Man United Debt Cost to be £100m this year...

Hobart

According to the Manchester United Supporters Trust (MUST) the total cost of the Debt refinancing carried out by the Glazers recently is to hit £100M for the first time this year. It appears that this has occurred due to a number of factors, not least of which is the recent number if interest rate hikes, and the recent turmoil in the financial markets.

The rates at which the interest on the debt was re-financed is huge:

Figures from the July 2006 refinancing documents wrote:

1. First tier senior secured debt

6-month LIBOR is currently at 6.68875% Annual interest

A loan 7 year term £75m 2.125% over LIBOR = 8.81375% 6.61m
B loan 8 year term £150m 2.625% over LIBOR = 9.31375% 13.97m
C loan 9 year term £150m 3.000% over LIBOR = 9.68875% 14.53m
Working Cap
Revolver 7 year term £50m Undrawn in 2006, interest rate unknown*

2. Second tier ‘lien tranche’

10 year term £150m 5.50% over LIBOR = 12.18875% 18.28m

3. PiK debt

£155.25m 15% p.a. rolling up into principal**

Total outstanding loans £660m*

Total interest payable annualised as at September 2007 = 53.39m

Total annual principal payments for 2007 (estimated) = 24.00m

Total annualised debt payments for 2007 = £77.39 million

Accrued interest on the PiK debt for 2007 = £23.28 million

Total annualised debt cost for 2007 = £100.67 million

It also appears that the chance of borrowing on future potential earnings might not be as secure as once thought. The "waiting list" on season tickets has disappeared over the last two years, with season tickets being unsold for the first time this year. And many fans are already disgruntled with the compounded 50% rise in ticket prices over the last two years.

This is a staggering amount of debt being heaped on the club, is there any chance that the Glazers can earn their way out of this, given what happened with Tampa Bay? Is it any wonder that the recent deals done for some players have involved players being bought on the never never (Tevez for example) . Will Manu be sold-off by the Glazers?

Link to the article on the MUST website => http://www.joinmust.org/forum/showthread.php?p=215203#post215203

The Glazers came out this morning and denied this.

Mitch Connor

of course they did - but again, they didn't really. ALl they have said (from what i have read) is that the debt is still 'servicable' by Manchester United - which to my mind is not a denial.

I was against the Glazers from the start. Winning the league, and the signings made this summer have just papered over the cracks imo - the debt is still FAR too high for United to maintain for long.

The only hope for the club is for a VERY rich consortium to offer the Glazers a deal which would see them bugger off with a 100million or so in hand, and the debt on United to be wiped clear (talking probably over a billion all in) United are in a very very poor position financially, and it wouldn't take much for it all to come crashing down - such as the CL spots being reduced to 3, and United to have a 'poor' season finishing 4th or lower. To be honest, I am very woried for the long term health of the club. The only real way for the Glazers to remain in charge and for the debt to be gotten rid of is for the collective TV deal to be scrapped, but then that could be the end of football as we know it in England, so I do not want that either.

Anywho, I'm sure all the opposition fans will be loving this.

Mr Alan

the Glazers are gonna have to do more than 'deny' it if they want to put Utd fans worries at ease

Mitch Connor

millersangel wrote:

the Glazers are gonna have to do more than 'deny' it if they want to put Utd fans worries at ease

MUST have called on the Glazers to open the books to independent scrutiny, but that isn't going to happen.

I really do hope the rumours of consortiums from both China and Dubai (preferably Dubai) are true. Not because I want United spending 100+ million every summer like Chelsea have been known to do, but simply because I want the future of the club I support secured. I do believe if a consortium tabled a firm offer for the club, that would see the Glazers walking away with a tidy profit, it would be accepted. The Glazers aren't actually idiots, and I would not be surprised to learn their entire plan from the start has been to increase United's value to a level above the debt outstanding, and sell at a profit. As it is now, they are not personally losing any money, as all the debt they incured from the purchase of the club is being paid for by the club - so the debt isn't a personal worry for them.

jobonar

Tauren wrote:

MUST have called on the Glazers to open the books to independent scrutiny, but that isn't going to happen.

It's what they need to do tho. The fans have a right to know if the club faces financial trouble in the future

Mitch Connor

jobonar wrote:

It's what they need to do tho. The fans have a right to know if the club faces financial trouble in the future

I would love to see the books opened up - but the Glazers don't have to do it, so why would they? In all probability it would provide a crap load more ammo for goups like MUST and be a media feeding frenzy too.

jobonar

Tauren wrote:

I would love to see the books opened up - but the Glazers don't have to do it, so why would they? In all probability it would provide a crap load more ammo for goups like MUST and be a media feeding frenzy too.

Exactly why we wont get to see the books.

leninbenjamin

jobonar wrote:

It's what they need to do tho. The fans have a right to know if the club faces financial trouble in the future

right? what right? it's a private family run business effectively, no fan has the right to see the books unless they cough up the hard cash to make an offer for the club.

and why is this news all of a sudden? when the club was first bought by the glazer's pretty much everyone knew how big the debt repayments were gonna be. Also, why would a consortium be any better than the glazers? it'd probably be the exact same same story, Utds huge profits being funneled into huge interest repayments.

Mr Alan

I presume wat he means is that it would be healthier for Utd to be owned by someone who can finance the purchase with the majority of the finds being their own, as opposed to being done all through bank loans. Whereby rising interest rates and repayments will have a major effect on the runnning of the club.

Hobart

Surely the best outcome for Manu would be a takeover? With the hedged debt wiped out (not the debt owed to the buyer obviously) would that not leave the club in some sort of sound financial footing.

This looks like a serious situation that the Glazers have put the club in. I think Tauren has hit the nail on the head, all it would take is a slight blip on the radar, such as not qualifying for the CL or Sky to wobble, and the problems could escalate.

Deleted User wrote:

The Glazers came out this morning and denied this.

No they have not. They have said that the Debt is not spiraling out of control, they have not said that £100M will have to be paid back this year, and that is just in servicing the loan(s).

leninbenjamin wrote:

and why is this news all of a sudden?

I suppose that the rise in interest rates (which I'm sure that finance would have been stressed for) and the downward turn in financial markets have given rise to this fact. It's not really "all of a sudden", as you put it, mere the scale of the issue that's of concern.

Mitch Connor

leninbenjamin wrote:

right? what right? it's a private family run business effectively, no fan has the right to see the books unless they cough up the hard cash to make an offer for the club.

and why is this news all of a sudden? when the club was first bought by the glazer's pretty much everyone knew how big the debt repayments were gonna be. Also, why would a consortium be any better than the glazers? it'd probably be the exact same same story, Utds huge profits being funneled into huge interest repayments.

The rumours of the consortium is that they would take on (and wipe out) the current debt leveraged against the club and pay the Glazers a sum as well. So it could be something like 800million for wiping the edbts away, and 200million for hte Glazers - The dubai consortium would certainly be in a financial position to do this, with the royal family being part of it, and the rumour consortium from China is apparently well stocked on cash. It would be similar to the Chelsea situation when they were taken over, all the debts were part of the purchase price, so it was gone in all but an instant.

It is a 'dream' scenario if you will - not one that i think will happen, but one of the few I can see being remotely possible and capable of keeping the club out of the big black hole it is staring into.

Also, it is certainly NOT news all of a sudden, people having been saying this from the very start, but International week is always slow for footie news so it is a good time for MUST to shout from the rooftops again. Some fans have buried their heads in the sand, assuming all is well cause we are prem champions and spent a good wad of cash in the summer.

gosplan

Tauren wrote:

Anywho, I'm sure all the opposition fans will be loving this.

I'm not actually. I think it sucks ass and spells disaster for the future of the game.

For me the genuine worry will be what happens after Fergueson goes. United can't afford a few years not challenging. There's a huge possibility that either someone like Hughes or Keane will replace him and just not be good enough, or a highly rated foreign manager will come in and just not be good enough. If you think of Benitez at Liverpool. He's obviously very talented but the guy seems to have only now figured out the premier league. In his first season they were out of the champions league and only reinstated by a stroke of luck(I'm not denying that they were worthy finalists and winners 'pool fans...but they could just have easily lost it). If a similar fate was to befall Utd, they'd be screwed. Basically all this debt has cut your margin for error to zero. It might and very well could work out but sometimes it doesn't, just ask Leeds.

gosplan

Tauren wrote:

So it could be something like 800million for wiping the edbts away, and 200million for hte Glazers - The dubai consortium would certainly be in a financial position to do this, with the royal family being part of it, and the rumour consortium from China is apparently well stocked on cash. It would be similar to the Chelsea situation when they were taken over, all the debts were part of the purchase price, so it was gone in all but an instant.

Can't see this at all to be honest. Chelsea had moderate debts, Utd will cost a billion. It's possible but would probably be the planet's worst business decision in terms of investment and return.

Mitch Connor

gosplan wrote:

I'm not actually. I think it sucks ass and spells disaster for the future of the game.

For me the genuine worry will be what happens after Fergueson goes. United can't afford a few years not challenging. There's a huge possibility that either someone like Hughes or Keane will replace him and just not be good enough, or a highly rated foreign manager will come in and just not be good enough. If you think of Benitez at Liverpool. He's obviously very talented but the guy seems to have only now figured out the premier league. In his first season they were out of the champions league and only reinstated by a stroke of luck(I'm not denying that they were worthy finalists and winners 'pool fans...but they could just have easily lost it). If a similar fate was to befall Utd, they'd be screwed. Basically all this debt has cut your margin for error to zero. It might and very well could work out but sometimes it doesn't, just ask Leeds.

The one shred of hope i have, if it all does go belly up, is that United is still extremely marketable. As long as the Glazers jumped ship quick enough, I am sure there would be no shortage of buyers with the right financial backing - United itself is still a profitably organisation, it is purely the debt from the club purchase that is pulling away.

Also, there is always FC United:D

Mitch Connor

gosplan wrote:

Can't see this at all to be honest. Chelsea had moderate debts, Utd will cost a billion. It's possible but would probably be the planet's worst business decision in terms of investment and return.

Indeed - but there was a recent offer for the club at a figure approaching 1 billion and that is the figure being talked about with regards consortiums from China and Dubai. The Glazers will have an exist plan - it would just remain to be seen whether that exit plan is in any way good for United.

Mr Alan

but didnt everyone from Utd deny that bid actually ever existed?

The Rooster

I wouldnt be overly worried. MU is still making buckets of profits despite the interest costs. I think its the most profitable club in Britain? The world even?

The fact that £1 billion is being bandied about suggests the value of the club continues to grow - not shrink as many thought. No danger, it seems, of "negative equity" for the Glaziers.

And if somebody did come in and pay a billion, and 800m was used to clear the existing debt and 200m given to the Glaziers (what an earner by the "stupid yanks" :eek: ), how does anyone think the £1 billion would be funded. Cash??? No chance, IMO. It'd be more debt.

Mitch Connor

millersangel wrote:

but didnt everyone from Utd deny that bid actually ever existed?

No - they denied they were looking to sell or were in discussions with anyone to do so either, not a denial that someone wanted to discuss it with them.

Hobart

The Rooster wrote:

I wouldnt be overly worried. MU is still making buckets of profits despite the interest costs. I think its the most profitable club in Britain? The world even?

I believe so, and I don't think that anybody thinks that the club is going to collapse tomorrow. What if Manu had a couple of quiet seasons? How do you think that would affect it's ability to meet the interest payments on it's loans?

The Rooster wrote:

The fact that £1 billion is being bandied about suggests the value of the club continues to grow - not shrink as many thought. No danger, it seems, of "negative equity" for the Glaziers.

Just look at the current climate in Ireland in the property market at the moment, that should give you some indication of the factors and way these things can actively change.

The Rooster wrote:

And if somebody did come in and pay a billion, and 800m was used to clear the existing debt and 200m given to the Glaziers (what an earner by the "stupid yanks" :eek: ),

A billion? Where is this figure of a Billion coming from? Do you honestly believe that the lenders would settle for a cut in their interest payments just because somebody said "well I have that money I borrowed from you, and I want to give it back to you and pay no more interest"!!:eek: Hardly a credible situation. Similarly the "record" the Glaziers have when dealing with teams when the screw starts to turn is hardly one of "sell sell sell"! Just google Tampa + Glazer +Buccaneer to see how these guys deal with a club once it has served it's purpose.

The Rooster wrote:

how does anyone think the £1 billion would be funded. Cash???

Why not?

The Rooster wrote:

No chance, IMO. It'd be more debt.

Not necessarily. Share swap, Cash there are plenty of ways of buying something that has debt by not using debt.

Mitch Connor

The Rooster wrote:

I wouldnt be overly worried. MU is still making buckets of profits despite the interest costs. I think its the most profitable club in Britain? The world even?

The fact that £1 billion is being bandied about suggests the value of the club continues to grow - not shrink as many thought. No danger, it seems, of "negative equity" for the Glaziers.

And if somebody did come in and pay a billion, and 800m was used to clear the existing debt and 200m given to the Glaziers (what an earner by the "stupid yanks" :eek: ), how does anyone think the £1 billion would be funded. Cash??? No chance, IMO. It'd be more debt.

First off, how can you know it would be more debt? Abramovic bought chelsea for something like 260million all in, the debt was wiped, it did not become a new debt to a new person.

Liverpool's purchase was not funded by debt, nor West Ham, nor Villa.

Granted, we are talking about smalled value's but you can not be sure in your assumptions.

Even if it did become another debt, it could become a debt direct to the buyer of the club to be paid off over time. This would result in less interest per year, and no hedge funds etc. The people who are being spoken of in relation to a proposed bid are multi-billionaires, who would indeed have the cash backing and assets to purchase United without having to hawk themselves to any lender they can find, for any deal they can get, as the Glazers did. Of course, it is probably just as likely that the bids don't exist at all - but i only brought them up as a potential out from the terrible financial position United are in.

Mitch Connor

Hobart wrote:

A billion? Where is this figure of a Billion coming from? Do you honestly believe that the lenders would settle for a cut in their interest payments just because somebody said "well I have that money I borrowed from you, and I want to give it back to you and pay no more interest"!!:eek: Hardly a credible situation.

The figure is coming fromt he various reports from the last week or so.

As for settling a debt early and avoid making interest payments on it in the future.... it happens all the time. People buy cars with money on loan, and are in a position to settle the debt early. The figure you settle with would be less then the value of the loan if carried to full term. You can increase mortgage payments to reduce the overall amount owed too, for instance.

Mr Alan

that might be a bit too simplistic a comparison Tauren considering the huge amounts of money we're talking about.

Hobart

Tauren wrote:

The figure is coming fromt he various reports from the last week or so.

As for settling a debt early and avoid making interest payments on it in the future.... it happens all the time. People buy cars with money on loan, and are in a position to settle the debt early. The figure you settle with would be less then the value of the loan if carried to full term. You can increase mortgage payments to reduce the overall amount owed too, for instance.

I agree, people do settle up debts early. But we are not talking about a car loan etc...here. Look at the huge rates of interest being paid here:

9.31375%
9.68875%
12.18875%
15%

way beyond what your money could get you on the Eurobar or inter-bank rates. I know that the creditors could leverage up on their capital, but why should they. I don't think anybody would look at 12% and decide, ok, pay me back what you owe, and we'll forget about it. It does not make sense that they would. So a billion sounds way off the mark imo.

Mitch Connor

Hobart wrote:

I agree, people do settle up debts early. But we are not talking about a car loan etc...here. Look at the huge rates of interest being paid here:

9.31375%
9.68875%
12.18875%
15%

way beyond what your money could get you on the Eurobar or inter-bank rates. I know that the creditors could leverage up on their capital, but why should they. I don't think anybody would look at 12% and decide, ok, pay me back what you owe, and we'll forget about it. It does not make sense that they would. So a billion sounds way off the mark imo.

But the Glazers have done EXACTLY that already with some of the loads - they refinanced a portion of it a while back, removing some of the PIKs (which had a horrible interst rate of something like 25%(!!)) or something in exchange for a longer term bank loan from a different lender, so obviously it is possible to pay off debts and loans early.

Hobart

Tauren wrote:

But the Glazers have done EXACTLY that already with some of the loads - they refinanced a portion of it a while back, removing some of the PIKs (which had a horrible interst rate of something like 25%(!!)) or something in exchange for a longer term bank loan from a different lender, so obviously it is possible to pay off debts and loans early.

I'm not saying that it isn't possible, I'm saying that 1 billion is a figure being bandied about, and we have no idea what it might possibly cost.

There are also some reports out there today that the Glazers have looked to do exactly what you are referring to, and were met with a "luke-warm" reception, with a number of banks reported to having turned them down.

Mitch Connor

Hobart wrote:

I'm not saying that it isn't possible, I'm saying that 1 billion is a figure being bandied about, and we have no idea what it might possibly cost.

There are also some reports out there today that the Glazers have looked to do exactly what you are referring to, and were met with a "luke-warm" reception, with a number of banks reported to having turned them down.

Yeah - it was reported a month or two ago that a few lenders had refused refinancing deals because of the current global economy, it ain't new news. To my mind, getting refused refinancing would make them more receptive to an offer for the club.

The Rooster

Tauren wrote:

Granted, we are talking about smalled value's but you can not be sure in your assumptions.

I didnt make any assumptions. Just giving my opinion.

The devil you know...

Hobart

Tauren wrote:

Yeah - it was reported a month or two ago that a few lenders had refused refinancing deals because of the current global economy, it ain't new news. To my mind, getting refused refinancing would make them more receptive to an offer for the club.

Possibly.

MrPillowTalk

The Glazers arent idiots, Im sure the debt is serviceable. Also claims that the financial health of Utd is critical are insane the club is by far the most marketable in world football. Cant really understand why MUST are calling for the books to be opened to independent scrutiny, like it or not Utd is the Glazers company now, would you open your books to your customers request?

I dreaded them taking over but to be fair to them they have shown ambition and foresight in providing an adequate transfer budget and the new quadrants to the stadium are complete and bringing in more revenue, plus it seems there is a property development deal on the cards for some of the land around old trafford. All that and the increaded sponsorship deals and marketing pushes in Asia and probably the states in the near future, Im not that worried at the moment.

astrofool

Well, after they flashed the cash this summer, squashing the stories that they weren't going to buy players, the opposition groups had to find something else to go after and this is it.

And there's one thing I think we can all agree on, football supporters are not in the position to be making judegement on multi million pound loan deals, so speculating on how to finance a takeover and the different methods to do it is all pub talk.

Mitch Connor

astrofool wrote:

Well, after they flashed the cash this summer, squashing the stories that they weren't going to buy players, the opposition groups had to find something else to go after and this is it.

And there's one thing I think we can all agree on, football supporters are not in the position to be making judegement on multi million pound loan deals, so speculating on how to finance a takeover and the different methods to do it is all pub talk.

i think most united fans would agree 800million worth of debt on the club, at high interest is not a good thing, no matter how it got there and is never going to be easily dealt with.

Hobart

astrofool wrote:

<snip>
And there's one thing I think we can all agree on, football supporters are not in the position to be making judegement on multi million pound loan deals, so speculating on how to finance a takeover and the different methods to do it is all pub talk.

...in your opinion. Football supporters come from all walks of life. These boards, I'm sure you can agree, could contain all sorts of supporters. who knowa, you may even find people who work for finance institutions, newspapers, banks, etc... To suggest that opinions are ill-informed or "pub talk" as you put it, is quite disingenuous, when you have no idea who holds that opinion.

OhNoYouDidn't

astrofool wrote:

And there's one thing I think we can all agree on, football supporters are not in the position to be making judegement on multi million pound loan deals, so speculating on how to finance a takeover and the different methods to do it is all pub talk.

Works fine at Barca....

Mitch Connor

OhNoYouDidn't wrote:

Works fine at Barca....

not really - the Barcelona fans get to vote on presidential candidates, they do not go to the bank looking for loans, or basically anything to do with the revenue of the club - that is all taken care of by the president and the board. So, I don't really get where you are coming from with your comment.

Hobart

Tauren wrote:

not really - the Barcelona fans get to vote on presidential candidates, they do not go to the bank looking for loans, or basically anything to do with the revenue of the club - that is all taken care of by the president and the board. So, I don't really get where you are coming from with your comment.

I thought Barca was a type of co-op?

Mitch Connor

Hobart wrote:

I thought Barca was a type of co-op?

nah - the members get to vote on who runs the place but that is about it. To my mind it is the most workable and ideal situation, I don't think fans should have direct control over finances or the like. Laporta was voted in, and when he came in, he brought a lot of money and investment with him. Through that money, and some sound financial practices on his part, Barcelona wiped their massive debt quite quickly. The barcelona fans do have a great say inhow the club is run, in that their voting power puts pressure on the president to deliver what they want, and to not go against their wishes, but as i say, there is no direct control over the financial side of things

Iago

Hobart wrote:

It also appears that the chance of borrowing on future potential earnings might not be as secure as once thought. The "waiting list" on season tickets has disappeared over the last two years, with season tickets being unsold for the first time this year.

Just to clarify this point, they were 1 season tickets. With those there is no guarantee that you'll get a ticket for even a single match the following season.

There is still a significant waiting list for permenant season tickets. I'm still somewhere around the 15,000 mark on that list for example.

Hobart wrote:

And many fans are already disgruntled with the compounded 50% rise in ticket prices over the last two years.

This is true, but then how many people aren't disgruntled when they have to pay more for anything? I get disgruntled when my ESB bill goes up, or my drink of choice goes up, I still have electricity and I still drink though. Granted a season ticket is a bigger expense, and a luxury rather than a nessecity but as I mentioned above there are at least 15,000 people waiting on a season ticket to open up.

Hobart wrote:

This is a staggering amount of debt being heaped on the club, is there any chance that the Glazers can earn their way out of this

It's a huge debt, but the we all knew that at the time, nothing has really changed except the short-term financial uncertainty in the world markets. Someone else has mentioned that the initial anti-glazer brigade message of reduced/non-investment in players has been nullified this summer so they need something else to rant about.

"the glazers won't invest in the club, there just here to make money and suck the life out of the team"

"yeah but we bought Nani and Anderson, and Hargreaves, and Tevez though..."

"Riiigghhtt... actually what really happened is the glazers have spent too much money on debt investing in the club, so they're going to cripple the team, yeah that's it, that'll work"

I was cynical when the glazers bought the club, I'm worried that we are debt laden. But there has been plenty of investment in trying to improve the squad, the ground and the brand. We've won the premier league again, and there's a strong chance that we'll win plenty more trophies over the next few years.

It's not doom and gloom by any means, and I think United will work it's way out of this debt, although it may take a while to do it. The debt hasn't hindered investments in the stadium or team, so for now it's not something to get overly worried about. Remember United make around £3M per home game in ticket and programme sales, without counting merchandise or TV revenue. There's plenty of money coming in.

Mitch Connor

Iago wrote:

Just to clarify this point, they were 1 season tickets. With those there is no guarantee that you'll get a ticket for even a single match the following season.

There is still a significant waiting list for permenant season tickets. I'm still somewhere around the 15,000 mark on that list for example.



This is true, but then how many people aren't disgruntled when they have to pay more for anything? I get disgruntled when my ESB bill goes up, or my drink of choice goes up, I still have electricity and I still drink though. Granted a season ticket is a bigger expense, and a luxury rather than a nessecity but as I mentioned above there are at least 15,000 people waiting on a season ticket to open up.



It's a huge debt, but the we all knew that at the time, nothing has really changed except the short-term financial uncertainty in the world markets. Someone else has mentioned that the initial anti-glazer brigade message of reduced/non-investment in players has been nullified this summer so they need something else to rant about.

"the glazers won't invest in the club, there just here to make money and suck the life out of the team"

"yeah but we bought Nani and Anderson, and Hargreaves, and Tevez though..."

"Riiigghhtt... actually what really happened is the glazers have spent too much money on debt investing in the club, so they're going to cripple the team, yeah that's it, that'll work"

I was cynical when the glazers bought the club, I'm worried that we are debt laden. But there has been plenty of investment in trying to improve the squad, the ground and the brand. We've won the premier league again, and there's a strong chance that we'll win plenty more trophies over the next few years.

It's not doom and gloom by any means, and I think United will work it's way out of this debt, although it may take a while to do it. The debt hasn't hindered investments in the stadium or team, so for now it's not something to get overly worried about. Remember United make around £3M per home game in ticket and programme sales, without counting merchandise or TV revenue. There's plenty of money coming in.

THere has been investment in the team and the ground, but it is questionable where this money is actually coming from.

For instance, before the Glazers took over, the United accounts showed that the money for the development of the quadrants was held in a bank account, so it showed we had the money set aside for this expansion. After the Glazer take over, the expansion was funded on the back of yet another loan which had previously been completely un-needed. Where did the original money go, and why was more debt (seemingly) needlessly put on th club?

Without seeing the finances now, it is also possible that the investment in players this summer (remember, last summer player purchases were entirely funded by player sales) has also resulted in more debt being placed on the club as opposed to being funded by a positive cash flow (highly likely imo given the profit levels we are used to, and the interest payments that now have to be made)

So, while there has been investment in the team and the ground, at what cost has it come at?

Stky10

Not an MU fan but anyway...

I can't see the Glazers being happy with a 200m payoff after the rings they had to jump through to buy the club, the crazy security measures they had to go through (once the sale went through) so as not to get their heads caved in with a brick, and all the poo they have to put up with everyday (like this story) just to run the club. They have a pretty unique opportunity here to make a lot of money for themselves, they're not going to give that up easily.

That said, these supposed Dubai or Chinese investors are likely businessmen as well rather than benefactors like Abramovich. Which means that at the end of the day they're going to try and maximise profits for themselves rather than invest it in the club. And they're going to have to make back not just what it cost the glazers to buy the club, but also whatever payoff the glazers get on top of that. And I'm struggling to see what other new revenue streams they can get to pay for all this. Future TV/satellite technology advances should mean increased payments, but thats going to be shared between all clubs, so its not going to be that much of an increase. Increased sales in Asia as well no doubt, but since a lot of other clubs are now fighting to get traction in the same market, its not going to be the gold mine many people expect.

So maybe for MU fans it should be a case of better the devil you know than the devil you don't.

Hobart

Tauren wrote:

nah - the members get to vote on who runs the place but that is about it. <snip>

It is a co-op. And the members don't just get a vote on who runs the place.

Barca has 130,000 club members and more than 1600 fan clubs around the world. Members have a democratic role to play in the club. They elect the president every four years and each president can only serve for a maximum of eight years. Members can also serve on the board. They vote for a Members’ Representative Assembly which represents members at meetings to agree the annual report, future plans and budgets.

They have a full representation on the board. They have a say on the annual report and budgets.

Hobart

Iago wrote:

Just to clarify this point, they were 1 season tickets. With those there is no guarantee that you'll get a ticket for even a single match the following season.

Is this still not of significance? So a single full season ticket for home and cup games for Manu is still available. Whatever waiting lists were there, are no longer there?

Iago wrote:

There is still a significant waiting list for permenant season tickets. I'm still somewhere around the 15,000 mark on that list for example.

I presume that you, and many others, were on this waiting list pre-Glazer?

Iago wrote:

This is true, but then how many people aren't disgruntled when they have to pay more for anything? I get disgruntled when my ESB bill goes up, or my drink of choice goes up, I still have electricity and I still drink though. Granted a season ticket is a bigger expense, and a luxury rather than a nessecity but as I mentioned above there are at least 15,000 people waiting on a season ticket to open up.

50% in what, 2ish years? Hardly comparable to your ESB bill or a pint of Bud, is it? I don't think petrol has risen that level in the same period.

Iago wrote:

It's a huge debt, but the we all knew that at the time, nothing has really changed except the short-term financial uncertainty in the world markets. Someone else has mentioned that the initial anti-glazer brigade message of reduced/non-investment in players has been nullified this summer so they need something else to rant about.

"the glazers won't invest in the club, there just here to make money and suck the life out of the team"

"yeah but we bought Nani and Anderson, and Hargreaves, and Tevez though..."

"Riiigghhtt... actually what really happened is the glazers have spent too much money on debt investing in the club, so they're going to cripple the team, yeah that's it, that'll work"

I think it's more the fundamentals of what the club is actually sitting on, and what the potential for disaster is. The club was bought by the Glazers with money they did not have. In order to do this they raised funds at exorbitant rates (since refinanced) and bought the club.

They must make a success of the club in order to make money, in order to pay the interest/finance bill. They need good and exciting players to be successful. Hence the signings of Nani, Andi, Tevez etc... (although what way they will work out is another matter). So it's a wee bit of a catch 22 situation. If they are not successful, they don't get the revenue, they don't make money, they don't pay their debt (ask any Leeds fan about that scenario). Therefore, they have to spend to accumulate. They are/were loathe to pay £20M+ for Tevez, so they have done some "loan" type deal AFAIK. I've never heard of Manu doing a deal of this nature with a player so highly respected and young. People call it "good business" etc.... I'm not qualified to say whether it is or not, I do know it's strange business.

You mention Hargreves, and yet some fans will scream at you that it was money out of "last years" budget, as if there is some magical pot full of cash from last year.

Like I said earlier in the thread, I'm not saying that Manu are in trouble, far from it at this stage tbh. It's the scale of the interest owed, compounded with rising interest rates handcuffed to the need to succeed which has the "potential" to be a banana skin.

Remember the MUST are Manchester United fans. Just like you. Do you honestly think they are undermining the club just for kicks?

gosplan

Iago wrote:

It's a huge debt, but the we all knew that at the time, nothing has really changed except the short-term financial uncertainty in the world markets. Someone else has mentioned that the initial anti-glazer brigade message of reduced/non-investment in players has been nullified this summer so they need something else to rant about.

"the glazers won't invest in the club, there just here to make money and suck the life out of the team"

"yeah but we bought Nani and Anderson, and Hargreaves, and Tevez though..."

"Riiigghhtt... actually what really happened is the glazers have spent too much money on debt investing in the club, so they're going to cripple the team, yeah that's it, that'll work"

I was cynical when the glazers bought the club, I'm worried that we are debt laden. But there has been plenty of investment in trying to improve the squad, the ground and the brand. We've won the premier league again, and there's a strong chance that we'll win plenty more trophies over the next few years.

It's not doom and gloom by any means, and I think United will work it's way out of this debt, although it may take a while to do it. The debt hasn't hindered investments in the stadium or team, so for now it's not something to get overly worried about. Remember United make around £3M per home game in ticket and programme sales, without counting merchandise or TV revenue. There's plenty of money coming in.

Reminds me of that joke in 'La Heine'.

Guy jumps off a building and on the way down keeps saying 'so far, so good, so far, so good'.

-it's not the fall that kills you, it's the landing

I stand by my reckoning that Man U currently are in OK shape but have zero margin for error as regards results. Fergie will go and whoever takes over has to get it right straight away. You can't afford to finish outside the CL for long. This probably won't happen but football is a very unpradictible game.

Iago

Hobart wrote:

Is this still not of significance? So a single full season ticket for home and cup games for Manu is still available. Whatever waiting lists were there, are no longer there?

There where no waiting lists for the 1 season tickets (to the best of my knowledge) certainly in September last season you could have got one as well.

Hobart wrote:

I presume that you, and many others, were on this waiting list pre-Glazer?

This is true, but in the last 2 years I think I've only moved around 500 places or so (it'll be a long wait!) So current fans aren't jettisoning their season tickets in any great numbers.

Hobart wrote:

50% in what, 2ish years? Hardly comparable to your ESB bill or a pint of Bud, is it? I don't think petrol has risen that level in the same period.

2005 Ticket Prices High Low
Arsenal £54 £30
Chelsea £60 £35
Manchester United £36 £21
Liverpool £32 £30

2007 Ticket Prices High Low
Arsenal £94 £32
Chelsea £65 £40
Manchester United £44 £25
Liverpool £36 £34

I think united compare well against the top 4 and the increase is closer to 30% than 50%. But the prices for the top costing ticket at old trafford are still cheaper than the 2005 prices at Chelsea and Arsenal

hobart wrote:

I think it's more the fundamentals of what the club is actually sitting on, and what the potential for disaster is. The club was bought by the Glazers with money they did not have. In order to do this they raised funds at exorbitant rates (since refinanced) and bought the club.

and you're completely right here, it is worrying but ultimately I believe that the club will see it's way out of the debt.

Hobart wrote:

They must make a success of the club in order to make money, in order to pay the interest/finance bill. They need good and exciting players to be successful. Hence the signings of Nani, Andi, Tevez etc... (although what way they will work out is another matter). So it's a wee bit of a catch 22 situation. If they are not successful, they don't get the revenue, they don't make money, they don't pay their debt (ask any Leeds fan about that scenario). Therefore, they have to spend to accumulate. They are/were loathe to pay £20M+ for Tevez, so they have done some "loan" type deal AFAIK. I've never heard of Manu doing a deal of this nature with a player so highly respected and young. People call it "good business" etc.... I'm not qualified to say whether it is or not, I do know it's strange business.

Again you're bang on the money so to speak! They need the team to be successful, but that also makes it a self-fulfilling prophecy. They will have to keep investing to keep generating money, regardless of whether their plan is to sell or make money. The team and fans will only benefit from that, and as I've shown above ticket prices are reasonable and jerseys and merchandise are no more expensive than anyone elses.

Hobart wrote:

Like I said earlier in the thread, I'm not saying that Manu are in trouble, far from it at this stage tbh. It's the scale of the interest owed, compounded with rising interest rates handcuffed to the need to succeed which has the "potential" to be a banana skin.

Remember the MUST are Manchester United fans. Just like you. Do you honestly think they are undermining the club just for kicks?

There is a potential banana skin, no doubt about it. However United aren't leeds, they have a global fan base and market. While that market may shrink following a couple of years in the wilderness there's enough talent in the squad and coming through to ensure CL football each year and that we'll be competing on at least 3 fronts each season.

MUST are supporters, however they have always been very vocal in their anti-glazer sentiments. Their first argument was that the club would charge through the nose for tickets etc, that hasn't proved to be true. Their second argument was that the debt would prevent investment in the squad and we would lose points and revenue as a result. Now they say that we are saddled with debt and the club will be crippled, it's unlikely but they have to beat the drums about something.

I have my eyes wide open, this could drag united down, but I don't think it will get anywhere near that. I don't think we'll have an extended period in the wilderness, not because we're infallible, but simply because their isn't enough from the other teams outside the top four to cause problems over a season as opposed to over a couple of games.

PHB

The Glazers are doing ok, they've made the club much more profitable, and seem to be able to work on the debt. I think if United have some problems it could cause some serious trouble, that said, Liverpool are in a pretty similar situation, the only difference is that the owners haven't transferred the debt onto the club, although it's effectively the same situation if there is a problem. Debt is a problem, but it won't changed the football situation much.

That said, the fans are the ones who are paying for it, so it's all bad

Hobart

PHB wrote:

The Glazers are doing ok, they've made the club much more profitable,

Well in fairness, that's simply not true. The first year they posted a profit of £49.7M compared to £46.1M, but the previous year was a financial year of 11 months, so actually if you work it out, they made a loss. Year 2 saw a rise in profits of 7% (hardly staggering) which was mainly put down to an improved deal with AIG!

PHB

A rise in 7% ain't something to turn your nose at, and they have the new TV deal coming in, also increased ticket revenue, they are doing just fine, and I'd even wager, better than they expected.

OhNoYouDidn't

so can I get this straight, for years we have been told that manure's success is based on them being run like a proper business.

now they are whinging because they are being run like a proper business?

boo hoo. this debate is 20 years too late. plc's act like plc's. deal with it or follow fc united.

Hobart

This sums it up more eloquently than I ever could.

gosplan wrote:

Guy jumps off a building and on the way down keeps saying 'so far, so good, so far, so good'.

-it's not the fall that kills you, it's the landing

PHB

I'm not living in a dream world, I think there are serious issues, especially the ticket price increases.

That said, I'm not going to pretend things aren't happening. The Glazers are making United more profitable, and look on course to be able to pay off the debts, albeit through screwing over the fans. United are in trouble if they finish outside the CL, probably. But it's quite unlikely to happen, infact, I"d say it's very unlikely. More importantly, the only club who wouldn't be in trouble if they didn't qualify would be Chelsea.

Hobart

PHB wrote:

More importantly, the only club who wouldn't be in trouble if they didn't qualify would be Chelsea.

What? How? I though Roman had ooodles of money?