ALL issues relating to the bond issue and club finances

[ciderman9000000]

You are trying to side track the issue. In my opinon the transfer activity was suspicious in the lead up to the bond issue and I feel their is evidence I may be right but am open to being proved wrong. At least admit that

Well there's evidence to suggest that you're wrong.

SAF's testimony that the Glazers wanted Ronaldo at the club more than he himself did; the club then offering Ronaldo a £150k a week contract to convince him to stay; the fact that the club tried so hard in fighting off Madrid's advances the previous season and succeeded in getting him to stay for another year. This strongly suggests that you're wrong and that the club really didn't want to sell him.

Can you prove that you're right though?

Your only bit of evidence seems to be that you think the bonds wouldn't have sold without selling Ronaldo first, but you're forgetting that having £80m in the bank or having an £80m asset at the club equates largely to the same thing; and i doubt very much that Crerand Legend has any real idea whatsoever what potential investors will be looking for in a football club anyway.

So your evidence is mostly just "because i say so", and thus not really evidence at all.

 

[TheMancRedDevil]

You are trying to side track the issue. In my opinon the transfer activity was suspicious in the lead up to the bond issue and I feel their is evidence I may be right but am open to being proved wrong. At least admit that

I'm not trying to side-track the issue.

What was "suspicious" about it? Where is your evidence that it was "suspicious"? What exactly are you asking me to prove? That it wasn't "suspicious"? Why do you think the Bond Issue had anything to do with it? Because having a wedge of cash in the bank made us look like a better investment?

Well, by that logic, why stop at Ronaldo and Tevez? Why not sell all the players (not that we actually sold Tevez, we just decided not to buy him) and have a humungous wedge of cash in the bank?

I'd argue very strongly that a football club that has just sold all its best players is not a very good investment.

How would the signing (or not) of a virtually unknown kid from Serbia have had an effect on the Bond Issue either way or vice versa?

I might be completely missing your point but you haven't really made it very well, to be honest.

 

[Crerand Legend]

I'm not trying to side-track the issue.

What was "suspicious" about it? Where is your evidence that it was "suspicious"? What exactly are you asking me to prove? That it wasn't "suspicious"? Why do you think the Bond Issue had anything to do with it? Because having a wedge of cash in the bank made us look like a better investment?

Well, by that logic, why stop at Ronaldo and Tevez? Why not sell all the players (not that we actually sold Tevez, we just decided not to buy him) and have a humungous wedge of cash in the bank?

I'd argue very strongly that a football club that has just sold all its best players is not a very good investment.

How would the signing (or not) of a virtually unknown kid from Serbia have had an effect on the Bond Issue either way or vice versa?

I might be completely missing your point but you haven't really made it very well, to be honest.[/QUOTE
I keeping saying none of us know what happened hence the speculation. I dont want to read back but if my memory serves me right we would have posted a large loss if we had kept Ronaldo and bought the other two, not a great advert for a massive bond sale. And yes I respect that you have valid points on this issue but not convincing ones. Speak later heading off

 

[ciderman9000000]

I keep saying none of us know what happened hence the speculation. I dont want to read back but if my memory serves me right we would have posted a large loss if we had kept Ronaldo and bought the other two, not a great advert for a massive bond sale. And yes I respect that you have valid points on this issue but not convincing ones. Speak later heading off

I can't believe you're still struggling with this. The 'loss' was made up of non-cash expenses, the club actually turned a large profit even without the Ronaldo sale. We've discussed this so many times i just can't believe that it hasn't sunk in for you yet; what the hell's wrong with you?! You can be assured that any potential investor in the bonds would not have been as ignorant as you seem to continue to be to the situation.

 

[UnitedRoadRed]

I think that Ronaldo wanted to go.

The one things the Glazers will have done to boost the bond issue is demand the £80m up front.

 

[Amir]

You dont know the whole story anymore than me, the Ronaldo/ Tevez and Serbian lad transfers are now suspicious looking and this irks the Glazer club

There's nothing suspicious about the Ronaldo transfer. He WAS going to go sooner or later.

 

[anver]

I'd agree that money was a primary consideration but not in the way you're suggesting.

I just think Tevez and his pimp wanted more than we were willing to offer him.

In the words of the late, great Sir Matt Busby, "no player will hold this club to ransom, no player".

We had a clear contract with Tevez's pimp about the buyout figure. We did not make the move when Tevez asked us to finish off the deal in January 2009. That is when Sparky got alerted, and offered the pimp more than what we had contracted with him.

 

[TheMancRedDevil]

I keeping saying none of us know what happened hence the speculation. I dont want to read back but if my memory serves me right we would have posted a large loss if we had kept Ronaldo and bought the other two, not a great advert for a massive bond sale. And yes I respect that you have valid points on this issue but not convincing ones. Speak later heading off

And if my memory serves me correctly, I seem to remember it being agreed by everyone from Andersred to GCHQ that we wouldn't have made a loss if we hadn't sold Ronaldo.

As ciderman says, I too can't believe that you still haven't got this into your head by now.

 

[TheMancRedDevil]

We had a clear contract with Tevez's pimp about the buyout figure. We did not make the move when Tevez asked us to finish off the deal in January 2009. That is when Sparky got alerted, and offered the pimp more than what we had contracted with him.

Well, if that's correct then I can see both sides of the argument there. Why should Fergie be "forced" to decide midway through the season with all the big games still to play especially when it is generally agreed that Tevez was not as influential in his second season as he was in his first? I can understand Fergie perhaps taking the attitude, "Well, let's see how you do between now and May" and I can understand Tevez not being unhappy at being kept in limbo and would like his future tied up.

Having said all this, it was Tevez and his pimp who seemingly invented this new type of ownership which appears to have given them the flexibility to play for whoever they wanted to play for (the highest bidder) at the expense of the security of a proper long-term contract.

By all accounts, United were playing by the rules that Tevez and pimp had laid down and eventually met the fee that was agreed at the outset.

Maybe Fergie's eventual offer was merely a half-hearted, token gesture because he had really decided that he didn't want Tevez but wanted to be able to say to the fans that he tried because he knew how much a lot of the fans loved Tevez (doesn't sound entirely plausible to me though that, Fergie is reknowned for doing things his way and to hell with what others think).

Personally, I never liked Tevez that much and I thought he was trouble. By all accounts, he's up to the same tricks at City at the moment, too.

Whatever the ins and outs, I certainly wasn't shedding any tears when he left us for City.

 

[datura]

And if my memory serves me correctly, I seem to remember it being agreed by everyone from Andersred to GCHQ that we wouldn't have made a loss if we hadn't sold Ronaldo.

As ciderman says, I too can't believe that you still haven't got this into your head by now.

That's not true. The club would have made a loss on their financial statements, as they will this year.

Anders et al stripped out certain book entries to come to their conclusions.

None of the reports were wrong, they just needed some analysis to provide better understanding of the impact financially on the club.

 

[anver]

Well, if that's correct then I can see both sides of the argument there. Why should Fergie be "forced" to decide midway through the season with all the big games still to play especially when it is generally agreed that Tevez was not as influential in his second season as he was in his first? I can understand Fergie perhaps taking the attitude, "Well, let's see how you do between now and May" and I can understand Tevez not being unhappy at being kept in limbo and would like his future tied up.

Having said all this, it was Tevez and his pimp who seemingly invented this new type of ownership which appears to have given them the flexibility to play for whoever they wanted to play for (the highest bidder) at the expense of the security of a proper long-term contract.

By all accounts, United were playing by the rules that Tevez and pimp had laid down and eventually met the fee that was agreed at the outset.

Maybe Fergie's eventual offer was merely a half-hearted, token gesture because he had really decided that he didn't want Tevez but wanted to be able to say to the fans that he tried because he knew how much a lot of the fans loved Tevez (doesn't sound entirely plausible to me though that, Fergie is reknowned for doing things his way and to hell with what others think).

Personally, I never liked Tevez that much and I thought he was trouble. By all accounts, he's up to the same tricks at City at the moment, too.

Whatever the ins and outs, I certainly wasn't shedding any tears when he left us for City.

Whatever the motives and reasoning Fergie may have had, the fee was met only after the season was over. By then, Tevez deal with City was done.

And your dislike for Tevez is hardly a factor in the issue under discussion.

 

[ciderman9000000]

That's not true. The club would have made a loss on their financial statements, as they will this year.

Anders et al stripped out certain book entries to come to their conclusions.

None of the reports were wrong, they just needed some analysis to provide better understanding of the impact financially on the club.

Yes, but not a loss in real terms. Any potential investors perusing the bond prospectus would have had the financial expertise to read the accounts as anders and GCHQ could; they wouldn't have been restricted to the layman's POV that the press and MUST take-up and on which Crerand insists on formulating his unsubstantiated theories.

Now that we have the benefit of anders' and GCHQ's analysis of the accounts we can consider ourselves to be more enlightened than most laymen who only read the headlines in the papers; why then some of us choose to be ignorant of that analysis and remain as laymen is beyond me; this is a learning process for many of us, only some of us are refusing point-blank to learn anything and instead just stick to the old preconceptions and then make the mistake of considering that uneducated position as a good platform for further analysis and theory formulation. It's fecking weird if you ask me.

 

[TheMancRedDevil]

Whatever the motives and reasoning Fergie may have had, the fee was met only after the season was over. By then, Tevez deal with City was done.

Well, that makes it all sound much better for Tevez doesn't it? Signing for another team while you're still playing for their local rivals. Brilliant.

When asked at the end of the season if he would be at United next season, he was saying "Is difficult" or something.

Clearly if what you're saying is true then he knew already that he wouldn't be because he had signed for City. Funny how he never mentioned it.

And your dislike for Tevez is hardly a factor in the issue under discussion.

I suppose it isn't but if we saved £25million plus god knows how much in wages that day, I'm happy about that.

 

[TheMancRedDevil]

That's not true. The club would have made a loss on their financial statements, as they will this year.

Anders et al stripped out certain book entries to come to their conclusions.

None of the reports were wrong, they just needed some analysis to provide better understanding of the impact financially on the club.

I am pretty certain that if I could be arsed, I could find either on here or on his blog a post or article where Anders quite categorically says that it isn't true that we would have made a loss were it not for the sale of Ronaldo because I distinctly remember reading it. In fact, I think he said that he went to great lengths to advise MUST not to go around saying that we would have made a loss were it not for the sale of Ronaldo because it was so easily shown to be untrue and it would have backfired on MUST.

I obviously don't understand accounting enough to explain it and that is why I don't try to but when somebody as anti-Glazer as Anders is prepared to let something like this go then it must be true.

My rather simplistic view of it was that with such a windfall coming in, it could have left us open to a hefty tax bill and so certain "expenses" were entered into the account which perhaps could have waited until another day but were brought forward to take advantage of the situation.

Without the "Ronaldo Money", these expenses wouldn't have been entered and the end balance would have remained the same.

Others such as GCHQ and Anders have addressed it in a much more sophisticated way than this but finding a specific post on here isn't easy.

 

[UnitedRoadRed]

Well, that makes it all sound much better for Tevez doesn't it? Signing for another team while you're still playing for their local rivals. Brilliant.

When asked at the end of the season if he would be at United next season, he was saying "Is difficult" or something.

Clearly if what you're saying is true then he knew already that he wouldn't be because he had signed for City. Funny how he never mentioned it.


I suppose it isn't but if we saved £25million plus god knows how much in wages that day, I'm happy about that.

Would you mention it?

It wasn't that well a kept secret - there were whispers of it in February that he'd signed for City.

 

[Redjazz]

I think that Ronaldo wanted to go.

The one things the Glazers will have done to boost the bond issue is demand the £80m up front.

There's more to it that just that, URR.
You don't get to carveout essentially anytime dividends of 95m without having the money in the bank to back it up. Had we surplus cash in the bank, after the Ronaldo deal, the Aon prepayment? Yes.
Without the 'Ronaldo money', the Glazers would have had to reduce their special dividend entitlements (95m)- the carveouts- by an amount equivalent to the Ronaldo money to get the bond away at the same yield (discount plus coupon) of c. 9%.
So, no 'Ronaldo money', no special dividend of 70m, say.
How successful would the bond issue have been, sans the Ronaldo money, as a means of eliminating the PIKs with club cash alone (the remaining 25m carveout plus their annual dividend of, say, 25m)? Not very.
The Glazers would be hard-pressed to eliminate the PIKs without the special dividend of 70m.
Now, the Glazers might well refinance the PIK should the opportunity arise, but you would figure on them reducing the principal outstanding by 70m before doing so.

 

[UnitedRoadRed]

There's more to it that just that, URR.
You don't get to carveout essentially anytime dividends of 95m without having the money in the bank to back it up. Had we surplus cash in the bank, after the Ronaldo deal, the Aon prepayment? Yes.
Without the 'Ronaldo money', the Glazers would have had to reduce their special dividend entitlements (95m)- the carveouts- by an amount equivalent to the Ronaldo money to get the bond away at the same yield (discount plus coupon) of c. 9%.
So, no 'Ronaldo money', no special dividend of 70m, say.
How successful would the bond issue have been, sans the Ronaldo money, as a means of eliminating the PIKs with club cash alone (the remaining 25m carveout plus their annual dividend of, say, 25m)? Not very.
The Glazers would be hard-pressed to eliminate the PIKs without the special dividend of 70m.
Now, the Glazers might well refinance the PIK should the opportunity arise, but you would figure on them reducing the principal outstanding by 70m before doing so.

I don't doubt it, I was just spelling it out at the highest level.

 

[TheMancRedDevil]

There's more to it that just that, URR.
You don't get to carveout essentially anytime dividends of 95m without having the money in the bank to back it up. Had we surplus cash in the bank, after the Ronaldo deal, the Aon prepayment? Yes.
Without the 'Ronaldo money', the Glazers would have had to reduce their special dividend entitlements (95m)- the carveouts- by an amount equivalent to the Ronaldo money to get the bond away at the same yield (discount plus coupon) of c. 9%.
So, no 'Ronaldo money', no special dividend of 70m, say.
How successful would the bond issue have been, sans the Ronaldo money, as a means of eliminating the PIKs with club cash alone (the remaining 25m carveout plus their annual dividend of, say, 25m)? Not very.
The Glazers would be hard-pressed to eliminate the PIKs without the special dividend of 70m.
Now, the Glazers might well refinance the PIK should the opportunity arise, but you would figure on them reducing the principal outstanding by 70m before doing so.

All very plausible stuff Redjazz but after it emerged that the Glazers had purchased at least 20% of the PIK debt two years ago - something which neither you nor anyone else knew about - I would have thought you might have stopped speculating on the state of the PIKs and the options open to the Glazers by now.

Apologies if I am putting words in your mouth here but that does tend to read like you are suggesting that Ronaldo was indeed sold in order to provide them with funds to pay down their debts.

The opposite scenario is also true though, isn't it? That an absurd amount of money came in and so the Glazers took full advantage of it in some kind of crazy "Business-owner uses profits to his advantage" shocker.

What I can't get my head around is how we can make £90million+ EBITDA (the figure that is all important when working out how much the Glazers can withdraw as dividends) in successive years when we haven't sold an £80million player in successive years. What does this tell us about the Glazer's "need" to sell Ronaldo in order to meet EBITDA targets?

 

[Julian Denny]

What I can't get my head around is how we can make £90million+ EBITDA (the figure that is all important when working out how much the Glazers can withdraw as dividends) in successive years when we haven't sold an £80million player in successive years. What does this tell us about the Glazer's "need" to sell Ronaldo in order to meet EBITDA targets?

The EBITDA figure of 90m plus did not include the Ronaldo money as far as I know. So you'll be relieved to know they don't have to sell Rooney to keep the ship afloat.

 

[ciderman9000000]

What I can't get my head around is how we can make £90million+ EBITDA (the figure that is all important when working out how much the Glazers can withdraw as dividends) in successive years when we haven't sold an £80million player in successive years. What does this tell us about the Glazer's "need" to sell Ronaldo in order to meet EBITDA targets?

I think the target is simply approx. EBITDA of £90m, mate, not £90m+EBITDA.
(edit. Oh i see what you meant; EBITDA of £90m+)

What Jazz is saying is not that the owners would have struggled to meet EBITDA targets (and thus take dividends) without the sale of Ronaldo, but that the proposed carveout of £95m in the bond prospectus would have been impossible without cash available in the bank from which to carve from.

That doesn't mean that the bonds wouldn't have sold without the sale of Ronaldo though, just that the owners would have been inclined to propose a carveout of a smaller scale.

Ronaldo was sold, and it worked to the immediate advantage of the club financially, no argument, but that does not mean that the owners were seeking to sell Ronaldo, just that they were in position to take advantage of the sale after the event. The monetary value of the best player in the world being at the club should not be overlooked when considering squad strength, brand advancement, sponsorship potential and expansion of overseas markets; United gained £80m in cash but in doing so lost an asset worth £80m.

SAF said at the time that...

'Kaka is one of the top three players in the world and if he's worth £100million, so are Lionel Messi and Ronaldo. You could argue Ronaldo is worth £120million because he is the World and European Player of the Year.

'But there is no chance the owners would want to sell him even if City came calling with £120million this summer. I am absolutely sure of it.

'They want him here even more than me. They are strong about that.'

Source

Strong words. Was he lying? Had he been tricked? Personally i doubt it, though i know certain others will choose to take a different view.

I believe that Ronaldo and easily marketable players like him such as Wayne Rooney are valued extremely highly and feature prominently in the Glazers business plan.

Ronaldo left because he wished to leave despite efforts from the club to hold on to him. The onus now is on finding the next Ronaldo.

 

[TheMancRedDevil]

The EBITDA figure of 90m plus did not include the Ronaldo money as far as I know. So you'll be relieved to know they don't have to sell Rooney to keep the ship afloat.

The point I am making is that EBITDA for year end 2009 was (if I recall) £91million.

This year we have Anders and GCHQ pretty much in agreement that it is likely to be the same again (possibly slightly higher).

If the EBITDA figure is all-important to the determination of Glazer dividends then this surely shows that without all these fancy "expenses" and whatever the hell they were, the targets could have been met regardless of the sale of Ronaldo because we haven't sold an £80million player this season.

 

[ciderman9000000]

The point I am making is that EBITDA for year end 2009 was (if I recall) £91million.

This year we have Anders and GCHQ pretty much in agreement that it is likely to be the same again (possibly slightly higher).

If the EBITDA figure is all-important to the determination of Glazer dividends then this surely shows that without all these fancy "expenses" and whatever the hell they were, the targets could have been met regardless of the sale of Ronaldo because we haven't sold an £80million player this season.

See my post above, TMRD.

 

[TheMancRedDevil]

I think the target is simply approx. EBITDA of £90m, mate, not £90m+EBITDA.

What Jazz is saying is not that the owners would have struggled to meet EBITDA targets (and thus take dividends) without the sale of Ronaldo, but that the proposed carveout of £95m in the bond prospectus would have been impossible without cash available in the bank from which to carve from.

That doesn't mean that the bonds wouldn't have sold without the sale of Ronaldo though, just that the owners would have been inclined to propose a carveout of a smaller scale.

Ronaldo was sold, and it worked to the immediate advantage of the club financially, no argument, but that does not mean that the owners were seeking to sell Ronaldo, just that they were in position to take advantage of the sale after the event. The monetary value of the bert player in the world being at the club should not be overlooked when considering squad strength, brand advancement, sponsorship potential and expansion of overseas markets; United gained £80m in cash but in doing so lost an asset worth £80m.

But yes, I take the point that real cash has to be in the bank for them to take it from. GCHQ still believes, however, that cash reserves may have reached something approaching £150-160million at some point during this first quarter.

I still maintain that some of the "expenses" were not necessary and could have been left in the account, though and that all of this would have provided the funds they needed.

As you showed with your excellent spreadsheets, the absolute need for the Glazers to extract every penny they could get their mitts on ASAP in order to clear the PIKs was shown to be quite wide of the mark once the revelation that they had bought at least 20% of them in 2008 became news.

 

[ciderman9000000]

Yes the sheets showed that only £13m per year on-going would be enough now to stabilise the PIK notes, but that figure took into account the payment of the £95m carve-out detailed in the bond-prospectus.

 

[datura]

But yes, I take the point that real cash has to be in the bank for them to take it from. GCHQ still believes, however, that cash reserves may have reached something approaching £150-160million at some point during this first quarter.

I still maintain that some of the "expenses" were not necessary and could have been left in the account, though and that all of this would have provided the funds they needed.

As you showed with your excellent spreadsheets, the absolute need for the Glazers to extract every penny they could get their mitts on ASAP in order to clear the PIKs was shown to be quite wide of the mark once the revelation that they had bought at least 20% of them in 2008 became news.

You need to stop thinking in terms of cash payments. Expenses can be accrued (ie expensed to the p&l but not spent). It's fairly clear despite apparently reading all the various reports etc you are still rather ignorant in terms of understanding the way the accounts work.

 

[TheMancRedDevil]

You need to stop thinking in terms of cash payments. Expenses can be accrued (ie expensed to the p&l but not spent). It's fairly clear despite apparently reading all the various reports etc you are still rather ignorant in terms of understanding the way the accounts work.

I think this is my problem, to be honest.

My brain only allows me to work in concretes. Money is either there or it isn't. It can't be there and not there at the same time.

Money comes in, money goes out. What's left is the profit.

I wouldn't say that I am ignorant though. Someone who has invested this much time and effort in the subject clearly isn't ignorant.

Possibly just a bit thick. I'll accept that.

 

[ciderman9000000]

You need to stop thinking in terms of cash payments. Expenses can be accrued (ie expensed to the p&l but not spent). It's fairly clear despite apparently reading all the various reports etc you are still rather ignorant in terms of understanding the way the accounts work.

Is it not so though, datura, that such non-cash expenses do not effect the operating cash-flow of the club and are thus deemed to be irrelevent. As explained here...

Investors should understand the difference between cash expenses and non-cash expenses when analyzing operating results. A non-cash expense is an operating expense on the income statement that does not require cash outlay. An example is depreciation expense. According to generally accepted accounting principles (GAAP), when a business buys a long-term asset (such as heavy equipment), the amount spent to buy that asset is not expensed in the same way as rent expense or raw materials cost might be. Instead, the cost is spread out over the useful life of the equipment and, therefore, a small amount of the overall cost is allocated to the income statement over a number of years in the form of depreciation expense, even though no further cash outlay has occurred. Note that non-cash expenses are often allocated to other expense lines in the income statement. A good way to grasp the effect of non-cash expenses is to look carefully at the operating section of the statement of cash flows.

It is largely because of non-cash expenses that operating income differs from operating cash flow. Investors are wise to consider the proportion of operating income that is attributable to non-cash expenses. Analysts often calculate earnings before interest, taxes, depreciation and amortization (EBITDA) to measure cash-based operating income. Because it excludes non-cash expenses, EBITDA may better measure the amount of cash flow generated from operations that is available for investors than operating income. After all, dividends must be paid from cash, not income. Similar to gross margin and operating margin, analysts use EBITDA to calculate EBITDA margin and they use this figure to do company comparisons and historical company analyses.

So despite the Profit and Loss statement reporting a loss, no such loss effectively occured. This is the crux of the matter and the cause of confusion in those who do not understand these mechanics. Crerand describes it as 'Wizardry' ffs!

 

[TheMancRedDevil]

I think part of my problem is that there are enormous gaps in the whole thing that my meagre brain in unable to explain.

I mean, look at the revenues. Revenues are, as I understand the term, the "raw" cash that is brought into the business.

Our revenues over the last several years have increased year on year but never particularly spectacularly so in any one year.

But surely with the £80million sale of Ronaldo, you would expect the revenues for that financial year to go completely off the scale but they didn't? Why not?

GCHQ believes our revenues this year could well be up but only by a relatively small amount (possibly as little as £5million or so). We are in agreement that this is actually good because we didn't reach a CL Final last season and we didn't win the PL.

Given that we also didn't sell an £80million player then to my mind, it is even more impressive.

If my understanding of the word "revenue" is correct then it surely includes monies gained from player sales. From that revenue, we then have to deduct all the various expenses that the club incurs (but not the interest costs) and what we have left is the EBITDA figure.

If this years' revenues are going to be roughly the same as last years and the EBITDA figure is going to be roughly the same as last years then the only way I can reconcile this in my head is that revenues in 2008/09 would have been significantly down were it not for the sale of Ronaldo but we have somehow brought them up by that amount and then some to achieve a figure higher this year which just seems to be wrong, too.

I am clearly missing something here. Any volunteers?

 

[datura]

Is it not so though, datura, that such non-cash expenses do not effect the operating cash-flow of the club and are thus deemed to be irrelevent. As explained here...

I think you have misunderstood. TMRD is obsessed with cash physically received and paid which doesn't give you a true reflection of performance, hence the need for accruals/prepayments. It wasn't about non-cash expenses (as per the definition you quoted).

So despite the Profit and Loss statement reporting a loss, no such loss effectively occured. This is the crux of the matter and the cause of confusion in those who do not understand these mechanics. Crerand describes it as 'Wizardry' ffs!

You just need to differentiate between a financial loss (which seems to confuse people) and the operating profit (adjusted for the non-cash items).

The concepts behind the financial accounts are all sound (on the most part), if you think they are complicated, try looking at tax. This is easy stuff.

 

[TheMancRedDevil]

Is it not so though, datura, that such non-cash expenses do not effect the operating cash-flow of the club and are thus deemed to be irrelevent. As explained here...



So despite the Profit and Loss statement reporting a loss, no such loss effectively occured. This is the crux of the matter and the cause of confusion in those who do not understand these mechanics. Crerand describes it as 'Wizardry' ffs!

Well, I describe it as like watching a master of sleight of hand with the little ball and three cups.

Now you see it, now you don't and no one knows where the hell it went.

 

[Redjazz]

All very plausible stuff Redjazz but after it emerged that the Glazers had purchased at least 20% of the PIK debt two years ago - something which neither you nor anyone else knew about - I would have thought you might have stopped speculating on the state of the PIKs and the options open to the Glazers by now.

No, it makes for more speculation really. And their own status as pik-holders doesn't invalidate the equivalence of the Ronaldo money to the special dividend of 70m. You might 'speculate' that if their intent on purchasing the piks was to cancel their share (or inject the proceeds from their pik-holding back into the club) then they might have opted for a reduced carveout; it might have made the bond cheaper, yield-wise; and P.R. wise, it might have dampened subsequent anti-Glazer sentiment.
Just speculating, like. Admittedly, the latest relevation makes the pik-thing a bit more convoluted so I might ease back from the 'speculating' until we get some concrete info about the bloody thing. Who knows, maybe the Glazers might cough up their real PIK plan any day now.

Apologies if I am putting words in your mouth here but that does tend to read like you are suggesting that Ronaldo was indeed sold in order to provide them with funds to pay down their debts.

Dreadful habit you have there; and noticeable even when you are in near agreement. I think Ronaldo wanted to go, and the money, anticipated or not, was very, very, convenient. Apology accepted.

The opposite scenario is also true though, isn't it? That an absurd amount of money came in and so the Glazers took full advantage of it in some kind of crazy "Business-owner uses profits to his advantage" shocker.

What I can't get my head around is how we can make £90million+ EBITDA (the figure that is all important when working out how much the Glazers can withdraw as dividends) in successive years when we haven't sold an £80million player in successive years. What does this tell us about the Glazer's "need" to sell Ronaldo in order to meet EBITDA targets?

The selling\buying of players (transfer fees) doesn't feature in the EBITDA figure (aside from the salary adjustment and, indirectly, performance on the pitch). 'Profit on disposal of player' and 'amortisation of player's registrations' feature in the P&L account and, I guess, the FPP regs' break-even test.

 

[ciderman9000000]

I think you have misunderstood. TMRD is obsessed with cash physically received and paid which doesn't give you a true reflection of performance, hence the need for accruals/prepayments. It wasn't about non-cash expenses.

He's on the right track. For a true reflection of performance non-cash expenses should be taken into account when analysing the club's Profit and Loss statements. TMRD seems to be struggling to grasp the reason for the existence of such expenses, but he's certainly open minded when it comes to considering the difference between cash and non-cash expenses when analysing the club's operating results. This is a consideration that the press and as such the layman has thus far ignored entirely.

 

[TheMancRedDevil]

The selling\buying of players (transfer fees) doesn't feature in the EBITDA figure (aside from the salary adjustment and, indirectly, performance on the pitch). 'Profit on disposal of player' and 'amortisation of player's registrations' feature in the P&L account and, I guess, the FPP regs' break-even test.

Curse you and your rubbish quoting technique!

Yeah. Ok. Whatever.

Yet another example of the incredible "luck" that these Glazer boys seem to attract wherever they go, then?

 

[TheMancRedDevil]

He's on the right track. For a true reflection of performance non-cash expenses should be taken into account when analysing the club's Profit and Loss statements. TMRD seems to be struggling to grasp the reason for the existence of such expenses, but he's certainly open minded when it comes to considering the difference between cash and non-cash expenses when analysing the club's operating results. This is a consideration that the press and as such the layman has thus far ignored entirely.

Thanks cider. "Struggling" is an understatement though!

I do feel like I am on the right track but am barking up the wrong tree, dressed in a cat-suit and the tree is actually a telegraph pole.

 

[Crerand Legend]

An outsiders view on the Glazers

Jim White: Liverpool debt problems cast warning shadow over Manchester United - Telegraph

 

[GCHQ]

Sheeeeeeeeeeeitttttttt. That's a good price GCHQ. I'm not trading on that.

IF they haven't taken the money I am at a loss to say why. I've spent the last nine months asking (non-football related) fixed income experts for a possible explanation and nobody has one.

As for my boycott, if people want to give me free tickets then I'll go. I paid the gimps £1,000+ last season and feck all this season (except my One United membership and Valencia away booking fee) and I'm happy about that.

On the P&L, I don't think the refinancing costs (swap closure etc) are irrelevant, that's real money (unlike g/w amortisation) but that's an argument that's been done to death.

Right then. You must be hoping against hope that tomorrow's results show the dividend has been taken then otherwise your entire analysis has to be called into question.

With the P&L, I wasn't describing the swap closure as irrelevant, it's obviously relevant for the year in which it was incurred, but it clearly doesn't reflect the underlying trading performance of the company and won't be repeated. It's very important that people understand the exceptional nature of this cost and you'd agree with that surely.

You'd presumably describe the c.£21m of unrealised foreign exchange losses on the dollar denominated bonds as an irrelevant non-cash loss. I mean come on. We can't say this is relevant when the bonds are nearly seven years away from maturity. On today's rate you'd be looking at a loss of just £6m.

We've then got the c.£6m of accelerated non-cash debt issue costs which are again irrelevant. There's also going to be the c.£2m relating to the provision on the Irish property which won't be repeated.

It's absolutely essential that people understand the accounting loss grossly distorts the reality of the club's financial situation and in order for that to happen the likes of yourself have to explain why that is. The question is, are you prepared to do it?

 

[ciderman9000000]

An outsiders view on the Glazers

Jim White: Liverpool debt problems cast warning shadow over Manchester United - Telegraph

We're so much deeper than and farther ahead of the press with our discussions on here, articles like that just seem like playschool stories in comparison.

 

[TheMancRedDevil]

An outsiders view on the Glazers

Jim White: Liverpool debt problems cast warning shadow over Manchester United - Telegraph

Hmm... not the best article in the world, to be honest. He doesn't even seem to know the basics of what he's talking about.

£700million debt at 16% interest? Where did he do his research? At a MUST convention?

 

[ciderman9000000]

For anyone interested, this thread has inspired me to enroll on an Open University undergraduate accountancy course starting in February. Pretty exciting, eh?

 

[TheMancRedDevil]

Right then. You must be hoping against hope that tomorrow's results show the dividend has been taken then otherwise your entire analysis has to be called into question.

It was quite funny reading some of Anders' older stuff today (I went back to read through some stuff in order to try to educate myself a bit following this afternoon's discussion where it became plainly obvious that my understanding of the finer points of what consistitutes a "financial loss" was virtually non-existent).

"What's obviously harder to prove is that they intend to exercise these rights and to what extent. We know for certain that they intend to take the Ronaldo money out, it's mentioned on pages 27, 44 and 130 of the prospectus. We know they are going to grab Carrington, sell it and make the club that built it from its own funds pay to use it, that's on pages 78, 79 and 156 amongst others."

Andersred - How We Know What They're Planning to Take Out - January 2010