A Detailed Look at United's Finances

[11101]

With the interest rate so low i wouldnt be surprised in the were looking at taking on more debt when its cheap tbh

That's what i was going to post. We are in good shape and it's an ideal time to get cheap money - though i would think we would draw down on some of our credit line first.

We spent 178m on player acquisitions last year and i assume we are still on the hook for a chunk more this season (150m according to @Infra-red) , but it won't be enough to put us in any danger. I think we will still buy this summer but there will be no records broken.

 

[romufc]

I know the finances might look bleek but we should wait to see what other clubs report. the losses are from match day revenue and TV money, which I assume every club will have lost out on? Considering that we at still up on the revenue?

 

[UnitedFan93]

We are also owed money in transfer fees as well and the money we owe teams are usually paid over a duration of years anyway not immediately. Plus this is a debt we`ve always had for years and it has never stopped us from spending.

We've spent a lot of money on the squad over the years (because this drives commercial revenues), however very little money has been invested in OT and the training complex. This has allowed rival clubs to close the gap on us in these areas.

The debt has meant we've had to prioritise where money is spent, when really a club of United's size should have money available to invest in all areas of the club, both on and off the pitch, to ensure we stay ahead of the pack.

 

[gajender]

Been looking for this figure whenever people say to just spread every massive transfer across three years. That thing adds up to the point where every future budget is paying for old transfers. It has to be controlled tightly at some point. No real surprise we decided to pay Maguire's fee upfront

No body decides to pay full payment upfront unless selling team insists upon it .

 

[limerickcitykid]

We've spent a lot of money on the squad over the years (because this drives commercial revenues), however very little money has been invested in OT and the training complex. This has allowed rival clubs to close the gap on us in these areas.

The debt has meant we've had to prioritise where money is spent, when really a club of United's size should have money available to invest in all areas of the club, both on and off the pitch, to ensure we stay ahead of the pack.

Our training ground was only built less than 20 years ago with major expansion to it 7 years ago. What is it lacking?

 

[Greck]

No body decides to pay full payment upfront unless selling team insists upon it .

Weird thing to take issue with. If they demand it we still have the decision to walk away if it's an unfavourable arrangement. We decide to do so in the same way any party to anything decides to co-consent. No one is saying we walked into the negotiation demanding to pay upfront or even proposed it

 

[UnitedFan93]

Our training ground was only built less than 20 years ago with major expansion to it 7 years ago. What is it lacking?

Nothing when you look at it solely on it's own.

However when you compare it to what other clubs have built or are building then it's dated. Major clubs all over Europe have built/ are building state of the art complexes with mini youth stadiums, on site accommodation, etc.

It's really down to ambition at the end of the day, and for the biggest club in the world, we lack ambition. We used to have it but then unfortunately the Glazers arrived.

 

[limerickcitykid]

Nothing when you look at it solely on it's own.

However when you compare it to what other clubs have built or are building then it's dated. Major clubs all over Europe have built/ are building state of the art complexes with mini youth stadiums, on site accommodation, etc.

It's really down to ambition at the end of the day, and for the biggest club in the world, we lack ambition. We used to have it but then unfortunately the Glazers arrived.

Carrington is a state of the art complex. It had a major renovation just 7 years ago. It has its own bloody hospital inside it.

We don’t need a mini youth stadium. There is virtually no benefit to having that. Nor do we need onsite accommodation. Why would we ever need that? Carrington has sleeping rooms and beds. It doesn’t need a hotel.

If we lacked ambition we wouldn’t have put £60m into renovating just 7 years ago.

Your whole argument comes down to a youth stadium and a hotel, neither of which have any benefit or are needed.

 

[red thru&thru]

Nothing when you look at it solely on it's own.

However when you compare it to what other clubs have built or are building then it's dated. Major clubs all over Europe have built/ are building state of the art complexes with mini youth stadiums, on site accommodation, etc.

It's really down to ambition at the end of the day, and for the biggest club in the world, we lack ambition. We used to have it but then unfortunately the Glazers arrived.

You forget that the Glazer's have bought a lot of property in and around OT. It's not for just the fun of it. It costs a lot of money. They have plans. IMO, it will be around something that Gary Neville mentioned recently and bringing a mini Manchester United village

 

[UnitedFan93]

Carrington is a state of the art complex. It had a major renovation just 7 years ago. It has its own bloody hospital inside it.

We don’t need a mini youth stadium. There is virtually no benefit to having that. Nor do we need onsite accommodation. Why would we ever need that? Carrington has sleeping rooms and beds. It doesn’t need a hotel.

If we lacked ambition we wouldn’t have put £60m into renovating just 7 years ago.

Your whole argument comes down to a youth stadium and a hotel, neither of which have any benefit or are needed.

The £60 million is the total amount invested in the training ground. This includes the original development cost as well as the renovation work that you talk about. The Glazers have invested £25 million in total, just slightly more than what they take out each year in dividends.

I agree money has been spent, just not enough. The same could be said of OT.

 

[worldgonemad]

You forget that the Glazer's have bought a lot of property in and around OT. It's not for just the fun of it. It costs a lot of money. They have plans. IMO, it will be around something that Gary Neville mentioned recently and bringing a mini Manchester United village

Thats interesting . Do you have any links as to what they have bought and over how long a period?

 

[sglowrider]

Man Utd on their own broadcasting service could make a lot more than the current deal allows. If the broadcasters are also going to play hard with the refunds now, the big clubs like United should use their clout to put them in their place or pull out from the collective deal.

I'm sure, if there is a legitimate threat of Manchester United pulling out the broadcasters will eventually play nice.

How many subs does MUTV have?

 

[roseguy64]

Been looking for this figure whenever people say to just spread every massive transfer across three years. That thing adds up to the point where every future budget is paying for old transfers. It has to be controlled tightly at some point. No real surprise we decided to pay Maguire's fee upfront

Yeah that's why we did that with our transfers this season. Paid all or a good amount up front to allow some flexibility this upcoming window.

 

[Member 117152]

Rival fans laughing at our finances etc because their clubs are apparently so well run. Such strong financial

The fact is our club wouldn’t be taking on debt if there wasn’t a reason for it & sometimes as others have said not all debt is bad debt.

I’m pretty sure our club is one of the least affected by the coronavirus. Rivals just like to pat themselves on the back to feel better since we have been getting better on the pitch.

They always need a reason discredit us. In reality our club has more credit than they do and can do more in any economic climate.

 

[Adisa]

The Athletic says we've already drawn on the loan facility.

 

[red thru&thru]

Thats interesting . Do you have any links as to what they have bought and over how long a period?

https://www.google.com/amp/s/www.mi...ester-uniteds-owners-been-buying-11520814.amp

One of many articles.

 

[Acquire Me]

Very good detailed post. As I was saying earlier, we're fine. People just need to see beyond what they see in sensational headlines and listen to actual football finance experts.

TBF, it is not easy to understand business finance without a proper education and/or working with business finance.

I understand business finance on a ok level because of education and that we deal with bits and parts of that in our company. That said, I wish the club would break it down for us a bit better, since we do care about it. Doing that would probably stop some bullshitters running stupid stories about our finances.

 

[Crimson King]

TBF, it is not easy to understand business finance without a proper education and/or working with business finance.

I understand business finance on a ok level because of education and that we deal with bits and parts of that in our company. That said, I wish the club would break it down for us a bit better, since we do care about it. Doing that would probably stop some bullshitters running stupid stories about our finances.

As someone who doesn't have a head for business at all it can be very confusing. I'm generally suspicious of the apocalyptic type nonsense the papers run with, especially as they've been writing stories like that one way or another for most of my life, but even some of the more respected journos at papers like the Guardian have been weighing in with it recently.

You want to trust the club and believe that they know what they're doing, but like most fans I don't trust the Glazers as far as I could throw them.

Thankfully there's a forum and thread like this one where I can usually find a bit more expertise and balance to assuage my fears.

Usually...

 

[red thru&thru]

TBF, it is not easy to understand business finance without a proper education and/or working with business finance.

I understand business finance on a ok level because of education and that we deal with bits and parts of that in our company. That said, I wish the club would break it down for us a bit better, since we do care about it. Doing that would probably stop some bullshitters running stupid stories about our finances.

Totally agree. But again with my limited knowledge of business, not too sure how much businesses have so much clarity?

I have read the clubs MOST and it's all commercially driven, very little on the footballing side.

 

[Acquire Me]

As someone who doesn't have a head for business at all it can be very confusing. I'm generally suspicious of the apocalyptic type nonsense the papers run with, especially as they've been writing stories like that one way or another for most of my life, but even some of the more respected journos at papers like the Guardian have been weighing in with it recently.

You want to trust the club and believe that they know what they're doing, but like most fans I don't trust the Glazers as far as I could throw them.

Thankfully there's a forum and thread like this one where I can usually find a bit more expertise and balance to assuage my fears.

Usually...

I really appreciate this forum because in time some people will break it down or find others who have done it. It’s not easy to do this without both understanding and taking time to analyse the data.

Totally agree. But again with my limited knowledge of business, not too sure how much businesses have so much clarity?

I have read the clubs MOST and it's all commercially driven, very little on the footballing side.

You are right, they will probably not release more than they do. But again, it could be smart to do so.Transparency is trust imo. The fans care and want to know what’s going on, good or bad.

 

[red thru&thru]

I really appreciate this forum because in time some people will break it down or find others who have done it. It’s not easy to do this without both understanding and taking time to analyse the data.



You are right, they will probably not release more than they do. But again, it could be smart to do so.Transparency is trust imo. The fans care and want to know what’s going on, good or bad.

With the amount of siblings involved, I'd be amazed if they're all on the same sheet. Some probably want to sell and others probably want to keep hold of United. Won't be easy.

 

[ASL]

The Athletic says we've already drawn on the loan facility.

It is actually in the clubs own SEC filling report. At the bottom of the report it states that:

"As a precautionary measure, in order to increase its cash position, preserve financial flexibility and maintain liquidity in response to the COVID-19 outbreak, follwing the balance sheet date, the group has drawn down £140,000,000 on its revolving facility."

You can read it here (see the very last page):
https://otp.tools.investis.com/clie...gId=14171244&Cik=0001549107&Type=PDF&hasPdf=1

They are saying that after 31st March (the balance sheet date) they have used £140m of the £150m credit facility.

 

[mariachi-19]

So in otherwords, due to covid, it seems like the clubs are unsure of the TV revenue coming in for the last quarter of the season and when they might received it, therefore are borrowing to ensure that it has sufficient cashflow to cover debts for the foreseeable future.

 

[Greck]

It is actually in the clubs own SEC filling report. At the bottom of the report it states that:

"As a precautionary measure, in order to increase its cash position, preserve financial flexibility and maintain liquidity in response to the COVID-19 outbreak, follwing the balance sheet date, the group has drawn down £140,000,000 on its revolving facility."

You can read it here (see the very last page):
https://otp.tools.investis.com/clie...gId=14171244&Cik=0001549107&Type=PDF&hasPdf=1

They are saying that after 31st March (the balance sheet date) they have used £140m of the £150m credit facility.

"...we anticipate a return to play during the month of June 2020.
The ongoing crisis will have a significant impact on full year revenues, operating profit and cash flows for the year ended 30 June 2020. We expect that the widerimpact of COVID-19 on revenue streams and cash flows will vary, but will generally depend on the extent and success of UK and international governmental measures to manage the spread of the disease; the length of time that such measures remain in place, their impact on future consumer behavior and our ability toplay football matches.
Despite the ongoing uncertainty, the Company remains well placed with a strong balance sheet, including cash resources as at 31 March 2020 of £90.3m. All fundsare held as cash and cash equivalents and therefore available on demand.

The Company also has access to a Revolving credit facility, £140m of which was drawndown following the quarter end. The Company has further undrawn facilities of £10m available.

The Company’s debt facilities include the $425m senior secured notes and the $225m secured term loan facility, the majority of which attract fixed interest rates.The Company’s £150m revolving credit facility, secured notes and term loan mature 2025, 2027 and 2029 respectively. As at 31 March, the Company was incompliance with all debt covenants."

Does the bolded say a rise in our total debt is actually because of the new credit facility?

 

[BenitoSTARR]

"...we anticipate a return to play during the month of June 2020.
The ongoing crisis will have a significant impact on full year revenues, operating profit and cash flows for the year ended 30 June 2020. We expect that the widerimpact of COVID-19 on revenue streams and cash flows will vary, but will generally depend on the extent and success of UK and international governmental measures to manage the spread of the disease; the length of time that such measures remain in place, their impact on future consumer behavior and our ability toplay football matches.
Despite the ongoing uncertainty, the Company remains well placed with a strong balance sheet, including cash resources as at 31 March 2020 of £90.3m. All fundsare held as cash and cash equivalents and therefore available on demand.

The Company also has access to a Revolving credit facility, £140m of which was drawndown following the quarter end. The Company has further undrawn facilities of £10m available.

The Company’s debt facilities include the $425m senior secured notes and the $225m secured term loan facility, the majority of which attract fixed interest rates.The Company’s £150m revolving credit facility, secured notes and term loan mature 2025, 2027 and 2029 respectively. As at 31 March, the Company was incompliance with all debt covenants."

Does the bolded say a rise in our total debt is actually because of the new credit facility?

I’ll do my best to explain so bear with!

Loans have maturation dates where they are expected to have their principal paid in full and interest payments cease. It’s kind of like a due date for the loan.

The 425 secured notes mature in 2027 that means 7 years from now they should be paid back to the lender usually the interest
payments stop on this date too.

The 225 secured term loan should also be paid by 2029.

The 150 revolving credit (if used) should be paid by 2025.

So essentially we should be paying off these loans over the next 9 years.

Now the credit facility is essentially a potential extra debt but I haven’t read if we are using it in full exactly now or if we are essentially activating it a bit like an overdraft facility. But essentially anything we do use from it would be added to debts.

EDIT: I can explain more fully if needed but I’m trying to avoid financial terms

EDIT 2: I think it should say in compliance not one word. If that’s the case we’re on schedule for all the above agreements to be settled

 

[Greck]

I’ll do my best to explain so bear with!

Loans have maturation dates where they are expected to have their principal paid in full and interest payments cease. It’s kind of like a due date for the loan.

The 425 secured notes mature in 2027 that means 7 years from now they should be paid back to the lender usually the interest
payments stop on this date too.

The 225 secured term loan should also be paid by 2029.

The 150 revolving credit (if used) should be paid by 2025.

So essentially we should be paying off these loans over the next 9 years.

Now the credit facility is essentially a potential extra debt but I haven’t read if we are using it in full exactly now or if we are essentially activating it a bit like an overdraft facility. But essentially anything we do use from it would be added to debts.

OK thanks

 

[DSG]

Great post by the OP @Lentwood.

I've made this point several times throughout threads on the Caf. We've spent a lot of money since SAF retired, and our issues are not that we don't spend money. It's that we don't spend money on the right players.

SAF had control over the scouting and final say on who to buy. That power was passed to Moyes, LvG and Jose. We learned about half way through the Jose experience that most managers need to win immediately and therefore spend on experienced players rather than engage in squad building for the future. The beginning of the end was when the board came to their senses and did not sanction Jose's request for Boateng / Alderweirald / Maguire. By published accounts, the overhaul of the scouting team and football philosophy began in 2018, I believe.

In retrospect, the hiring of Ed Woodward from a commercial revenue standpoint was actually very good for the club, because he has overseen substantial increases in revenues in the this area. If SAF was still the manager, it probably would have been a decent arrangement because there was no need for a footballing philosophy or a director of football. That was all wrapped up in Sir Alex Ferguson.

There is A LOT of criticism of Woodward in the Caf, with good reason. He's not a football man, and yet, he was allowed to run football operations. SAF retired, there was a power vacuum, Woodward deferred to Moyes, LvG and Jose, and voila, a shiteload of bad transfers.

I blame the board and mostly the Glazers for the deterioration of the squad. They needed to have the management foresight to realize that Woodward was not capable of managing in a way that worked with SAF, because those managers were not of SAF's quality.

Regarding the leveraged buyout of United by the Glazers, it needs to be mentioned that most takeovers / business acquisitions are financed with some sort of loan. The idea is that the profits of the business pay back the loan. Whatever the Glazers paid (was it 750m?), to pay cash for that kind of acquisition size is actually not smart. Also, it was not smart to have such a high interest rate, so that's on the the Glazers.

I'd also mention that the diversified income streams that Woodward has grown and developed are undoubtably going to help us deal with COVID-19 fallout, whereas most other clubs are going to be even more cash poor as revenues will fall even further for them.

 

[Nou_Camp99]

827 million gone on simply servicing the debt. A debt that we didn't create but they did and still stands at close to. 400m. It's an absolute travesty this takeover was ever allowed to happen and anyway defending the Glazers or trying to paint a good picture of this fact is just delusional. They are parasites and don't deserve this club. Scum in fact.

 

[BenitoSTARR]

827 million gone on simply servicing the debt. A debt that we didn't create but they did and still stands at close to. 400m. It's an absolute travesty this takeover was ever allowed to happen and anyway defending the Glazers or trying to paint a good picture of this fact is just delusional. They are parasites and don't deserve this club. Scum in fact.

It’s legal and the debt is being managed.

I don’t like how it’s been done but despite it we’re still better off than most.

 

[red thru&thru]

Glazer's biggest downfall is letting Ed be in charge of football for too long. But as alluded to before, Malcolm's death would have disturbed United a lot, with the rest of their assets. It probably only now getting resolved and hopefully Joel and Avram can direct the club into a new dawn.

The stadium renovation would be another great project too.

 

[UnitedFan93]

827 million gone on simply servicing the debt. A debt that we didn't create but they did and still stands at close to. 400m. It's an absolute travesty this takeover was ever allowed to happen and anyway defending the Glazers or trying to paint a good picture of this fact is just delusional. They are parasites and don't deserve this club. Scum in fact.

Totally agree.

The reality is the club is still paying for it's own takeover and despite all the money (£827 million) that has already been lost, the Glazers still take out over 20 million each year in dividends.

The fact that they're the only owners in the Premier League to pay themselves dividends is rather telling. They exploit the supporters loyalty by extracting as much money from the club as possible. They take fans money and use it to line their own pockets or subsidize the Buccaneers, when really this money should be invested in OT etc. Scum.

 

[Greck]

Glazer's biggest downfall is letting Ed be in charge of football for too long. But as alluded to before, Malcolm's death would have disturbed United a lot, with the rest of their assets. It probably only now getting resolved and hopefully Joel and Avram can direct the club into a new dawn.

The stadium renovation would be another great project too.

I think Ed is just the face. He doesn't make football decisions alone, he does them in conjunction with the active Glazers. If he acted alone and kept shitting the bed someone upstairs would have diluted his power by now.

 

[Redjazz]

So in otherwords, due to covid, it seems like the clubs are unsure of the TV revenue coming in for the last quarter of the season and when they might received it, therefore are borrowing to ensure that it has sufficient cashflow to cover debts for the foreseeable future.

Yeah, except it not really about covering debt so much as covering short term cash needs however they arise. COVID introduces uncertainty wrt timing and size of revenues.
Having cash from the revolving facility is insurance against that uncertainty.
The revolving credit facility is a short term debt instrument requiring nearly complete repayment in the near term (typically within a year), so it's not an instrument for long term borrowing.

 

[arnie_ni]

It’s legal and the debt is being managed.

I don’t like how it’s been done but despite it we’re still better off than most.

It shouldnt be legal is probably more what he's saying

 

[BenitoSTARR]

It shouldnt be legal is probably more what he's saying

I appreciate that and it pisses me off as much as the next person but it happened and we’re out of the worst of it.

It’s a bit too late in the day to expect them to leave as their investment is working well for them and has been for many years.

It sickens me that it was able to happen but it was legal and we’ve managed to get through debts and service them on schedule. Equally as a result of their takeover I do think we’ve improved our commercial side which we’ll benefit from once they leave too.

 

[BenitoSTARR]

Yeah, except it not really about covering debt so much as covering short term cash needs however they arise. COVID introduces uncertainty wrt timing and size of revenues.
Having cash from the revolving facility is insurance against that uncertainty.
The revolving credit facility is a short term debt instrument requiring nearly complete repayment in the near term (typically within a year), so it's not an instrument for long term borrowing.

I think it’s better to refer to it kind of like an overdraft.

I feel like that explains it pretty well in laymen’s terms.

 

[arnie_ni]

I appreciate that and it pisses me off as much as the next person but it happened and we’re out of the worst of it.

It’s a bit too late in the day to expect them to leave as their investment is working well for them and has been for many years.

It sickens me that it was able to happen but it was legal and we’ve managed to get through debts and service them on schedule. Equally as a result of their takeover I do think we’ve improved our commercial side which we’ll benefit from once they leave too.

Oh def, i agree, i just dont think someone buying a business from someone else should be able to endebt that business to pay for it before they even fully own it.

The loans should be in their own names

 

[Gasolin]

I think Ed is just the face. He doesn't make football decisions alone, he does them in conjunction with the active Glazers. If he acted alone and kept shitting the bed someone upstairs would have diluted his power by now.

It's completely unfounded, but there is a guy on Twitter who keeps saying that Ed has been found out and was in fact responsible for some of the worst decisions in the last years after SAF. And apparently, this is where Ole is coming in to instill the football knowledge and all... I don't think much about it, but I do agree that something has changed with Manchester United under Ole. The club behaves like a football club, the club tries to make sure players behave like football players, the club focuses on the football side of things. And I like it. I think world class players can also see something has changed with Manchester United, especially the recruitment.

 

[red thru&thru]

It's completely unfounded, but there is a guy on Twitter who keeps saying that Ed has been found out and was in fact responsible for some of the worst decisions in the last years after SAF. And apparently, this is where Ole is coming in to instill the football knowledge and all... I don't think much about it, but I do agree that something has changed with Manchester United under Ole. The club behaves like a football club, the club tries to make sure players behave like football players, the club focuses on the football side of things. And I like it. I think world class players can also see something has changed with Manchester United, especially the recruitment.

Any links of this guy from Twitter? DM if you can as I know people only like the tier 1 sources. Cheers.

 

[UnitedFan93]

The Glazers have been a total disaster for the club. When they finally leave and their debt is cleared it will be one of the best days in United's history as the club will start growing again. However, until then, we're stuck with the Glazers treating us as their personal ATM machine.