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Question to EPL fans regarding American owners
Comments
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More information and another interesting read:
http://soccerlens.com/manchester-uniteds-debt-analysed/7356/It has been some time that people have been talking about a financial crisis in-the-making at Old Trafford. There are also those who insist we are already seeing one. The team, however, is doing extremely well on the pitch. That suggests, at least from a financial point of view (perhaps not conclusively though), that players are happy with their wages. After all, the club spent 74m on wages and salaries in 2006-07 (majority of which must have gone to players).
Even football clubs like Manchester United can hardly rely on money from T-shirts, posters or footballs – they really have to sell football – in the ground and on the TV. For Manchester United that makes up ¾ of their revenue which is showing excellent growth (30% year-on-year). Compared to previous year, the administration has done a great job in keeping a lid on operating expenses (despite the widespread belief that Manchester United uses a Russian cheque book too). The club has grown from a position of gross loss (persistent gross loss is an outright indicator of a failed business model) to a modest gross profit.
This is all good. But here comes a mighty financial challenge (note: I do not want to carelessly use the word “crisis”). The club incurred financial costs of 81m. That is more than what the club has paid the people who make this club – the ground staff, administration and of course players. This is, at least in an academic sense, a highly inefficient and unsustainable cost structure. But there are worse and more practical issues here.
Despite closing the acquisition transaction in the preceding year, the club incurred more debt and re-profiled existing loans this year. Pricing that Manchester United has received from financiers is not going to make things any easier. And given the deteriorating financial health of the club, overall credit tightening and the very nature of the risk financial institutions have taken on red devil’s football, finance costs will only increase.
If you doubt that then there is one simple explanation I can give.
The collateral offered to financial institutions is 425m of “first fixed and floating charge over fixed assets”. A charge is a piece of paper that gives legal claim to bankers over collateral in an event of default. But Manchester United only has 252m of tangible assets, the rest are largely intangible. In other words, this acquisition exposes banks more than Glazers themselves. The Glazers simply bought the club on bankers’ wallet, and if push comes to shove, they will handover the “soccer club” to banks, endure manageable loss, swim back home and watch “football clubs” play in America. Now wouldn’t a bank squeeze every penny out of Manchester United after taking such a risk on it?
Let us say, my view so far has been very subjective. Then let us look at some crisp objective facts. Financial institutions do not like to keep their credit lines evergreen for corporate customers unless the business model is one of low risk (e.g. a heavily regulated power utility). One day all banks will ask Manchester United to repay the principal amount which currently stands at 666m.
A very dirty (read: conservative) multiple of debt-to-free cash flow (using current figures for both debt and free cash flow) stands easily above 25x! This is too high, even with all the grace period in debt maturity schedule. Going forward, this multiple must come down or the club will be at mercy of financial institutions (whether or not they agree to rollover). What are the possible ways of doing it?
* Stop piling more debt - not possible until the club makes enough operating income to at least repay its finance costs i.e. interest cover above 1x. Currently, this ratio stands at 0.23x.
* Continue to post solid revenue growth e.g. at least at least 15-odd % each year. Keep up the branding. Media money is all about that. There is a reason why TV in Malaysia will not pay 2 cents for covering a Derby match.
* Win competitions. Duh!
* Become more efficient i.e. increase its operating margin. The current 9-odd % is not going to work.
* Buy like Wenger, not like Abramovich. The club does not have financial liberty as many would think.
A 194m accumulated loss on the balance sheet has reduced Glazer’s equity to only 80m (year-on-year 42% decline). This is alarming. Imagine, if loss in financial year 2008 is going to be anything above 80m (2006 loss: 135m; and let us say, Glazers don’t bring in more money from America), the club will have negative equity. In English that means bankruptcy for Manchester United where banks are involved. For clubs where no banks are involved, and Russians are involved, negative equity does not matter because the owner pays for his hobby, not the banks.
Even in the beginning of the article I clearly said, this is a challenge and not a crisis. One has to understand the buyout of Manchester United. These leveraged acquisitions, a couple of years back when things were not as bad, were in fashion. Financial institutions make good money in these. Where time is merciful enough to pan things out more or less the same way as those Excel sheets suggested in investment banks when the deals are struck, the equity investors (like Glazers) in these deals make money for their generations to come.
But huge risks are involved. There are too many assumptions, from the club itself to the economy at large. If you ask me in a nutshell if Manchester United is heading for a serious financial crisis – I will say it is not so certain at the moment. Glazers should really kneel down and thank the outstanding team and some great fans who continue to buy season tickets despite $120+ crude oil and a terribly confused Brown-Darling-King tripod.
The greatest positive surrounding all of this is the debt profile – the club does not really repay any principal in the next 5 years. That is a good breathing space. But even then, for this Glazer deal to let Manchester United live, this club needs to grow really badly. Did not we all think Manchester United is an enormous club? Size is relative. You are only as big as your debt makes you look.0 -
Here's a somewhat accurate article about the finances from the FT about it:Man Utd owners are going up
By Tom Burgis
FT April 26 2008
The holding company that owns Manchester United saw both its interest costs and pre-tax profits rise last year, according to results the owners said put the Premier League champions on a more stable financial footing.
Red Football Joint Venture's interest on bank loans and overdrafts it refinanced in August 2006 was £42m for the 12 months to June 30 last year, compared with £27.2m for the previous 14 months, accounts seen by the Financial Times showed.
Earnings before interest, tax, depreciation and amortisation rose from £36.3m to £75.4m. Operating profit - after depreciation and amortisation, which includes the falling value of ageing players - moved into the black, reaching £7.1m following a loss of £37.2m. The overall loss for 2006-07 was £57.8m, smaller than the previous period's £135m.
Red Football, owned by the Glazer family, which is headed by Malcolm Glazer, the US sports tycoon, bought Manchester United in May 2005 for £790m. The purchase drew the ire of fans who feared the highly leveraged deal would impede a flow of big-name signings that had seen stars such as Cristiano Ronaldo and Rio Ferdinand join the club.
Yesterday's data showed net debt rose from £603m to £666m. But that includes one-off costs for redeeming high-interest loans and switching to senior debt.
The company could have paid its interest out of ebitda 1.8 times last year. However, had earnings been the same as 2006, the company would have fallen £6m short of covering its interest payment.
A spokesman for the Glazers rejected suggestions this showed a vulnerability for a company reliant on the team's on-field success, which cannot be guaranteed. "We are confident that our ebitda will continue to comfortably service our interest payments, leaving considerable cash for investing in the club."
He said confidence was partly based on a sponsorship deal with AIG worth £18m a year over five years, and another with Nike that will bring in £303m in the next 13 years. Gate receipts for the expanded 76,000-seat stadium at Old Trafford rose 28 per cent to £92.6m. Receipts from TV and other media rose to £61.5m (£46m).
EBITDA is warnings before interest, tax, depreciation and amortalisation.
There are a couple of things missing from this though:
This report doesnn't include the fact we owe ****loads of money on last summers tranfsers this summer. 37 million due this summer if i'm not mistaken. That's not including Tevez either.
Also the debt figures they are using may be understating it.
The previous years accounts suggested that
The refinance (Aug 2006) pushed the senior debt to £575m and the PIK debt left over was £135m. Come August with two years' compounded interest at 14.25% pa, the PIK debt will hit £180m, giving a total debt of £755m
You can get theaccounts here:
http://wck2.companieshouse.gov.uk/c0cd5d415eabcbc2168db4213814c064/wcframe?name=accessCompanyInfo
The highlights of this years accounts were:
For Manchester United Limited and Manchester United Football Club Limited.
The following are extracted from them
1) The net cash outgoing on players was £10.5 million
2) Players have been bought on the never never.At 30 June 2006 the amount owed on players bought was £7.4 million.By June 2007 it had risen to £56.2 million.
3) The profit on disposal of players was £11.76 million.
4) A further £13.7 million was lent to Red Football Limited.
5) 64500 season tickets sold.
6) A note on events after 30th June discloses that players were sold for a total of £23.6 million and players bought for £9.91 million.I don't have immediate references as to names.
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In summary, the debt can be seen like this:
575 million of senior loans (long-term lowest interest)
Initially 138 PIK loans (short term high interest at 14.25%)
Look below for a breakdown of its increasing debt. We are not eating into the PIKs at all, and we can't seem to refinance them.8/2006 £138.000m £19.665m £157.665m
8/2007 £157.665m £22.467m £180.132m
8/2008 £180.132m £25.668m £205.801m
8/2009 £205.801m £29.326m £235.127m
8/2010 £235.127m £33.505m £268.633m
8/2011 £268.633m £38.280m £306.913m
8/2012 £306.913m £43.735m £350.648m
8/2013 £350.648m £49.967m £400.616m
8/2014 £400.616m £57.087m £457.704m
8/2015 £457.704m £65.222m £522.927m
8/2016 £522.927m £74.517m £597.444m
8/2017 £597.444m to be redeemed 11/08/2017
We're in a slow motion car crash. But people can't seem to realise it. Right now, there is no apparent get out startegy except the the Glaziers keep feeding everyone bull**** until somebody makes them a big enough offer for them to make a big profit.
Hopefully the credit will become availible again so we can refinance the PIKs.0 -
This is a question to Man Utd fans.
And Russian owners are the best, Sure havn't we bought ourselves loads of trophy's.
Should bag another next season which we will clearly be buying :rolleyes:0 -
This is a question to Man Utd fans.
And Russian owners are the best, Sure havn't we bought ourselves loads of trophy's.
Should bag another next season which we will clearly be buying :rolleyes:
ye still have 500 million worth of loans that will need to be sorted out somehow. any idea how Chelsea plan to repay these?0 -
Even Ambrovomich is screwing Chelsea over a little. Why the hell hasn't he just written of Chelseas loans? Because when he's done with Chelsea, he'll want to get his money back, and he'll rip the club apart from them.0
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All I know is before the Glazers took over I could get a ticket for around £25. Now its an average of £40 (Depending on where your sitting of course)
Even at £25 I thought that was expensive. When I was a kid the Juniors tunstile in the corner of the Stretford end was £1.50 (around 1980)
The Glazers seem to be under the impression that tickets are undervalued. They are pricing the fans that built the club out of their seats and using the lame excuse that compared to Chelsea or Arsenal its still much cheaper to watch a Premiership game at Old Trafford.
The ticket price is a reflection of the market, if they are still filling the stadium at £40 a ticket then they have no reason to reduce it.
The real fans seem to turn up week after week at £40 a pop.0 -
No wonder the banks are going into hibernation, all their accountants are on here!
In really simple terms.
Manchester United is worth more now than it was when Glazier bought it. Simply put, success on the pitch has guaranteed this. Notwithstanding revenues and profits are higher. Anyone who can't understand this shouldn't post any more on this thread.
Regarding the debt, as long as United remains a private company there will always be debt for who ever bought it. Only a hand full of people in the world could purchase a business of that size for cash. Even still interest on the loan is covered.
Paying the loan back won't be required (it may have to be refinanced to get a new term) as the only time anyone could afford to pay it back would be on sale of the club. The banks know this and are happy to lend and get the interest as they know their cash is safe as there will always be a buyer for the club if it came to it.
Who ever were to buy the club, even if it was Cristiano Ronaldo himself, would need to borrow to fund it, so as long as it remains in private hands the debt will be there. It didn't previously have debt funding technically but essentially tonnes of people lent United money in the initial listing.
Glazier would be delighted with his investment, regardless of how long he plans to hang around. He could realise a profit now, or he could hang in for the long term as there is only one way United as a business is going and it isn't down.0 -
That's just a bland assertion.
What happens if Uniteds success on the pitch can't keep up with the increasing interest payments?
What happens if we can't refinance the PIKs?
Debt is normal, no doubt about it. It however is meant to be managed properly. The idea that this is just common business practice is equally stupid, especially considering how 'common business practice' just helped cause a world wide recession.0 -
As a fan of a club that has been relatively recently taken over by a foreign owner, I await the inevitable bubble burst and the freefall to League Two.
Debts don't get cleared, they get shoved under the carpet. When the big boys are finished with their toys then the fans get a dose of reality and the debts will once again rear their ugly head and the club will be screwed.
It's only a matter of time so I'm just gonna enjoy the good times while they last.0 -
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Head-in-sand time.
Remember "the good times" down Tolka way?
imo, the "good" times aren't worth the heartache, in the long run.
They are if the last good times happened 15 years before you were even born.
If winning a trophy or two meant we had to 'do a Leeds' then so be it. Let's face it, City have done it before. Only last time we won feck all before it went tits up.0 -
:eek:
You'd take a "trophy or two" for future demise of the club?
Seriously?0 -
:eek:
You'd take a "trophy or two" for future demise of the club?
Seriously?
For a league title or a European Cup then yeah I'd give it all up for a decade or so.
As I said, we did it before. Got relegated, sold Kinkladze et al, continued the free fall, and ended up struggling to make it out of Division 2.
Seriously, we've been the laughing stock of English football. It's happened to Leeds, Sheffield Wednesday and Forest. However if the club has the long term support of it's fans (which we do as evidenced by an average home attendence of over 32,000 in Division 2) then they will be ok in the long term.
If Thaksin left us we would be up shit creek for a few years but we would survive and come back stronger, just like we are now.
Bottom line, I want to see us win something of note in my life time.
I would be of a different opinion if I supported United or Pool though as they are used to the silverware.0 -
Wow.For a league title or a European Cup then yeah I'd give it all up for a decade or so.If When Thaksin left us we would be up shit creek for a few years but we would survive and come back stronger, just like we are now.
City are only "stronger" because of Thaksin. Fine, they came up through the leagues, and that's very commendable, no doubt about it, but they would have stayed hovering around mid-table/relegation if not for him.Bottom line, I want to see us win something of note in my life time.
Hmmm.
I can certainly see this side of the arguement. But having watched Shels piss away money that they didn't own, chasing an ultimately impossible dream, then to nearly go under, go out of business, to nearly cease existing, has meant that I'd be happy enough with first division mediocrity for the rest of my time on the planet, once I could go see them play.
If Thaksin pulls the plug tomorrow, how will City continue to honour the contracts of the players they've signed?0 -
Wow.
People don't remember relegations nearly as much as they do European Cup or league title wins, just ask fans of Manchester 'we were shite in the 70s' United. In 30 years time I want to be able to say I was there when we won the European Cup. Lord knows the fans deserve it after the last fifteen years.
If Shels go on a make the CL group stages in 5 years time then the year or two in obscurity will be a small price to pay for being the toast of the country.City are only "stronger" because of Thaksin. Fine, they came up through the leagues, and that's very commendable, no doubt about it, but they would have stayed hovering around mid-table/relegation if not for him.
Probably, but so would Chelsea. A bandwagon has come into football. Either jump on board or be left behind.Hmmm.
I can certainly see this side of the arguement. But having watched Shels piss away money that they didn't own, chasing an ultimately impossible dream, then to nearly go under, go out of business, to nearly cease existing, has meant that I'd be happy enough with first division mediocrity for the rest of my time on the planet, once I could go see them play.
If Thaksin pulls the plug tomorrow, how will City continue to honour the contracts of the players they've signed?
Good question. We don't have a stadium to sell so that's not part of our equity.
I suppose again it'll come down to the fans. We didn't desert the club in our previous lull so it won't happen when Thaksin goes.
The fans are the measure of the club. Have them and the club will always be there.0 -
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People don't remember relegations nearly as much as they do European Cup or league title wins, just ask fans of Manchester 'we were shite in the 70s' United. In 30 years time I want to be able to say I was there when we won the European Cup.
Yeah, but still. You'd take the "glory" at the expense of the future of the club.
Here, imagine this scenario.
City win the CL in the next 5-10 years, but then Thaksin dies, City go into free-fall and are absolutely crippled by debts, meaning they go under. Gone.
Now.
It's 2028
Xavi6 : Ah, I was there when they won the CL
Boy of 12 : Who?
Xavi6 : Manchester City
Bo12 : Who?
Xavi6 : Manchester City lad, we used to be...
Bo12 : Used to be , schmused to be.Lord knows the fans deserve it after the last fifteen years.
That's funny. What about the long suffering fans of Exeter, Gilliingham or Grimsby?
NO club, or it's fans, deserve success. None.If Shels go on a make the CL group stages in 5 years time then the year or two in obscurity will be a small price to pay for being the toast of the country.
I'd only be happy with that if it was done in a proper financially sustainable way.
Look at Pats. Big Irish-American owner, pumping millions into the club, they probably will qualify for UEFA Cup group stages in the next few years. But what happens when he legs it?
Kaput.Probably, but so would Chelsea. A bandwagon has come into football. Either jump on board or be left behind.
I'd rather be left behind with a club which I know is not going to be crippled by unsustainable debt than out in front for a few years only to be left with hundreds of millions of debt, nothing to show for it apart from what is ultimately a tin-pot and a falling down Tesco shop where I used to watch football.Good question. We don't have a stadium to sell so that's not part of our equity.
I suppose again it'll come down to the fans. We didn't desert the club in our previous lull so it won't happen when Thaksin goes.
I'm afraid that's a bit delusional.
Sure, the 32,000 fans who came week-in week-out were enough to sustain the club last time, but with hundreds of millions of debts, mercenary players hanging on for every last penny they can get out of the club and banks and other financial institutions putting the squeeze on during this global recession, then fans would want to be paying two hundred quid, twice a week to even have a chance of survival. Can you see that happening? No, neither can I.The fans are the measure of the club. Have them and the club will always be there.
Not with hundreds of millions of debt.0 -
Yeah, but still. You'd take the "glory" at the expense of the future of the club.
Here, imagine this scenario.
City win the CL in the next 5-10 years, but then Thaksin dies, City go into free-fall and are absolutely crippled by debts, meaning they go under. Gone.
Now.
It's 2028
Xavi6 : Ah, I was there when they won the CL
Boy of 12 : Who?
Xavi6 : Manchester City
Bo12 : Who?
Xavi6 : Manchester City lad, we used to be...
Bo12 : Used to be , schmused to be.
I never said I would sacrifice it if it meant the club went bust. I would sacrifice it for a couple of years in the doldrems.That's funny. What about the long suffering fans of Exeter, Gilliingham or Grimsby?
NO club, or it's fans, deserve success. None.
I meant with regard to our situation that the club has dicked us around enough in recent times. It's about time we got something back from i.e. the platform on which to build some success.I'd only be happy with that if it was done in a proper financially sustainable way.
Look at Pats. Big Irish-American owner, pumping millions into the club, they probably will qualify for UEFA Cup group stages in the next few years. But what happens when he legs it?
Kaput.
To be fair Pats will not die out completely, no more so than Shels did. If the club is big enough then it'll be fine.I'd rather be left behind with a club which I know is not going to be crippled by unsustainable debt than out in front for a few years only to be left with hundreds of millions of debt, nothing to show for it apart from what is ultimately a tin-pot and a falling down Tesco shop where I used to watch football.
Well that's where we differ. It's easy for you to say having seen Shels win pretty much every trophy possible (outside of Europe) for the best part of a decade. I've never seen City win anything.
If Shels hadn't won a single trophy in 40 years would you sacrifice three years in the lower leagues for that one title?I'm afraid that's a bit delusional.
Sure, the 32,000 fans who came week-in week-out were enough to sustain the club last time, but with hundreds of millions of debts, mercenary players hanging on for every last penny they can get out of the club and banks and other financial institutions putting the squeeze on during this global recession, then fans would want to be paying two hundred quid, twice a week to even have a chance of survival. Can you see that happening? No, neither can I.
Not with hundreds of millions of debt.
Scarborough did it. Sure it was on a lesser scale but their fans chipped in and bought the club etc. We have more fans so in theory it could be done on a bigger scale. Plus I have faith that there is some rich fan out there who would help us out, even if it is Curly Watts.0 -
It's not a bland assertion, I'm afraid it is you who has the bland side of things.That's just a bland assertion.
What happens if Uniteds success on the pitch can't keep up with the increasing interest payments?
What happens if we can't refinance the PIKs?
Debt is normal, no doubt about it. It however is meant to be managed properly. The idea that this is just common business practice is equally stupid, especially considering how 'common business practice' just helped cause a world wide recession.
United's success on the pitch means squat really as they are the undisputable market leader off it. Something like 5% of the world's population are "fans". Revenues keep on sky-rocketing primarily down to gate-receipts, TV money and sponsorship. They had two trophyless years (bar a Carling Cup) and still increased revenues and profitability.
If he can't re-finance the loans he'll have to sell (and take his loans with him), he'd have no other choice, and then the next guy will come in and promise the earth and the cycle will start again. United will never be without a buyer.
In any case interest is almost covered twice over in United's operating profits, and is certainly common business practice amongst a lot of people. It didn't cause a world-wide recession, people over-gearing themselves has done that. Glazier hasn't done that because he's made a sound investment, the best in its field. Sound investments don't feel the crunch like others will. Look at house prices in Malahide or Blackrock, they are certainly less hit than those in the newer areas on the commuter belt of Dublin.
Regards the world-wide recession, last I checked China, India and quite a few Asian countries were booming. Over 75% of United's fan base is here. CHA-CHING!
United is immune to the risks that will be the peril of the Shelbournes, Manchester City's and Leeds' of this world. They are built on iron and steel, billions of fans, and the best brand in the world.
They are a marketeer's wet dream.
As a Liverpool fan I'd raise an enormous grin to see them falter, but put simply it will not happen to them.0 -
So, what happens if United are no longer allowed to compete in the CL because Platini decides not to allow debt ridden clubs to enter (something he HAS said recently). The is a lot of cash and marketing gone - that would cause a massive problem in sustaining the debt.0
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So, what happens if United are no longer allowed to compete in the CL because Platini decides not to allow debt ridden clubs to enter (something he HAS said recently).
Then the G14 will leg it and make a european super league, with even more tv revenue.
I wouldn't really worry about that.
The G14 may have disbanded, but the club haven't gone away.0 -
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The G14 have disbanded and signed agreements stating they would not form their own league.0
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The G14 have disbanded and signed agreements stating they would not form their own league.
Agreements schmagreements tbh.
If UEFA try to pull a fast one like you have outlined, have no doubt that the clubs affected will form their own exclusive competition.
We all know contracts and agreements mean nothing in today's money-led football world.0 -
So, what happens if United are no longer allowed to compete in the CL because Platini decides not to allow debt ridden clubs to enter (something he HAS said recently). The is a lot of cash and marketing gone - that would cause a massive problem in sustaining the debt.
The Champions league relies on teams like Man Utd in the champions league. Throwing them out would be a disaster for it and sponsorship alike. So they would never throw a team like utd out0 -
United may have a lot of debt but they still have a net assets on the bottom line. Player values alone would cover the debt. So they can continue to operate as a going concern until that changes.So, what happens if United are no longer allowed to compete in the CL because Platini decides not to allow debt ridden clubs to enter (something he HAS said recently). The is a lot of cash and marketing gone - that would cause a massive problem in sustaining the debt.
As an aside, I notice in your sig you encourage Ferguson to sign Ronaldinho, a player who reportedly turned down a £200k a week chance to move to Manchester. That is £10m a year a huge chunk of any interest payment that "may cripple the club".
The ironing is delicious.0 -
United's success on the pitch means squat really as they are the undisputable market leader off it.
That's just silly. At the core of Uniteds success in all financial aspects is their perfrormances on the pitch.
Ticket revenues are now increasingly coming from new fans (in the last 3-4 years) who buy the expensive tickets. You think they'll do that if United struggle for the CL?
The same is exactly true for sponsorship. Without success we aren't as marketable. People follow success! It's how United got to where we are before the Glaziers came.
TV money is secured no doubt about that.In any case interest is almost covered twice over in United's operating profits
That's not true! The 'profits' just recovered the interest. No debt has been payed off whatsoever.It didn't cause a world-wide recession, people over-gearing themselves has done that.
Over-lending did, on unprofitable ventures.
Buying a club with no prospect of ever increasing operating profits to pay off debts is a bad business practice, especially when the operating profits are just, just, just covering the interest.Over 75% of United's fan base is here. CHA-CHING!
Aside from that not really understanding what is going on in the world economy, that is just a blatent myth. When people talk about that, it's if they feel they are close to a football club. People who might watch one game a year are classified as that. In terms of actually making money out of them, its near impossible. The majority of jearseys are knock offs and this year was the first time they were asked to pay to watch the games and the company is in serious trouble trying to get people. Also the idea that these fans would follow United if they weren't in the CL at least is laughable.
I don't think United are going to go under. They have too much assests for that. We can always sell of Ronaldo. But keep in bloody mind, that's a ****ing bad thing. It's something that really ****ing annoys me. Worst case scenario people think is that the Glaziers stick around for a while longer, realise they can't pay off the loans, and somebody else comes in.
The problem is this. The Glaziers will want a profit. But while they have made United more profitable (in horrendus long-term-damaging ways) the debt is increasign every year. They ****ed up in terms of the PIKs and can't refinance. Nobody is going to pay that.
That have no money whatsoever risked in this, at all. They have no risk at all. If they had money in it, no doubt that would sell. But since they have no risk at all, there's no telling what the **** they'll do.0 -
PHB for someone who speaks so certainly on something, you demonstrate a huge lack of business knowledge again and again. You seem to think you can point out holes in this after reading a couple of articles online. What sort of business background do you have?
You do know that the Glazier's would have paid tens of millions to firms of professional advisors to analyse the various scenarios that may happen should they proceed with the takeover? I'm sure interest rate hikes and a global down turn would have been one of the first ones modelled given that they were borrowing hundreds of millions.
Not necessarily true. United are a cash cow. Their presence is so established that a couple of trophyless seasons will not have a significant effect on their financial performance.That's just silly. At the core of Uniteds success in all financial aspects is their perfrormances on the pitch.
If they were to finish 6th and get knocked out of each cup at the first hurdle well then obviously it would, but is that a realistic scenario?
From the article that YOU posted "United have sold 65000 season tickets". 85% of the stadium. General belief is that tickets for United games are hard to get and the waiting list for season tickets is so long it's been suspended.Ticket revenues are now increasingly coming from vnew fans (in the last 3-4 years) who buy the expensive tickets. You think they'll do that if United struggle for the CL?
Simply put, United will have a completely full stadium for years to come.
You went two years trophyless and then signed the biggest sponsorship deals in the clubs history did you not? You just had one of your most successful seasons ever.The same is exactly true for sponsorship. Without success we aren't as marketable. People follow success! It's how United got to where we are before the Glaziers came.
United are in the mature stage of their business cycle, what actually happens to them on the pitch means less than it did because their brand is so established. No club in the world gets guaranteed gates of 75000 every week or such international recognition.
Eh excuse me, from your own article againThat's not true! The 'profits' just recovered the interest. No debt has been payed off whatsoever.
"The company could have paid its interest out of ebitda 1.8 times last year."
Did you even read it before posting it?
I never said any of the debt has been repaid, it doesn't have to be as it will be repaid when the club is sold. All they have to do is maintain the interest and increase the value of the club, which they are.
Eh again from your own article that you obviously didn't readBuying a club with no prospect of ever increasing operating profits to pay off debts is a bad business practice, especially when the operating profits are just, just, just covering the interest.
"Earnings before interest, tax, depreciation and amortisation rose from £36.3m to £75.4m. Operating profit - after depreciation and amortisation, which includes the falling value of ageing players - moved into the black, reaching £7.1m following a loss of £37.2m."
Operating profits are increasing, sufficient cash is there to finance player acquisitions. This is their strategy. Cover costs, buy players, win trophies, sell at a profit.
Evidence of the last three years proves they are doing a great job!
I hope this isn't directed at me.Aside from that not really understanding what is going on in the world economy, that is just a blatent myth.
Have you ever been to Asia?When people talk about that, it's if they feel they are close to a football club. People who might watch one game a year are classified as that. In terms of actually making money out of them, its near impossible. The majority of jearseys are knock offs and this year was the first time they were asked to pay to watch the games and the company is in serious trouble trying to get people. Also the idea that these fans would follow United if they weren't in the CL at least is laughable.
Do you think that these people follow United to stay up until 5am on a Thursday morning to watch CL football or wait until Saturday night for their fix?
Footballing aside, merchandising is mega business over there. While counterfeiting is also huge they still manage to have more designer stores in places like Tokyo than LA. Everything over there needs to have a recognisable brand, from school bags to watches to clothes. United is the biggest brand in the world.
You can buy United anything there.
Q.E.D.I don't think United are going to go under. They have too much assests for that.
You've just proved the flaws in your own argument.
Sigh.....The problem is this. The Glaziers will want a profit. But while they have made United more profitable (in horrendus long-term-damaging ways) the debt is increasign every year. They ****ed up in terms of the PIKs and can't refinance. Nobody is going to pay that.
That have no money whatsoever risked in this, at all. They have no risk at all. If they had money in it, no doubt that would sell. But since they have no risk at all, there's no telling what the **** they'll do.
So the Glazier's have bought United at no risk to themselves? I can't believe you think this. So why didn't you or I buy it?
Essentially the Glazier's would be the sole shareholders of Red Football Inc which is the owner of MU. Red Football took out loans to buy MU. These loans are the Glazier's responsibility. They've borrowed at rates as high as 15% because they know they are on to such a winner!0 -
Jivin Turkey wrote: »From the article that YOU posted "United have sold 65000 season tickets". 85% of the stadium. General belief is that tickets for United games are hard to get and the waiting list for season tickets is so long it's been suspended.
can we just dispell this myth please....friends of mine, Liverpool fans and neutrals, were offered season tickets at the end of last summer by the club as they held their information on file after applying for tickets at OT before. The waiting list has disappeared over the last couple of years and the club was, last year at least, desperate to sell season tickets.0 -
From the article that YOU posted "United have sold 65000 season tickets". 85% of the stadium. General belief is that tickets for United games are hard to get and the waiting list for season tickets is so long it's been suspended.
Simply put, United will have a completely full stadium for years to come.
Complete myth as pointed out by Mr Alan above. They've eaten through the season ticket list over the last 2-3 years due to huge price increases. You think those new fans will be as loyal as the old ones?You went two years trophyless and then signed the biggest sponsorship deals in the clubs history did you not? You just had one of your most successful seasons ever.
United are in the mature stage of their business cycle, what actually happens to them on the pitch means less than it did because their brand is so established. No club in the world gets guaranteed gates of 75000 every week or such international recognition.
That's only because the sponsorship deal we previously had was under valued. We had one of our most successful seasons ever built on increasing debt. We had to take out loans to buy all our players. This business model is unsustainable!
As I pointed out there were some problems with the article/
Did you even read it before posting it?
See this is where the point gets complicated and is easy to gloss over:Operating profits are increasing, sufficient cash is there to finance player acquisitions. This is their strategy. Cover costs, buy players, win trophies, sell at a profit.
What the Glaziers did was shift the cost on transfers last year, to this year. That's why we owe about 40 million in transfer fees.
This is because the Glaizers have been doing some creative accounting, so that if you look at the accounts at first glance. However when you realise is all they are doing is carrying more debt in order to hide the ebitdas real figures, you realise that they are just building a house of cards.Have you ever been to Asia?
Twice.You can buy United anything there.
Yes you can. Try find some data to support the idea that lots of Uniteds money comes from there. You'll have huge huge trouble because it doesn't exist.
There is of course money to be made there, no doubt, but its a small section of Uniteds profits.I can't believe you think this. So why didn't you or I buy it?
Because I couldn't get the loans. The Glaziers have invested a tiny amount of their own money into this. If Utd goes under, they don't lose a penny personally. Nada, Zilch. It is risk free for them.
The problem isn't with United going under. Ultimately we can sell Old Trafford if we have to. The point is, that's a ****ing bad thing!0 -
Jivin Turkey wrote: »
Sigh.....
So the Glazier's have bought United at no risk to themselves? I can't believe you think this. So why didn't you or I buy it?
Essentially the Glazier's would be the sole shareholders of Red Football Inc which is the owner of MU. Red Football took out loans to buy MU. These loans are the Glazier's responsibility. They've borrowed at rates as high as 15% because they know they are on to such a winner!
For a bloke who's spouting off to PHB about 'business knowledge' you seem to show a clear lack of it yourself.
The fundamental rule in company law is the separate legal identity of a company and it's shareholders, dating back to the case of Solomon v Solomon. A company is a separate legal entity, distinct from it's shareholders, and is the bearer of it's own debts. Hence, if Google went up sh/t creek, anyone who bought shares in Google won't have any liability attached to their name.
If this holding compnay 'Red Football' took out the loans, then the Glazers are untouchable in terms of debts being reclaimed.
Hence, when people say the Glazers have no risk attached to the club, they really aren't waffling.0 -
Jivin Turkey wrote: »
Have you ever been to Asia?
Do you think that these people follow United to stay up until 5am on a Thursday morning to watch CL football or wait until Saturday night for their fix?
QUOTE]
Been in Asia for the last 4 months and i'd just like to point out that they DO stay up til 5 watching champions league footie.
United are fine for the short term but they are NOT in a healthy situation financially. In fact i'd say the running of the clubs on field interests falls a fair bit down the Glazers order of priority, behind the bucs and other investements where they're actually risking their own money... The only thing they care about is making money off United by whatever means neccesary. The exact same as those two clowns at Anfield.0 -
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How is it a myth? It says in the report you posted that "United have sold 64,500 season tickets". This is a statement of fact.Complete myth as pointed out by Mr Alan above. They've eaten through the season ticket list over the last 2-3 years due to huge price increases. You think those new fans will be as loyal as the old ones?
The only myth or speculation on this is the type you're forwarding regarding the loyalty of these holders.
If United still have season tickets up for sale please point me in the direction of how I can buy one because I'd buy two this second.
You're moving the goal posts now. I say Glazier's have done brilliantly negotiating TWO major sponsorship deals, you counter with "well they were undervalued anyway". Credit where it's due please!That's only because the sponsorship deal we previously had was under valued.
Again we've got random internet posters judging the business actions of scores of seasoned professionals being paid millions! If United have geared up their balance sheet it will all be a factor when it comes to selling the club, you'd swear the powers that be don't even consider things like this.We had one of our most successful seasons ever built on increasing debt. We had to take out loans to buy all our players. This business model is unsustainable!
The business model is certainly different to how the club has previously been run but then again they are the joys of being private, you do what you want.
Nothing is glossed over there. It's clear as day. They are improving profits but still highlight the need for positive cash flows. Interest may increase but it will be covered by increased revenues.As I pointed out there were some problems with the article/
See this is where the point gets complicated and is easy to gloss over:
I'm sure we'll see a qualified audit opinion so. You must be signing it as you obviously have the inside track.What the Glaziers did was shift the cost on transfers last year, to this year. That's why we owe about 40 million in transfer fees.
This is because the Glaizers have been doing some creative accounting, so that if you look at the accounts at first glance. However when you realise is all they are doing is carrying more debt in order to hide the ebitdas real figures, you realise that they are just building a house of cards.
I'd need to see detailed workings of their revenue figures to prove anything. Which I can't get. But the point I was trying to make was that "world-wide recession isn't affecting a huge proportion of United's fans.Yes you can. Try find some data to support the idea that lots of Uniteds money comes from there. You'll have huge huge trouble because it doesn't exist.
There is of course money to be made there, no doubt, but its a small section of Uniteds profits.
Given the growth of China, in particular, there are going to be millions of people, who once thought that a replica shirt was out of their reach, that is almost in their reach now.
"A tiny amount of their own money" but "risk free". That is a paradox.Because I couldn't get the loans. The Glaziers have invested a tiny amount of their own money into this. If Utd goes under, they don't lose a penny personally. Nada, Zilch. It is risk free for them.
Quantify "a tiny amount". United held loans of circa £600M on their balance sheet at the time of the takeover. The purchase price was £790M. Where did the rest of the cash come from? When you do the calculation tell me £190M is a tiny amount even from anyones personal fortune.
No matter how wealthy someone is, banks don't lend to them to buy things unless they put up part of the cash themselves.
The idea that this is risk free to the Glazier's is absolutely ridiculous, and the sort of ignorance that Shareholders United craved on when trying to oppose the takeover.
You are not impressing me with your first year company law knowledge.charlie mchugh wrote: »For a bloke who's spouting off to PHB about 'business knowledge' you seem to show a clear lack of it yourself.
The fundamental rule in company law is the separate legal identity of a company and it's shareholders, dating back to the case of Solomon v Solomon. A company is a separate legal entity, distinct from it's shareholders, and is the bearer of it's own debts. Hence, if Google went up sh/t creek, anyone who bought shares in Google won't have any liability attached to their name.
If this holding compnay 'Red Football' took out the loans, then the Glazers are untouchable in terms of debts being reclaimed.
Like I said above the Glazier's stumped up a huge amount of their own cash in order to secure the rest of the funding. If these loans get out of hand for them they lose this cash.
Here's something else you probably covered in first year, if the company goes into liquidation through all this supposed mismanagement they're barred from acting as directors of every other investment they hold. But idiots as they are, sure they probably didn't even consider this when they decided to buy United????
For Christ's sake!
So you are another one that thinks they went into a bank and said "I want to borrow £800M, any chance?"charlie mchugh wrote: »Hence, when people say the Glazers have no risk attached to the club, they really aren't waffling.
The mind boggles.0 -
Jivin Turkey wrote: »You are not impressing me with your first year company law knowledge.
I'm sorry I have failed to impress you, on your behalf, fail is for me.Jivin Turkey wrote: »Like I said above the Glazier's stumped up a huge amount of their own cash in order to secure the rest of the funding. If these loans get out of hand for them they lose this cash.
It's news to me that the Glazer's stumped up a huge chunk of their own cash. Can you provide me with any links which verifies this statement?
If they 'stumped' a large chunk of change, how come there is so much debt saddled on the club?Jivin Turkey wrote: »So you are another one that thinks they went into a bank and said "I want to borrow £800M, any chance?"
No I don't think they went to a bank and asked for £800 million, but I do think that they went to various banks, private equity firms, and hedge funds, offering them all a slice of the pie, at a time when credit was very cheap and the money men of the world couldn't loan it out quick enough. This has only increased through refinancing schemes as the Glazers have borrowed from Peter to pay Paul.Jivin Turkey wrote: »Here's something else you probably covered in first year, if the company goes into liquidation through all this supposed mismanagement they're barred from acting as directors of every other investment they hold. But idiots as they are, sure they probably didn't even consider this when they decided to buy United????
And as every other investment they hold is outside of the U.K. this affects them how???
Why is it that you seem to defend the Glazer's shoddy dealings with such a passion. Anyone can see that the manner in which they have conducted business at Old Trafford has taken the club from what was a very firm and solid financial base, to one which is fraught with danger.0 -
I didn't think I could appreciate Randy Lerner anymore than I already did but after reading this thread, my god he seems like the Saint of foreign owners.0
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Well without me going through the dregs of financial news items, it is common knowledge that the Glazier's built their investment in United slowly before launching a take over bid when they reached about a 30% holding. It was only then that they had to borrow the £600M to purchase the rest of the club.charlie mchugh wrote: »It's news to me that the Glazer's stumped up a huge chunk of their own cash. Can you provide me with any links which verifies this statement?
See above, they owned a large chunk of it before they launched the total takeover.charlie mchugh wrote: »If they 'stumped' a large chunk of change, how come there is so much debt saddled on the club?
As I've said before, if you think any businessman, no matter how proven a track record he has, can walk into various places and get cash, without demonstrating a layer of confidence by putting his money where his mouth is, you are so mistaken I can't put words together to demonstrate.charlie mchugh wrote: »No I don't think they went to a bank and asked for £800 million, but I do think that they went to various banks, private equity firms, and hedge funds, offering them all a slice of the pie, at a time when credit was very cheap and the money men of the world couldn't loan it out quick enough. This has only increased through refinancing schemes as the Glazers have borrowed from Peter to pay Paul.
I do it because I can see the big picture. I'm a Liverpool fan so I'm hardly fraught with bias!charlie mchugh wrote: »Why is it that you seem to defend the Glazer's shoddy dealings with such a passion. Anyone can see that the manner in which they have conducted business at Old Trafford has taken the club from what was a very firm and solid financial base, to one which is fraught with danger.
If the club had remained public the very firm and solid financial base which you spoke of would have been eroded detrimentally to the business as it would have fallen in line with the global stock markets (and we are talking about falls of billions globally!).
Anyway by listing the club previously, they gained hundreds of millions from fans, that felt aligned as "owners", that they never intended to repay. There was so many fans that were content to hold their shares regardless of the price. It was a free cash injection preying on the complete ignorance of fans that to be fair at the time was an idea far ahead of its time.
All that is different now is that the club plays by the banks rules as opposed to abusing its fans loyalty.0
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