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United, Liverpool, Debt, British Tax...

  • 14-11-2008 12:30pm
    #1
    Mitch Connor
    Registered Users, Registered Users 2 Posts: 46,447 ✭✭✭✭


    Was reading something on another forum this morning and it brought up an interesting point.

    With the pound weakening against the Dollar, the American owners of United and Liverpool are in the happy position of their dollars being worth more then when they bought the clubs, so they could reduce the debt from their dollar finances for less now.

    Anyway, the issue that really interested me is that the british tax payer is currently subsidising business that are in debt thanks to the credit crisis.
    redloner on jaapsai wrote:
    ]Sorry folks I had one on me last night and this occurred to me and for some strange reason I found it ironic.

    Mitch, it was supposed to read "here's one for the LUHG brigade - the rest look away now" but it got garbled as it was a by-product of a late-night project on the subject of Corporation Tax relief on interest payments used in leveraged takeovers. The question being asked is should Corporation Tax relief be allowed if the debt interest is being used for a purpose other than business investment or expansion?

    Neither Sutcliffe or HMRC will confirm or deny if British taxpayers are helping the Glazers buy United or Gillette & Hicks to purchase Liverpool. It's a bit odd really because the Guardian are doing a thing on taxpayers subsidising lower-league clubs who might be a bit slow with their PAYE returns, while missing the much bigger picture and bigger subsidy at the top level...

    United is in good company out there with firms like Boots being funded the same way, then the British taxpayer is expected to contribute because of the nature of the capital used for the purchase. In the words of the immortal Roy Walker "It's good, but it's not right."

    As it happens, all the debt, both senior and PIK is denominated in sterling and sterling interest rates used (3mth LIBOR+) so my assertion is quite accurate. The Glazers would of course benefit, should they decide to put any money into United now as they get more bang for their buck!


Comments

  • #2
    Hobart
    Registered Users, Registered Users 2 Posts: 4,839 ✭✭✭Hobart


    Mitch Connor wrote: »
    Was reading something on another forum this morning and it brought up an interesting point.

    With the pound weakening against the Dollar, the American owners of United and Liverpool are in the happy position of their dollars being worth more then when they bought the clubs, so they could reduce the debt from their dollar finances for less now.

    Anyway, the issue that really interested me is that the british tax payer is currently subsidising business that are in debt thanks to the credit crisis.

    It depends. Did they buy in Dollars or Sterling? Also, when both clubs were bought the assertion that "PIK is denominated in sterling and sterling interest rates used (3mth LIBOR+)" was certainly true. But that most definitely is not the case today.


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