LFC sale as a case study on MUFC

--amadeus--

There are only two clubs in the EPL that have been bought out by leveraged buyouts (I think they are the only two major clubs in Europe in fact, but could be wrong). And I thought it might be interesting to look at how the things we learned during the sale of LFC could be applied to MUFC.

First some headline numbers. To keep everything consistent I am using numbers from here. They are from the UK Times and refer to 2009 so are recent enough.

Now most business owners will tell you that a good rule of thumb for valuing a business is to estimate based on 3 times revenue. This gives you a rough ballpark from which negotiations up (based on potential future sales or deals yet to feed through your revenue pipeline) or down (usually on debt or profitability) can happen.

Liverpool had excellent revenues in 2009 - just shy of £185million. Using our rough cut number that gives us a theoretical value on teh club of £555million (185*3). Co-incidentally teh owners were originally looking for £600million for the club and Forbes (as we know from the legal work in teh sale) valued the club at £530million so we can see that our rough estimate is broadly in the right area. With Liverpool owing £237million that left a positive equity in the club of around £318million (a value of 555 minus the debt of 237). Now you can see why Hicks expected to quadruple his money and why he is so angry at the "epic swindle"!

On this basis Utd are doing ok. 2009 Revenues of £278.5million give the club a theoretical value of £835million (278.5*3). This obviously makes Old Trafford a fabulously valuable asset. The challenge is the debt - £716million is vast but even that leaves the Glazers ok as the club has a net value of £119million. Not as good as Liverpool but still more than enough of a buffer to keep investors onside. Now of course exact figures on debt are hard to pin down but an £800million debt figure has been thrown around which would leave that buffer at just £35million, which (if true) is a different story.

However we all know that LFCs true market value - the price actually paid - was significantly lower than the £555million nominal value. There are lots of reasons for this but the main is that it was a distressed asset sale, the owners had to sell and anyone looking to buy a car off someone emigrating knows how strong a position you are in when the owner has to sell by a deadline.

In fact LFC sold for £300million. Rather than being worth 3 times revenue they were only worth 1.6 times revenue. Just more than half the supposed value. Applying this multiple to MUFC dramatically alters the picture. Now the club would only be worth £451.6million. Still a vast amount. But it would leave the club in negative equity to the tune of almost £265million (a value of 451 minus debt of 716). The value of the club is lower than the value of the debt.

The debt to revenue ratio is also interesting. LFC's owners were rightly held up as irresponsible for teh weight of debt on Anfield. And it was immense - debt of £237million against income of £185million gives a debt ratio of 1.2 (237 divided by 185). In other words for every pound in revenue they owed £1.20 in debt. This is commercial suicide. The equivalent would be someone on teh average wage here (31.5k apparently) having a €38k overdraft. It was simply unsustainable.

The MUFC debt ratio is 2.6 (716 divided by 278). This is the equivalent of our friend having an overdraft of over €82k!

Naturally such high debt levels (on both clubs) brings high interest bills and despite the huge revenues both clubs posted recent losses - £83.6million in Utds case. Their is an old saying in business "Revenue for vanity, profit for sanity". At the moment Utd have eye catching revenues but the profit is being siphoned off into interest payments and debt service.

Of course assets can be valued on potential as well as current states. And LFC had a good tale to spin for investors - a global fan base and rapidly growing commercial revenues (close on doubled in three years). And famously LFC are £1million down compared to MUFC on every matchday due to the stadium. But of course this is also potential for growth - with a similar commercial profile there is no reason LFC shouldn't be aiming at closing the near £100million revenue gap on Utd. A new stadium will help but better sponsorship deals and exploitation in emerging markets such as Asia mean that there is significant potential there.

Utd on teh other hand have already got some of the most lucrative deals in place and the Glazers have been very adept at "sweating the asset". While growth in revenue will be expected it will not be vast. It certainly won't be in the order of hundreds of millions as it would need to be to make teh debt sustainable.

As it stands MUFC are clearly in serious financial difficulty. The biggest advantage they currently hold is that they have split the debt amongst several institutions so no one group can issue the sort of ultimatum that RBS did to G&H. And of course sustained success on the pitch generates such huge amounts of money that bankers are turning a blind eye to mounting losses (akin to the property developers during our own boom). But with the loss of Ronaldo (the equivalent of LFCs Alonso) and seemingly the pending loss of Rooney (LFCs Masch) and all of teh attendant commercial and merchandise revenue hurts a club, even one as big as Utd. And teh debt means that investment in teh squad suffers. All too quickly a team can under perform leading to a commercial collapse.

Lessons for Utd? Well what saved LFC was teh enforced debt paydown last year. The £140million pumped into the club directly by the owners reduced teh debt and enabled teh club to be sold for a realistic price. It would seem that Utd's long term hopes are pinned on either an unbundling of TV rights that would allow them to sell directly and so increase revenues exponentially so sustaining debt or enabling a sale. Or teh Glazers digging in and paying down debt themselves to enable the club to function as a business.

Tough choices.

3hn2givr7mx1sc

I sense nothing but extreeeeeme boringness coming from this thread.

Mr Alan

Good post. Head in the sand types won't like it much, but Tis a good one.

Morzadec

baz2009 wrote: »

I sense nothing but extreeeeeme boringness coming from this thread.

Thought it was interesting, well explained for the casual fan with little idea of economics/debt etc... I honestly did not know the extent of United's debt, that's a huge number

Jesus Wept

Can someone summarize it in ten words or less.

super_furry

More Norwich scarves over expensive replica jerseys should help.

--amadeus--

The-Rigger wrote: »

Can someone summarize it in ten words or less.

LFC Debt > LFC money
MUFC debt >> MUFC Money

LFC sale price > LFC debt
MUFC ? sale price < MUFC debt :eek:

MUFC :eek::eek:

(not quite 10 but you get the gist )

recylingbin

Excellent post.

I'm sure I saw a Bob Charlton interview where he intimated that the stadium would eventually house 100,000 which is one area for growth. Don't see this redevelopment in the near to mid future though.
However, I forsee alot less success on the pitch in the coming years.
If Man Utd fans are lucky, this will force the Glazer's hand. But, while the club is valued at such a hich price, I can only see vultures coming in for it.

3hn2givr7mx1sc

Morzadec wrote: »

Thought it was interesting, well explained for the casual fan with little idea of economics/debt etc... I honestly did not know the extent of United's debt, that's a huge number

Did break it down nicely, but wait until United's 'accountants' come charging in.:/

Amadeus's summmary helped me understand it too.:P

Gawwwwd money is ruining football.

super_furry

I may be wrong and they might be working in the background but there doesn't seem to be the same level of coordinated effort from Manchester United fans to get rid of the Glazers as there was from Liverpool grounds like the Spirit of Shankly. Joking aside, the scarf campaign is the only thing I've seen and it seems pretty ineffective.

Could this be down to the fact that many of the pro-active United fans left to form FC United?

OPENROAD

baz2009 wrote: »

Did break it down nicely, but wait until United's 'accountants' come charging in.:/

Amadeus's summmary helped me understand it too.:P

Gawwwwd money is ruining football.

Didn't see many complaining when they were paying big transfer fees for the likes of Rio, Carrick etc....;)

3hn2givr7mx1sc

OPENROAD wrote: »

Didn't see many complaining when they were paying big transfer fees for the likes of Rio, Carrick etc....;)

I was about 10 when we signed Rio and around 12/13 when w esigned Carrick so I didn't have a cluuuuue what was goin' on.:P

Jesus Wept

--amadeus-- wrote: »

LFC Debt > LFC money
MUFC debt >> MUFC Money

LFC sale price > LFC debt
MUFC ? sale price < MUFC debt :eek:

MUFC :eek::eek:

(not quite 10 but you get the gist )

Ok you suckered me in and I read it, wp.
Let's hope you are correct and United go down in flames. :pac:

Mr Alan

super_furry wrote: »

I may be wrong and they might be working in the background but there doesn't seem to be the same level of coordinated effort from Manchester United fans to get rid of the Glazers as there was from Liverpool grounds like the Spirit of Shankly. Joking aside, the scarf campaign is the only thing I've seen and it seems pretty ineffective.

Could this be down to the fact that many of the pro-active United fans left to form FC United?

Certainly be a part of it, but don't underestimate how a bit of success can cloud peoples judgement, some fans think as long as Utd are performing alright on the pitch in the short term, they couldn't care about the levels of debt.

Sideshow Mark

Tbh, gave up about halfway through that. You didn't take into account that LFC's 2010 revenues are going to be significantly lower than 2009 due to poor league position in the 09/10 season and not qualifying to the champions league. You also didn't take into account that RBS was hours away from putting Liverpool into administration as the debt was going to be defaulted on which renders Hicks' "epic swindle" quote bull****


Go on then, I read it all. Tv unbundling is never going to happen in the life of the Premier League. As evidenced by the Ronaldo sale, the Glazers are going to sell off their assets to either take the profit back or reduce the debt. As with Liverpool no money is going to go into strengthening the squad, and as a result United will follow Liverpool into the Uefa league for a few seasons.

--amadeus--

Sideshow Mark wrote: »

Tbh, gave up about halfway through that. You didn't take into account that LFC's 2010 revenues are going to be significantly lower than 2009 due to poor league position in the 09/10 season and not qualifying to the champions league. You also didn't take into account that RBS was hours away from putting Liverpool into administration as the debt was going to be defaulted on which renders Hicks' "epic swindle" quote bull****

Errr actually I did take into account the fact that LFC were on the verge of administration (that's what a "distressed asset" is). And revenues for this year for LFC will be down through no CL football but up because of teh Standard Charter sponsorship deal. All told that plus the potential for increases in revenue versus Utds probable lack of scope for increased revenue meant that the comparisons are fair regardless.

But yes the Hicks "epic swindle" line is laughable

mike65

LFC was lucky, the debt was simply too big to sustain and the bank got worried after a technical default, had the cash been found we'd still be in G&Hs clutches. The Glazers are still able to skim off the top to pay the debt interest and may be able to do so for a few years yet. Maybe Utd supporters should hope things go really badly wrong for the owners even if it means a few leans years.

Boskowski

I'm not saying this to needle. I don't like ye but I respect ye as a great club and rival.

The OP is spot on and I can do it in less than ten words.

Ye are fvcked.

Drumpot

As a United fan, I hope Fergie leaves along with Rooney . . He is deserving of more support then this from the owners . . The old phrase "If you love something, set it free" comes to mind. . It would be selfish for any United fan to expect fergie to try to keep up a sinking ship.

I hope the club goes into administration and the owners are left with nothing or a loss like those other yank twats Hicks and Gillette . . Sometimes things have to get worse before they can get better and if its a case United wont stump up the cash for players or Rooney, then I hope the Glazers get seriously burned . .

I dont want to see Fergie go another 5 years trying to build success on bargain basement players and having to selloff our best players every couple of seasons . . The club cannot sustain this level of debt and prolonging the tenure of the Glazers will only prolong the agony . . I would prefer a quick sharp pain, then death by several seasons demise . .

davyjose

--amadeus-- wrote: »

There are only two clubs in the EPL that have been bought out by leveraged buyouts (I think they are the only two major clubs in Europe in fact, but could be wrong). And I thought it might be interesting to look at how the things we learned during the sale of LFC could be applied to MUFC.

First some headline numbers. To keep everything consistent I am using numbers from here. They are from the UK Times and refer to 2009 so are recent enough.

Now most business owners will tell you that a good rule of thumb for valuing a business is to estimate based on 3 times revenue. This gives you a rough ballpark from which negotiations up (based on potential future sales or deals yet to feed through your revenue pipeline) or down (usually on debt or profitability) can happen.

Liverpool had excellent revenues in 2009 - just shy of £185million. Using our rough cut number that gives us a theoretical value on teh club of £555million (185*3). Co-incidentally teh owners were originally looking for £600million for the club and Forbes (as we know from the legal work in teh sale) valued the club at £530million so we can see that our rough estimate is broadly in the right area. With Liverpool owing £237million that left a positive equity in the club of around £318million (a value of 555 minus the debt of 237). Now you can see why Hicks expected to quadruple his money and why he is so angry at the "epic swindle"!

On this basis Utd are doing ok. 2009 Revenues of £278.5million give the club a theoretical value of £835million (278.5*3). This obviously makes Old Trafford a fabulously valuable asset. The challenge is the debt - £716million is vast but even that leaves the Glazers ok as the club has a net value of £119million. Not as good as Liverpool but still more than enough of a buffer to keep investors onside. Now of course exact figures on debt are hard to pin down but an £800million debt figure has been thrown around which would leave that buffer at just £35million, which (if true) is a different story.

However we all know that LFCs true market value - the price actually paid - was significantly lower than the £555million nominal value. There are lots of reasons for this but the main is that it was a distressed asset sale, the owners had to sell and anyone looking to buy a car off someone emigrating knows how strong a position you are in when the owner has to sell by a deadline.

In fact LFC sold for £300million. Rather than being worth 3 times revenue they were only worth 1.6 times revenue. Just more than half the supposed value. Applying this multiple to MUFC dramatically alters the picture. Now the club would only be worth £451.6million. Still a vast amount. But it would leave the club in negative equity to the tune of almost £265million (a value of 451 minus debt of 716). The value of the club is lower than the value of the debt.

The debt to revenue ratio is also interesting. LFC's owners were rightly held up as irresponsible for teh weight of debt on Anfield. And it was immense - debt of £237million against income of £185million gives a debt ratio of 1.2 (237 divided by 185). In other words for every pound in revenue they owed £1.20 in debt. This is commercial suicide. The equivalent would be someone on teh average wage here (31.5k apparently) having a €38k overdraft. It was simply unsustainable.

The MUFC debt ratio is 2.6 (716 divided by 278). This is the equivalent of our friend having an overdraft of over €82k!

Naturally such high debt levels (on both clubs) brings high interest bills and despite the huge revenues both clubs posted recent losses - £83.6million in Utds case. Their is an old saying in business "Revenue for vanity, profit for sanity". At the moment Utd have eye catching revenues but the profit is being siphoned off into interest payments and debt service.

Of course assets can be valued on potential as well as current states. And LFC had a good tale to spin for investors - a global fan base and rapidly growing commercial revenues (close on doubled in three years). And famously LFC are £1million down compared to MUFC on every matchday due to the stadium. But of course this is also potential for growth - with a similar commercial profile there is no reason LFC shouldn't be aiming at closing the near £100million revenue gap on Utd. A new stadium will help but better sponsorship deals and exploitation in emerging markets such as Asia mean that there is significant potential there.

Utd on teh other hand have already got some of the most lucrative deals in place and the Glazers have been very adept at "sweating the asset". While growth in revenue will be expected it will not be vast. It certainly won't be in the order of hundreds of millions as it would need to be to make teh debt sustainable.

As it stands MUFC are clearly in serious financial difficulty. The biggest advantage they currently hold is that they have split the debt amongst several institutions so no one group can issue the sort of ultimatum that RBS did to G&H. And of course sustained success on the pitch generates such huge amounts of money that bankers are turning a blind eye to mounting losses (akin to the property developers during our own boom). But with the loss of Ronaldo (the equivalent of LFCs Alonso) and seemingly the pending loss of Rooney (LFCs Masch) and all of teh attendant commercial and merchandise revenue hurts a club, even one as big as Utd. And teh debt means that investment in teh squad suffers. All too quickly a team can under perform leading to a commercial collapse.

Lessons for Utd? Well what saved LFC was teh enforced debt paydown last year. The £140million pumped into the club directly by the owners reduced teh debt and enabled teh club to be sold for a realistic price. It would seem that Utd's long term hopes are pinned on either an unbundling of TV rights that would allow them to sell directly and so increase revenues exponentially so sustaining debt or enabling a sale. Or teh Glazers digging in and paying down debt themselves to enable the club to function as a business.

Tough choices.

"The"

Sorry, but it bugs me you went to such great lengths to "AH" up your thread.

I'm not convinced the two situations are so similar. For a start, I think had Liverpool not been dangling in the relegation zone, they'd have been happy to write the year off, go into administration, and start afresh with new owners. Because of United's situation, they'll see bankrupcy before they see administration (although Glazers would bail before that).

Also, the difference in revenue means a lot. United have a lot more cash at hand, which means they can reinvest some of it, in the hope that will increase income. It means a players "value" to the club has to outweigh it's cost, which is iffy. But at least it suggests players will be bought.

My personal belief is that in the next 6/7 years the Glazers will leave a moderately functioning club behind. And the rebuilding begins. And then we use the highest earnings in world football to rebuild, at a time when the Chelseas and Man City's are coping with keeping the ratio of their outgoings and income at a Uefa/Fifa prescribed level.

davyjose

OPENROAD wrote: »

Didn't see many complaining when they were paying big transfer fees for the likes of Rio, Carrick etc....;)

You're missing the point. I have had nothing but raw, votive hatred for Liverpool from an age I was far to young to hold such emotions, yet I was chuffed when they didn't get docked 9 points, and found a solvent owner.

Can you really not see how money has p!ssed all over this game?

It's a bunch of Billionaires in the backroom, rolling the dice, lighting each others' cigars and cackling over their day's tycooning. It's act 1 from the movie trading places, and yes it's ruining the game.

I'm not going to sit here and discuss the morals of football 20 years ago. I was a kid. I'm aware United were better placed for success than Coventry. But I was also aware that success came after a long hard road of letdowns and heartbreak no kid should suffer (I remember Leeds '91 as one of the darkest times of my life). And in fairness to Liverpool and Arsenal, they've seen some gaps between the glory days. And in fairness x 2, City and Chelsea have seen even darker days (therein lies the conundrum - what is fair?). But when it comes to the point where some cùnt with 10 billion in the bank comes along with his checkbook and changes the shape, and dynamics, of the game forever ... for his own, fcuking, selfish end, and when it's irrelevant to the prick in question whether that happens to help the club, or hinder the club, then YES!!! I freely admit, I think money is ruining football!

Degag

My only conclusion is that this guy missed alot of Junior Infants because one of the first words i learnt how to spell there was "the" and he's fairly inept at using it.

Good read none the same.

OPENROAD

davyjose wrote: »

You're missing the point. I have had nothing but raw, votive hatred for Liverpool from an age I was far to young to hold such emotions, yet I was chuffed when they didn't get docked 9 points, and found a solvent owner.

Can you really not see how money has p!ssed all over this game?

It's a bunch of Billionaires in the backroom, rolling the dice, lighting each others' cigars and cackling over their day's tycooning. It's act 1 from the movie trading places, and yes it's ruining the game.

I'm not going to sit here and discuss the morals of football 20 years ago. I was a kid. I'm aware United were better placed for success than Coventry. But I was also aware that success came after a long hard road of letdowns and heartbreak no kid should suffer (I remember Leeds '91 as one of the darkest times of my life). And in fairness to Liverpool and Arsenal, they've seen some gaps between the glory days. And in fairness x 2, City and Chelsea have seen even darker days (therein lies the conundrum - what is fair?). But when it comes to the point where some cùnt with 10 billion in the bank comes along with his checkbook and changes the shape, and dynamics, of the game forever ... for his own, fcuking, selfish end, and when it's irrelevant to the prick in question whether that happens to help the club, or hinder the club, then YES!!! I freely admit, I think money is ruining football!

I know what you are driving at and I agree with you to a large extent.

But look at the approach Arsenal have taken, actually the approach Arsenal have always taken but in particular in the last six years. Arsenal as a club have been effectively run like a business should be run. They haven't gone out and spent over the odds for players, they have funds available for transfers but these funds are from income generated from the football side of things.

Now I know exactly what you are saying, but my point still stands regarding transfers. Just look at some of the transfers over the last few years and prices paid, and most supporters haven't complained that they have paid well over the odds for players.

Lukker-

OPENROAD wrote: »

I know what you are driving at and I agree with you to a large extent.

But look at the approach Arsenal have taken, actually the approach Arsenal have always taken but in particular in the last six years. Arsenal as a club have been effectively run like a business should be run. They haven't gone out and spent over the odds for players, they have funds available for transfers but these funds are from income generated from the football side of things.

Now I know exactly what you are saying, but my point still stands regarding transfers. Just look at some of the transfers over the last few years and prices paid, and most supporters haven't complained that they have paid well over the odds for players.

And thats why they havent won anything in 5 years..

Arsenal are a good example of a well run business but that's because Wenger is more like an accountant then a manager sometimes.

He seems to prefer pleasing the shareholders more then pleasing the fans, he obviously has the ability to spot a bargain and always has an eye on the future but they are always going to be 1 or 2 major signings away from suceeding at the very top level.

OPENROAD

Lukker- wrote: »

And thats why they havent won anything in 5 years..

Arsenal are a good example of a well run business but that's because Wenger is more like an accountant then a manager sometimes.

He seems to prefer pleasing the shareholders more then pleasing the fans, he obviously has the ability to spot a bargain and always has an eye on the future but they are always going to be 1 or 2 major signings away from suceeding at the very top level.

Are you not missing the fact that we have moved stadiums ? Its not a case of pleasing the shareholders, its a case of ensuring the club will be on solid foundations for a long time to come. Also it would have been very easy to go out and buy a couple of players, but where does that leave the kids coming through.

As for not pleasing the fans, that is clearly not the case, as I said all games are sell outs, thousands are on waiting lists. I have certainly no problems not winning anything for the last five years, I can see the bigger picture.

Liam O

OPENROAD wrote: »

I know what you are driving at and I agree with you to a large extent.

But look at the approach Arsenal have taken, actually the approach Arsenal have always taken but in particular in the last six years. Arsenal as a club have been effectively run like a business should be run. They haven't gone out and spent over the odds for players, they have funds available for transfers but these funds are from income generated from the football side of things.

Now I know exactly what you are saying, but my point still stands regarding transfers. Just look at some of the transfers over the last few years and prices paid, and most supporters haven't complained that they have paid well over the odds for players.

It's funny how you go from pretty much praising Arsenal for something and then go and criticise United for the same thing. You think United went into debt to buy the likes of Veron and Rio? No they were the epitome of a well run club and something Arsenal, no matter how much they expanded, couldn't compete with on a commercial level.

OPENROAD

Liam O wrote: »

It's funny how you go from pretty much praising Arsenal for something and then go and criticise United for the same thing. You think United went into debt to buy the likes of Veron and Rio? No they were the epitome of a well run club and something Arsenal, no matter how much they expanded, couldn't compete with on a commercial level.

No and I never said that and I agree at the present time Utd are ahead of Arsenal commercially

The point was made that money was ruining football, I just pointed out that people were not complaining when huge amounts were been paid out in transfer fees.

Just because you are commercially successful at a given time doesn't mean you go out and over spend on a player, sometimes you have to say no, that valuation is too much. And in fairness to Fergie he has acknowledged this. By the way the post you have quoted in your reply to me was not specifically directed at Utd.

Dont be at yourself

Sideshow Mark wrote: »

Go on then, I read it all. Tv unbundling is never going to happen in the life of the Premier League. As evidenced by the Ronaldo sale, the Glazers are going to sell off their assets to either take the profit back or reduce the debt. As with Liverpool no money is going to go into strengthening the squad, and as a result United will follow Liverpool into the Uefa league for a few seasons.

TV unbundling isn't necessarily the holy grail. If clubs can negotiate their own internet rights, Liverpool, United etc will make a fortune.

mike65

A snippet from David Conns Guardian article today

Manchester United have paid £487m bank interest, charges and fees – around the cost of building the 2012 Olympic stadium – to service the Glazers' 2005 takeover. Despite that, the total owed has grown to that eye-watering £769m.

MaceFace

I am still waiting for Le King, or anyone else to show how United can work themselves out of this mess.

Just like Leeds, United are reliant on getting to the later stages of the CL, and the occassional (1 in 3) League win.
If all this happened two years ago I would not be as concerned for United, but City have changed everything - now there are two heavy weights to fight against.

K-9

MaceFace wrote: »

I am still waiting for Le King, or anyone else to show how United can work themselves out of this mess.

Just like Leeds, United are reliant on getting to the later stages of the CL, and the occassional (1 in 3) League win.
If all this happened two years ago I would not be as concerned for United, but City have changed everything - now there are two heavy weights to fight against.

Ah, I think you've hit the nail on the head.

Will be interesting to see if anybody will take it on.

PHB

People need to think long-term. United are actually less attractive a prospect than Liverpool. Liveprool still has potential. If you can get tht new stadium, push on from there, there's a real chance to catch up with United, Barca, Madrid.

United are pretty much maxxed out. As much money as can be gotten from tickets has been gotten. The stadium is pretty close to capacity, and any further developments would cost a massive amount of money. Commercially we are really pushing the boundaries in terms of sponsorship and merchandising, and the TV rights deal is collectively locked in. The only real opportunity is further increases in the TV rights deal, and inflation adjusted growth. As a business, without debt, the Glazers have got it running to its maximum capacity.

But then there's the debt. The debt which nobody can see any way to pay. The debt which was never in the initial plan. The takeover was pre-crisis, the PIKs were never meant to mature like they are going to. They were meant to be re-financed, but there's no cheap credit anymore. As such, the Glazers have no real way to pay them off, and imo will eventually have to sell the club because of them. But what can they do in the meantime? Keep paying a ****load of fees to the entire family. Keep taking money out of the club any way they can, including payouts. Eventually, they will have to sell the club, but the longer they hold on, the more money they can take out.

Once they move on, either the banks or themselves will pick who it is sold to. Whatever the value of the club, even if its like 1 billion, and the debts are fully matured to be around 800 million, if the new owners have the cash reserves, they can clear the debt, and the club will be extremely profitable.

But, that's based on current success. Our commercial side, and our merchandising side, and our ticket sales, are based on success. The latter is especially true with the massive ticket prices pushing out long term fans and replacing them with the leaving 5 minutes early brigade. We've had to sell our two best players. We have no reasonable expectation that we are going to invest heavily to fix that. Inter sold Ibrahomic for c. 66 million, re-invested it all into the squad, and won the treble. That's what could have happened for us, but it didn't. We are slipping now as a squad, with players retiring/leaving, and the quality not being replaced. Unless we get extremely extremely lucky, like Golden Generation lucky, with our youth system, we are in trouble. Even if the Glazers are gone in 5 years, which I think most would expect to happen, we may well be outside the top 4 by then, and look how hard it is to get back to the top of the league.

#15

That's a good post PHB, bar the bit about squad re-investment which is a bit more debatable.

It's hard to see an end-game in all this.

The only way the Glazers can increase income is through continued success on the pitch, or through individual TV rights. I think they have bet the house on the TV rights issue. That's just a personal hunch though.

super_furry

United's and the Glazer's big hope is individual television rights. If they can somehow force through a system similar to the US when teams negotiate the sale of their TV indivdually, they'll be set forever.

The Texas Rangers have just signed a £3billion 20-year contract for their rights and if you're going to go by global interest, United could probably double that. However, there is no real possibility of that happening right now.

Boskowski

It would be very bad for the league and I don't think it would be good for United either.

Plus, I certainly wouldn't pay more for my Sky subscribtion so that I can continue to watch fkn United. They will be unwatched then as far as I am concerned. A lot of people will think like this unless they're United supporters. So that means that they would be effectively increasing the squeeze on their own supporters even more so...those guys will be needing two subscriptions then.

I do realize that people on the Isles are willing to fork out more for their clubs than on the continent but surely any time soon that point will be reached where price increases are going decrease actual revenue. I can't quite remember what you call that point. The one the Irish government actually lost sight of years ago when it comes to excise duty on cigarettes.

Dont be at yourself

Boskowski wrote: »

It would be very bad for the league and I don't think it would be good for United either.

Plus, I certainly wouldn't pay more for my Sky subscribtion so that I can continue to watch fkn United. They will be unwatched then as far as I am concerned. A lot of people will think like this unless they're United supporters. So that means that they would be effectively increasing the squeeze on their own supporters even more so...those guys will be needing two subscriptions then.

A lot of people subscribe to Sky JUST to watch United. Individual TV deals will be great - at least in the short term - for United, Liverpool, Chelsea etc. Barca and Madrid are cleaning up with their deals, and I dare say the English clubs would attract even bigger deals.

Boskowski

NekkidBibleMan wrote: »

A lot of people subscribe to Sky JUST to watch United. Individual TV deals will be great - at least in the short term - for United, Liverpool, Chelsea etc. Barca and Madrid are cleaning up with their deals, and I dare say the English clubs would attract even bigger deals.

But it would widen the gap between the 'big clubs' and the others therefore decreasing the attractiveness of the league which in return cannot be good even for the top dogs in that same league in the long run.

Dont be at yourself

Boskowski wrote: »

But it would widen the gap between the 'big clubs' and the others therefore decreasing the attractiveness of the league which in return cannot be good even for the top dogs in that same league in the long run.

Yep, I agree. And I'm sure La Liga will move towards a collective pay deal sooner rather than later.

But from United's point of view, they need to get that 1,000lb gorilla of debt off their back. As the most marketable club on the planet, taking their broadcast deal in-house would do that. Short-term, it would be a massive gain for them.

I don't know if it needs a majority approval from PL clubs, but I'm sure they'll be exploring every option to make it happen.

recylingbin

NekkidBibleMan wrote: »

I don't know if it needs a majority approval from PL clubs, but I'm sure they'll be exploring every option to make it happen.

I'd be almost certain it would.
Not a hope of any more than about 4 or 5 of them wanting it.

Boskowski

NekkidBibleMan wrote: »

Yep, I agree. And I'm sure La Liga will move towards a collective pay deal sooner rather than later.

But from United's point of view, they need to get that 1,000lb gorilla of debt off their back. As the most marketable club on the planet, taking their broadcast deal in-house would do that. Short-term, it would be a massive gain for them.

I don't know if it needs a majority approval from PL clubs, but I'm sure they'll be exploring every option to make it happen.

Ye, I agree. They must take some action. Because it has the potential to break the club. And when I say potential I don't really mean that. It will certainly break the club, it's just I would trust somehting to happen before it comes to that.

ShooterSF

PHB wrote: »

As such, the Glazers have no real way to pay them off, and imo will eventually have to sell the club because of them. But what can they do in the meantime? Keep paying a ****load of fees to the entire family. Keep taking money out of the club any way they can, including payouts. Eventually, they will have to sell the club, but the longer they hold on, the more money they can take out.

But if they take money out of the club making it less competitive you will decrease the revenue of the club (prize money, sponsorship, fan base all decrease). Does that not decrease the value of the club?

For example if you take 10 million out of the club and revenue drops 3 million from the reduction (lack of re-investment causes poorer performances) as well as further debt from interest the clubs value could drop by 10 million or so anyway.

PHB

ShooterSF wrote: »

But if they take money out of the club making it less competitive you will decrease the revenue of the club (prize money, sponsorship, fan base all decrease). Does that not decrease the value of the club?

For example if you take 10 million out of the club and revenue drops 3 million from the reduction (lack of re-investment causes poorer performances) as well as further debt from interest the clubs value could drop by 10 million or so anyway.

Well the general theory behind that is that the Glazers realise that they have ****ed up the club now. They won't accept bids of less than 1 bn, which is apparently what the Red Knights said that they were asking for. It suggests that they realise that they are not going to be able to make a profit on the sale of the club, and that all they can do now is make a personal profit through fees and dividends etc.

Leiva

PHB wrote: »

People need to think long-term. United are actually less attractive a prospect than Liverpool. Liveprool still has potential. If you can get tht new stadium, push on from there, there's a real chance to catch up with United, Barca, Madrid.

United are pretty much maxxed out. As much money as can be gotten from tickets has been gotten. The stadium is pretty close tBo capacity, and any further developments would cost a massive amount of money. Commercially we are really pushing the boundaries in terms of sponsorship and merchandising, and the TV rights deal is collectively locked in. The only real opportunity is further increases in the TV rights deal, and inflation adjusted growth. As a business, without debt, the Glazers have got it running to its maximum capacity.

But then there's the debt. The debt which nobody can see any way to pay. The debt which was never in the initial plan. The takeover was pre-crisis, the PIKs were never meant to mature like they are going to. They were meant to be re-financed, but there's no cheap credit anymore. As such, the Glazers have no real way to pay them off, and imo will eventually have to sell the club because of them. But what can they do in the meantime? Keep paying a ****load of fees to the entire family. Keep taking money out of the club any way they can, including payouts. Eventually, they will have to sell the club, but the longer they hold on, the more money they can take out.

Once they move on, either the banks or themselves will pick who it is sold to. Whatever the value of the club, even if its like 1 billion, and the debts are fully matured to be around 800 million, if the new owners have the cash reserves, they can clear the debt, and the club will be extremely profitable.

But, that's based on current success. Our commercial side, and our merchandising side, and our ticket sales, are based on success. The latter is especially true with the massive ticket prices pushing out long term fans and replacing them with the leaving 5 minutes early brigade. We've had to sell our two best players. We have no reasonable expectation that we are going to invest heavily to fix that. Inter sold Ibrahomic for c. 66 million, re-invested it all into the squad, and won the treble. That's what could have happened for us, but it didn't. We are slipping now as a squad, with players retiring/leaving, and the quality not being replaced. Unless we get extremely extremely lucky, like Golden Generation lucky, with our youth system, we are in trouble. Even if the Glazers are gone in 5 years, which I think most would expect to happen, we may well be outside the top 4 by then, and look how hard it is to get back to the top of the league.

Excellent post and honest to the core from a true fan.

Hope you can shake the Glazers out of your club like we have with G&H.

Football matters should be sorted on the field .
I just hope Liverpool have Man Utd on their knees during 90mins and not due to the scourge that is leveraged buyouts / Glazers.

K-9

breaking news ssn

rooney confirms he wants to leave as meeting with gill last week confirmed man united cant guarantee they can keep attracting top class players>>>>>>>>


Looks like the whole Rooney thing has just highlighted that the £150 Million to spend on players is complete hogwash.

Gill will say what the owners tell him to and spin everything to look favourable for them.

Surely the penny must drop now for any who doubted previously.