he is doing ok by the club IMO.

Waster

Good Observer article on this.
http://football.guardian.co.uk/money/story/0,,1821409,00.html

blastman

PHB wrote:

They have already done that, all the debt is currently against the club.

Wrong, the PIKs are not secured against the club assets. That's what this refinancing is doing, making the debt cheaper, but increasing the overall amount of debt (almost doubling it, in fact)secured against the club.

PHB

the PIKs are not secured against the club assets

What do you think they are against then?

blastman

The PIKs are personal debt taken on by the Glazers. If they default, the banks who own them cannot seize United assets or demand a seat on the board.

Emmo

smart move.

Its like moving your credit card debt to a different card to get the 0% APR for a few months while you manage it.

Emmo

blastman

Except there's no 0% APR, of course.

Emmo

No but it did save them about 50 Million / year.

Its called restructuring the loan. SMART

Emmo

blastman

Not denying it's a smart move...for the Glazers.

Doesn't do anything good for the club though, quite the opposite IMO.

astrofool

How is the owner of the club having 50m extra a year a bad thing for the club? If it were a PLC fine, then the investors are in it for the profits on shares and dividends, but when its one owner, the amount that ManUtd can spend is going to be directly linked to the amount of money the owner has. People forget that Glazer is worth over 1bn himself, if he were to sell all his assets, but seeing as he has his assets tied up in different things, most of the businesses he has will be on long term loans like ManUtd, and face it, with interest rates at their lowest level in decades, borrowed money is cheap (of course this may change, but debt is always exchangable).

It's amazing how people can break down something as business finance so easily on football forums, you'd swear that they'd all got a commerce/accounting degree/masters....

blastman

** Edited as it looks like the figures given weren't accurate, it's actually worse than they suggested **

astro, in a PLC, the dividends are paid depending on what the club makes in profit. Loans have to be paid regardless.