Or Gill is good at talking shit ......
ALL issues relating to the bond issue and club finances
- Thread starter sammsky1
- Start date
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Or Gill is good at talking shit ......
Well yes. I imagine the bloke wrote the article having looked into things a little more than simply relying on Gill's spiel though.
Yep, but neither is a disaster and indeed both may be preferable to what we have now.
Seems to suggest that they're going to struggle to get under 9% though. Which would see the annual interest payments rise (I think - someone may be able to do the maths).
Hmmm... would we prefer to be shot or stabbed?
He talks the Glaziers talk
If they ended up paying 10 or 11% then the whole exercise would be one big waste of time - I guess we will find out in the next couple of weeks how much interest there has been in buying the bonds.
I have not seen any dates anywhere on what date the bonds are supposed to be issues etc so I dont think we know the exact timescale as yet
I have not seen any dates anywhere on what date the bonds are supposed to be issues etc so I dont think we know the exact timescale as yet
Do we know at what rate the banks will take the bonds if there is not sufficient interest? If that's how it works?
11% equates to around 55 million in interest (on the bond) alone...
Do we know at what rate the banks will take the bonds if there is not sufficient interest? If that's how it works?
No we dont know - I commented on exactly this point in the main Glazer thread
I am seeing a lot of conflicting stories about whether people think these bonds are a good investment or not.
From the ones I've seen the concensus (of those who have spoken to the media) appears to be "might be worth a punt, but not at 8.5%".
The main driver seems to be to pay down the PIKS.
Current exposure:
£500M @ 7%ish = £35M
£200M @ 14.25%= £28.5M (and compounding)
Implies crudely that a coupon of up to 12% might be good on balance (without going into a complex discussion about the value of the £200M and the effects of compounding).
If I m not wrong at the moment the 500M is at 5-5.5% and not 7% ish so current exposure is
£500M @ 5.5%ish = £27.8M
£200M @ 14.25%= £28.5M
Which is roughly the same figure that the club will pay for the bonds alone (assuming 11% rate).
However while the bond rate is fixed, the interest rate on the current loan is not and if interest rates go up, so will payments on the loan...
Obviously it means a vastly better outcome for the Glazers come 2017 (i.e. they will owe around £6-700m, not £1.1bn), but between now and then it could increase the amount annually going out the club? So they would need to get 9% (which it sounds like they will be lucky to get) in order to match the £45m p.a. being paid at the moment.
And that's not taking into account the remaining PIKs and the £75m which is going to be borrowed?
Question I have on this bond issue.
Basically who is it aimed at?
I can tell from a skimmed reading of the Prospectus and from the road show they are looking for big investors with a fair bit of money.
The question I have is this bond issue open to anyone, similar to the way shares were when we were a PLC and as a consequence of that, does it give investors any say in how the club is run. This can be re-worded into the simple question is there any threshold on the amount of money that has to be invested for this bond issue or similarly any criterion limiting who could invest?
I could be way off but this bond issue has come very quickly and as the Prospectus open up a whole myriad of issues there is a vast amount of specifics unanwered.
Basically who is it aimed at?
I can tell from a skimmed reading of the Prospectus and from the road show they are looking for big investors with a fair bit of money.
The question I have is this bond issue open to anyone, similar to the way shares were when we were a PLC and as a consequence of that, does it give investors any say in how the club is run. This can be re-worded into the simple question is there any threshold on the amount of money that has to be invested for this bond issue or similarly any criterion limiting who could invest?
I could be way off but this bond issue has come very quickly and as the Prospectus open up a whole myriad of issues there is a vast amount of specifics unanwered.
I thought the remaining PIKs were being paid using the Ronaldo money, would it not be remaining PIKs or £75m depending on which would have a lower rate?
the bond would not give owners a say in the running of the club... just as buying government bonds does not give a say in the running of a country.
they will be aimed at people who have cash lying around to invest and due to the low interest rates available many may be tempted to do so... many are at the momeny in fact CREDIT MARKETS: Investors Pile Into Corporate Bonds - WSJ.com... given the debts that united have and the fact that the galzers may be under preassure to sell i would expect that we will need to offer a pretty good rate of return to stand out in a crowded market... united airlines for example are offering 9.875% so dont expect a massive saving compared to our current interest rates
About Corporate Bonds
i would imagine they would be aiming the issue primarily at the investment bank / fund manager market as people begin to restructure portfolios with a higher bias of bonds that offer a reasonable rate of return
Good post , informative
The 10 Most Valuable Teams In Sports
No. 1 Manchester United
English Premier League
Value: $1.87 billion
Arguably the strongest sports brand in the world, Man-U fetched a record $1.45 billion when Malcolm Glazier bought it in 2005.
How much did the Great Recession whack pro sports? It depends on who you ask. Many teams have suffered downturns in revenue and valuation, but for the richest franchises, life is still good.
Despite the wretched economy, the roster of clubs worth more than a billion dollars has remained stable. In fact, membership grew by one (to 25) since last January, with Germany's Bayern Munich soccer club joining four other European soccer franchises, the New York Yankees and 19 NFL teams.
Topping the list for the second straight year is Manchester United, the English Premier League soccer powerhouse that boasts a worldwide fan base. Man-U's valuation grew 4% to $1.87 billion between April 2008 and April 2009 on a 9% increase in revenue. Other billion-dollar soccer clubs include Real Madrid ($1.35 billion), Spain's historic power, and the Premier League's Arsenal ($1.2 billion) and Liverpool (just over $1 billion; finishing just out of the top 10).
In Pictures: The Most Valuable Teams In Sports
The economic downturn has affected various sports leagues differently over the past year. European soccer, with long-term broadcasting and sponsorship deals, has mostly sidestepped the recession. Clubs gained 7.7% or $42 million per team during the 12 months that ended last April.
Why? The sport is simply more embedded in Europe than the typical American sport is across the Atlantic, says Rob Tilliss, president of Inner Circle Sports, an industry M&A firm based in New York.
"You've got more fans keeping their tickets in a recessionary environment," he says.
The recession has been more visible in the U.S., with the hurt distributed along class lines. The rich had few problems, with the bulk of the highest-valued teams in the NFL, NBA, MLB and NHL holding their own or growing, while negative growth hit the poor and middle class. In the NFL, where the average franchise value inched down about a half a percentage point, the 10 most valuable franchises gained a collective $164 million in value; the rest of the league lost a combined $303 million. Six NFL clubs appear on our top 10 list, led by the Dallas Cowboys and Washington Redskins.
Major League Baseball, where rich clubs help the poor through revenue sharing, suffered a classic middle-class squeeze. Valuation gains showed up in the top six spots and in seven of the bottom nine. But those in the middle--clubs like Atlanta, San Francisco, Texas and Cleveland--lost value.
"It's easier to revive a small-market club, where you can get young (and cheap) guys that play well together," says Tilliss. Example: The Florida Marlins, who went young and cheap and contended for much of the season on a low payroll, saw an 8% jump in value. The San Francisco Giants, still trying to carve out a post-Barry Bonds identity, patched a veteran roster together and lost 5% of their value.
In baseball, only the New York Yankees--who print money through cable riches and a sparkling new stadium--reside in the billionaire's club.
Meanwhile, it's been pretty much an equal opportunity recession in the NBA, where the majority of teams backslid. The value of the reigning champion Los Angeles Lakers dropped by $6 million from a year earlier to $607 million, but still took over the top spot from the New York Knicks, who slipped even more. No doubt, the sponsorship-heavy league is getting pinched more than others right now, after going premium over the past decade with fast-rising ticket prices and expensive luxury suites.
Team values were fairly stable in the NHL, where the average team appreciated 1.2%. But the league did show its share of class struggle: The top four spots increased in value while the bottom five all fell.
The Most Valuable Teams In Sports - Forbes.com
No. 1 Manchester United
English Premier League
Value: $1.87 billion
Arguably the strongest sports brand in the world, Man-U fetched a record $1.45 billion when Malcolm Glazier bought it in 2005.
How much did the Great Recession whack pro sports? It depends on who you ask. Many teams have suffered downturns in revenue and valuation, but for the richest franchises, life is still good.
Despite the wretched economy, the roster of clubs worth more than a billion dollars has remained stable. In fact, membership grew by one (to 25) since last January, with Germany's Bayern Munich soccer club joining four other European soccer franchises, the New York Yankees and 19 NFL teams.
Topping the list for the second straight year is Manchester United, the English Premier League soccer powerhouse that boasts a worldwide fan base. Man-U's valuation grew 4% to $1.87 billion between April 2008 and April 2009 on a 9% increase in revenue. Other billion-dollar soccer clubs include Real Madrid ($1.35 billion), Spain's historic power, and the Premier League's Arsenal ($1.2 billion) and Liverpool (just over $1 billion; finishing just out of the top 10).
In Pictures: The Most Valuable Teams In Sports
The economic downturn has affected various sports leagues differently over the past year. European soccer, with long-term broadcasting and sponsorship deals, has mostly sidestepped the recession. Clubs gained 7.7% or $42 million per team during the 12 months that ended last April.
Why? The sport is simply more embedded in Europe than the typical American sport is across the Atlantic, says Rob Tilliss, president of Inner Circle Sports, an industry M&A firm based in New York.
"You've got more fans keeping their tickets in a recessionary environment," he says.
The recession has been more visible in the U.S., with the hurt distributed along class lines. The rich had few problems, with the bulk of the highest-valued teams in the NFL, NBA, MLB and NHL holding their own or growing, while negative growth hit the poor and middle class. In the NFL, where the average franchise value inched down about a half a percentage point, the 10 most valuable franchises gained a collective $164 million in value; the rest of the league lost a combined $303 million. Six NFL clubs appear on our top 10 list, led by the Dallas Cowboys and Washington Redskins.
Major League Baseball, where rich clubs help the poor through revenue sharing, suffered a classic middle-class squeeze. Valuation gains showed up in the top six spots and in seven of the bottom nine. But those in the middle--clubs like Atlanta, San Francisco, Texas and Cleveland--lost value.
"It's easier to revive a small-market club, where you can get young (and cheap) guys that play well together," says Tilliss. Example: The Florida Marlins, who went young and cheap and contended for much of the season on a low payroll, saw an 8% jump in value. The San Francisco Giants, still trying to carve out a post-Barry Bonds identity, patched a veteran roster together and lost 5% of their value.
In baseball, only the New York Yankees--who print money through cable riches and a sparkling new stadium--reside in the billionaire's club.
Meanwhile, it's been pretty much an equal opportunity recession in the NBA, where the majority of teams backslid. The value of the reigning champion Los Angeles Lakers dropped by $6 million from a year earlier to $607 million, but still took over the top spot from the New York Knicks, who slipped even more. No doubt, the sponsorship-heavy league is getting pinched more than others right now, after going premium over the past decade with fast-rising ticket prices and expensive luxury suites.
Team values were fairly stable in the NHL, where the average team appreciated 1.2%. But the league did show its share of class struggle: The top four spots increased in value while the bottom five all fell.
The Most Valuable Teams In Sports - Forbes.com
The £70m put aside to pay the PIKs (which along with the £30m being spend on refinancing costs include the Ronaldo money) isn't enough to pay them all off. We'll need to sell a few more players/properties to do that.
Talking of which, anyone remember this quote from Mr Capable Hands Gill?
"There are two elements to the debt, the hedge funds and the senior debt," explained Gill. "The hedge funds have no security over the club and no influence over it either. Yes, they have to be repaid but that is something the Glazers will do from their own resources or refinancing plans in time.”
From looking at the media comment on saturday's MUST/IMUSA meeting I doubt this is the case.
Do you think it's possible they would sell the TBB in order to pay off some of the debt to make it look more attractive to potential investors/buyers, or is that just wishful thinking on my part? And if they did look to sell the Buccaneers how much could they expect to recieve?
Hmmm I'm not too sure.
When you look at the piks the interest is compounded and the principle amount owed back is going to triple.
10-11% is high but as least it's not adding to the principle.
I for one am not going to question the word of The Equalizer!
I agree
I'm prerry sure the senior debt is hedged in at 8%
They are juggling the debt to facilitate the repayment of the piks. Once this is done they can transfer 75m (presumably the remainer of the Ronaldo money) to the holding company to pay off part of the pik. They will also have a revolving facitity of 75m for working capital and squad investment when needed.
I love the way US valuations seem to take no account of debt. $1.87 my arse!
This bond issue is not about paying off debt it's about getting the debt they have under control.
They are basically facilitating the repayment of the piks - the most punitive of our debt. The current structure requires them to pay it from their own pocket, which we all know they will not do. The bond issue will let them pay the piks from club generated funds. They are having to borrow 75m for the day to day running costs of the club. Once they have paid off the 202m, which would have probably gone in the transfer kitty, then we will only (he says) be 500m in debt.
Yeah I understand all that, my question didn't really have any relation to the current situation, just a general wondering really.
It wouldn't make business sense to liquidate an asset to clear debts from one that is apparently 'self funding'.
Remember Gills famous words 'we are servicing the debt comfortably'.
They are not bothered about clearing the main debt, just wiping out the hedgefunds.
Glazers could take £130m out of Manchester United next year
The Glazer family, who own Manchester United, can take almost £130m cash out of the club next year alone if enough lenders sign up for the bond they have launched to borrow £500m for United.
Nestling in the small print of the 322-page bond prospectus are provisions allowing the Glazers to take £70m out of the club's cash reserves, which includes the money they have received from selling players such as Cristiano Ronaldo. The document also reserves for the Glazers the legal right to pay £25m out of the club in a dividend, and half of what is termed "consolidated net income". This is effectively the club's cash profits, which based on the most recent accounts would have meant £23m being paid out last year.
The bond's terms also note that the Glazers will have the right for £6m a year to be paid to companies they own "for administration and management services", and a further £3m "in respect of services provided by directors, officers or employees" of companies the Glazers use to hold their shares in United.
That money, added to the £70m and £25m one-off payments, plus the half of United's cash profit they can take out each year (equating to £23m last year), add up to £127m next year alone.
That huge figure is in addition to the straightforward payment of interest (yield) on the £500m the club will have borrowed via the bond, which at a mooted 9%, will be £45m. That will bring the total taken out of United to service the Glazers' borrowings, which were loaded on to the club after the family bought the club in 2005, to £172m next year alone.
It has become increasingly clear since the prospectus was launched last week that its principal purpose is to allow the Glazers to take cash out of United to reduce the amounts they owe in "payments in kind" to hedge funds, which are running at a punitive £14.25% interest. Standing at £175m in the year to 30 June, 2008, the "payments" accrued £25m interest in the year to 30 June, 2009, and so stand now at over £200m. That debt is secured on the United shares the Glazer family own, and it is clear their financial priority is to use United's giant turnover and profits to pay down that debt before the interest "rolls up" dramatically.
A calculation of the total cash which the bond would entail being paid out of United in dividend payments, the yield from the bond, management fees and the possible requirement for the club to lease the Carrington training ground, is more than £500m between next year and the maturity of the bond in 2017.
If the bond issue is fully taken up by lenders, it will mean that since the Glazer family bought United in May 2005 for £810m – £540m of it borrowed from banks and hedge funds – their takeover will have already cost United £340m in cash. That comprises £220m in bank interest plus "early-repayment premiums" made when the borrowings were first refinanced in August 2006. A further £120m will have been incurred in fees paid to bankers, lawyers and other professionals – the fees for this bond issue are noted as £15m – plus £35m incurred by the club's interest rate hedging arrangements.
On top of that, the "payments" have incurred interest payable of around £124m since the Glazers first borrowed the money to buy United.
A Glazer family spokesman, who also speaks for United on financial matters, declined to comment.
Nick Towle, chair of the Manchester United Supporters' Trust, said: "It is a shocking picture. These are immense amounts of money being leaked out of United to pay banks, lawyers, the Glazers themselves and interest, to pay for a takeover none of the supporters, or the United board itself, wanted.
"United's success and profits could have been used to keep ticket prices affordable or invest in the team but instead we see this heartbreaking waste, just because one family ultimately hopes to make a profit from the club."
Glazers could take £130m out of Manchester United next year | Football | guardian.co.uk
The Glazer family, who own Manchester United, can take almost £130m cash out of the club next year alone if enough lenders sign up for the bond they have launched to borrow £500m for United.
Nestling in the small print of the 322-page bond prospectus are provisions allowing the Glazers to take £70m out of the club's cash reserves, which includes the money they have received from selling players such as Cristiano Ronaldo. The document also reserves for the Glazers the legal right to pay £25m out of the club in a dividend, and half of what is termed "consolidated net income". This is effectively the club's cash profits, which based on the most recent accounts would have meant £23m being paid out last year.
The bond's terms also note that the Glazers will have the right for £6m a year to be paid to companies they own "for administration and management services", and a further £3m "in respect of services provided by directors, officers or employees" of companies the Glazers use to hold their shares in United.
That money, added to the £70m and £25m one-off payments, plus the half of United's cash profit they can take out each year (equating to £23m last year), add up to £127m next year alone.
That huge figure is in addition to the straightforward payment of interest (yield) on the £500m the club will have borrowed via the bond, which at a mooted 9%, will be £45m. That will bring the total taken out of United to service the Glazers' borrowings, which were loaded on to the club after the family bought the club in 2005, to £172m next year alone.
It has become increasingly clear since the prospectus was launched last week that its principal purpose is to allow the Glazers to take cash out of United to reduce the amounts they owe in "payments in kind" to hedge funds, which are running at a punitive £14.25% interest. Standing at £175m in the year to 30 June, 2008, the "payments" accrued £25m interest in the year to 30 June, 2009, and so stand now at over £200m. That debt is secured on the United shares the Glazer family own, and it is clear their financial priority is to use United's giant turnover and profits to pay down that debt before the interest "rolls up" dramatically.
A calculation of the total cash which the bond would entail being paid out of United in dividend payments, the yield from the bond, management fees and the possible requirement for the club to lease the Carrington training ground, is more than £500m between next year and the maturity of the bond in 2017.
If the bond issue is fully taken up by lenders, it will mean that since the Glazer family bought United in May 2005 for £810m – £540m of it borrowed from banks and hedge funds – their takeover will have already cost United £340m in cash. That comprises £220m in bank interest plus "early-repayment premiums" made when the borrowings were first refinanced in August 2006. A further £120m will have been incurred in fees paid to bankers, lawyers and other professionals – the fees for this bond issue are noted as £15m – plus £35m incurred by the club's interest rate hedging arrangements.
On top of that, the "payments" have incurred interest payable of around £124m since the Glazers first borrowed the money to buy United.
A Glazer family spokesman, who also speaks for United on financial matters, declined to comment.
Nick Towle, chair of the Manchester United Supporters' Trust, said: "It is a shocking picture. These are immense amounts of money being leaked out of United to pay banks, lawyers, the Glazers themselves and interest, to pay for a takeover none of the supporters, or the United board itself, wanted.
"United's success and profits could have been used to keep ticket prices affordable or invest in the team but instead we see this heartbreaking waste, just because one family ultimately hopes to make a profit from the club."
Glazers could take £130m out of Manchester United next year | Football | guardian.co.uk
Glazers Send an SOS to the Players and Staff
I know it's only in the Sun, but you have to smile at this little gem!
By PHIL THOMAS
Published: 19 Jan 2010
THE Glazer family have gone cap in hand to Manchester United's players - effectively asking them for a multi-million pound loan!
United stars were stunned by the handout request when they arrived back last week from their Qatar training camp.
Players were handed a prospectus, as owner Malcolm Glazer attempts to raise a staggering £500million through a bond issue to refinance huge debts.
And SunSport understands even the lower paid Old Trafford staff have been offered the 'opportunity' to invest in the club by the American owners.
A United insider said: "The players don't know what to make of it, really.
"Most are bemused that the people who pay their wages are basically trying to find out if they can have some back.
"A few of the lads know a good investment when they see one, but not too many seem prepared to put their money where their mouths are!"
United are believed to be offering investors an annual return of seven per cent on the bonds, which start at £50,000 a block.
But City experts say returns are dependent on continued success on the field in the years ahead.
The insider added: "There have been people working at Old Trafford for many years, on low salaries, worried about their futures.
"Yet now they are being offered the chance to stretch themselves even further. It's a joke!"
http://www.thesun.co.uk/sol/homepage...Utd-stars.html
I know it's only in the Sun, but you have to smile at this little gem!
By PHIL THOMAS
Published: 19 Jan 2010
THE Glazer family have gone cap in hand to Manchester United's players - effectively asking them for a multi-million pound loan!
United stars were stunned by the handout request when they arrived back last week from their Qatar training camp.
Players were handed a prospectus, as owner Malcolm Glazer attempts to raise a staggering £500million through a bond issue to refinance huge debts.
And SunSport understands even the lower paid Old Trafford staff have been offered the 'opportunity' to invest in the club by the American owners.
A United insider said: "The players don't know what to make of it, really.
"Most are bemused that the people who pay their wages are basically trying to find out if they can have some back.
"A few of the lads know a good investment when they see one, but not too many seem prepared to put their money where their mouths are!"
United are believed to be offering investors an annual return of seven per cent on the bonds, which start at £50,000 a block.
But City experts say returns are dependent on continued success on the field in the years ahead.
The insider added: "There have been people working at Old Trafford for many years, on low salaries, worried about their futures.
"Yet now they are being offered the chance to stretch themselves even further. It's a joke!"
http://www.thesun.co.uk/sol/homepage...Utd-stars.html
Would those tossers honestly be as stupid?
That's priceless if true!Galzers Could Take 130 Million Out Next Year
Glazers could take £130m out of Manchester United next year
• Small print in bond offer reveals shock provisions
• Owners able to get cut of money from player sales
The Glazer family, who own Manchester United, can take almost £130m cash out of the club next year alone if enough lenders sign up for the bond they have launched to borrow £500m for United.
Nestling in the small print of the 322-page bond prospectus are provisions allowing the Glazers to take £70m out of the club's cash reserves, which includes the money they have received from selling players such as Cristiano Ronaldo. The document also reserves for the Glazers the legal right to pay £25m out of the club in a dividend, and half of what is termed "consolidated net income". This is effectively the club's cash profits, which based on the most recent accounts would have meant £23m being paid out last year.
The bond's terms also note that the Glazers will have the right for £6m a year to be paid to companies they own "for administration and management services", and a further £3m "in respect of services provided by directors, officers or employees" of companies the Glazers use to hold their shares in United.
That money, added to the £70m and £25m one-off payments, plus the half of United's cash profit they can take out each year (equating to £23m last year), add up to £127m next year alone.
That huge figure is in addition to the straightforward payment of interest (yield) on the £500m the club will have borrowed via the bond, which at a mooted 9%, will be £45m. That will bring the total taken out of United to service the Glazers' borrowings, which were loaded on to the club after the family bought the club in 2005, to £172m next year alone.
It has become increasingly clear since the prospectus was launched last week that its principal purpose is to allow the Glazers to take cash out of United to reduce the amounts they owe in "payments in kind" to hedge funds, which are running at a punitive £14.25% interest. Standing at £175m in the year to 30 June, 2008, the "payments" accrued £25m interest in the year to 30 June, 2009, and so stand now at over £200m. That debt is secured on the United shares the Glazer family own, and it is clear their financial priority is to use United's giant turnover and profits to pay down that debt before the interest "rolls up" dramatically.
A calculation of the total cash which the bond would entail being paid out of United in dividend payments, the yield from the bond, management fees and the possible requirement for the club to lease the Carrington training ground, is more than £500m between next year and the maturity of the bond in 2017.
If the bond issue is fully taken up by lenders, it will mean that since the Glazer family bought United in May 2005 for £810m – £540m of it borrowed from banks and hedge funds – their takeover will have already cost United £340m in cash. That comprises £220m in bank interest plus "early-repayment premiums" made when the borrowings were first refinanced in August 2006. A further £120m will have been incurred in fees paid to bankers, lawyers and other professionals – the fees for this bond issue are noted as £15m – plus £35m incurred by the club's interest rate hedging arrangements.
On top of that, the "payments" have incurred interest payable of around £124m since the Glazers first borrowed the money to buy United.
A Glazer family spokesman, who also speaks for United on financial matters, declined to comment.
Nick Towle, chair of the Manchester United Supporters' Trust, said: "It is a shocking picture. These are immense amounts of money being leaked out of United to pay banks, lawyers, the Glazers themselves and interest, to pay for a takeover none of the supporters, or the United board itself, wanted.
"United's success and profits could have been used to keep ticket prices affordable or invest in the team but instead we see this heartbreaking waste, just because one family ultimately hopes to make a profit from the club."
http://www.guardian.co.uk/football/2...ce-the-glazers
Glazers could take £130m out of Manchester United next year
• Small print in bond offer reveals shock provisions
• Owners able to get cut of money from player sales
The Glazer family, who own Manchester United, can take almost £130m cash out of the club next year alone if enough lenders sign up for the bond they have launched to borrow £500m for United.
Nestling in the small print of the 322-page bond prospectus are provisions allowing the Glazers to take £70m out of the club's cash reserves, which includes the money they have received from selling players such as Cristiano Ronaldo. The document also reserves for the Glazers the legal right to pay £25m out of the club in a dividend, and half of what is termed "consolidated net income". This is effectively the club's cash profits, which based on the most recent accounts would have meant £23m being paid out last year.
The bond's terms also note that the Glazers will have the right for £6m a year to be paid to companies they own "for administration and management services", and a further £3m "in respect of services provided by directors, officers or employees" of companies the Glazers use to hold their shares in United.
That money, added to the £70m and £25m one-off payments, plus the half of United's cash profit they can take out each year (equating to £23m last year), add up to £127m next year alone.
That huge figure is in addition to the straightforward payment of interest (yield) on the £500m the club will have borrowed via the bond, which at a mooted 9%, will be £45m. That will bring the total taken out of United to service the Glazers' borrowings, which were loaded on to the club after the family bought the club in 2005, to £172m next year alone.
It has become increasingly clear since the prospectus was launched last week that its principal purpose is to allow the Glazers to take cash out of United to reduce the amounts they owe in "payments in kind" to hedge funds, which are running at a punitive £14.25% interest. Standing at £175m in the year to 30 June, 2008, the "payments" accrued £25m interest in the year to 30 June, 2009, and so stand now at over £200m. That debt is secured on the United shares the Glazer family own, and it is clear their financial priority is to use United's giant turnover and profits to pay down that debt before the interest "rolls up" dramatically.
A calculation of the total cash which the bond would entail being paid out of United in dividend payments, the yield from the bond, management fees and the possible requirement for the club to lease the Carrington training ground, is more than £500m between next year and the maturity of the bond in 2017.
If the bond issue is fully taken up by lenders, it will mean that since the Glazer family bought United in May 2005 for £810m – £540m of it borrowed from banks and hedge funds – their takeover will have already cost United £340m in cash. That comprises £220m in bank interest plus "early-repayment premiums" made when the borrowings were first refinanced in August 2006. A further £120m will have been incurred in fees paid to bankers, lawyers and other professionals – the fees for this bond issue are noted as £15m – plus £35m incurred by the club's interest rate hedging arrangements.
On top of that, the "payments" have incurred interest payable of around £124m since the Glazers first borrowed the money to buy United.
A Glazer family spokesman, who also speaks for United on financial matters, declined to comment.
Nick Towle, chair of the Manchester United Supporters' Trust, said: "It is a shocking picture. These are immense amounts of money being leaked out of United to pay banks, lawyers, the Glazers themselves and interest, to pay for a takeover none of the supporters, or the United board itself, wanted.
"United's success and profits could have been used to keep ticket prices affordable or invest in the team but instead we see this heartbreaking waste, just because one family ultimately hopes to make a profit from the club."
http://www.guardian.co.uk/football/2...ce-the-glazers
Cant it get any worse?
it sure can and it will
Here's an opportunity for that pay raise that Rooney wanted
I'm now going to read the 'Glazers will borrow 130 million next year' thread.
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