ALL issues relating to the bond issue and club finances
- Thread starter sammsky1
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Well said Ciderman.
This nonsense about the loss is just absurd. Just to point out how absurd it is, in order to reverse this accounting ''loss'' back to break even next year all that would need to happen would be for the pound to strengthen against the dollar (it's 1.58 today) from 1.51 at the end of the last financial year to 1.62 at the end of the current financial year. Not that the c. £20m unreaslied gain on the dollar bonds would be any more relevant than the c. £20m loss on them last year. It's all completely irrelevant because the bonds don't mature until 2017.
That's break even without even deducting the utterly irrelevant £35m non-cash goodwill amortisation charge.
I just don't know what planet some of you live on. I'll call it Planet Ignorant.
Gill has done a fantastic job in my humble opinion. I know a lot don't like him for his part in the events of 2005, but in his day to day role he is doing brilliantly, hence the ever increasing turnover.
Agreed. I think he's being doing a great job. But as with most things at United, it's all clouded by the shitty way the Glazers took over the club.
I actually keep hearing muppets say that United have 'bought' all their success and that's why they have big debts. There was a letter into an Irish newspaper when United opened the new Aviva stadium complaining that Barcelona should have been chosen to open the stadium as they had earned all their success while United had bought it all with debt.
When obviously the fact is that United have been the best run club in the world (at Gills level) for years, and have funded all their own success on the pitch with their own money.
The problem is that United also have to fund this leveraged fecking buyout.
I hate this situation. I just don't agree with the people who want to boycott the team and piss on Gill though.
Why if the business is in such a healthy state, the brand name is world class, the club is followed religiously throughout the world the banks never lent the Glazers money on the initial purchase of the club (when banks were begging people to borrow money). They had to go to loan sharks (PIK). Recently they promised bondholders more than double what a normal business would have to pay banks.
I have never received a decent answer to these questions.
I have never received a decent answer to these questions.
To be fair, people compare the situation prior to the Glazers and now. And you cant deny that United is worse off with them. And also worse off with the debt. And that a takeover with so much (leveraged) debt is just not healthy and risky, and puts the club in a worse situation.
You know what, I bet half of you lot aint got a fecking clue when it comes to discussing business, yet talk like you've been working for Goldman Sachs for the last 10 years.
To be blunt - we're fecked. Matchday revenue is one of our biggest revenue streams, which will decrease over the years as protest against the Glazers becomes even stronger and interest payments will rise. Gradually, we wont receive as many sponsorship deals the way things are going on the field in the league, particularly if our results in all competitions arent great - God help us if we're out of the Champions League by the group stages. I dont have enough time to go into more detail, but sadly, things look very bleak for the club we love. Gill can feck off with his inevitable positive spin on things (record operating profits etc, forgetting the rise in debt) and Fergie, I may burst a blood vessel if I hear you mention theres no value in the market one more time. Its all clear for the ones with half a brain to see we're struggling for funds.
To be blunt - we're fecked. Matchday revenue is one of our biggest revenue streams, which will decrease over the years as protest against the Glazers becomes even stronger and interest payments will rise. Gradually, we wont receive as many sponsorship deals the way things are going on the field in the league, particularly if our results in all competitions arent great - God help us if we're out of the Champions League by the group stages. I dont have enough time to go into more detail, but sadly, things look very bleak for the club we love. Gill can feck off with his inevitable positive spin on things (record operating profits etc, forgetting the rise in debt) and Fergie, I may burst a blood vessel if I hear you mention theres no value in the market one more time. Its all clear for the ones with half a brain to see we're struggling for funds.
Before people consider the rest of the post, perhaps you'd like to explain why your opinion on this matter are worthy of being taken seriously, considering your above view on other peoples opinions.
Just noticed your edit; people who say things like that are woefully ignorant of the facts. I used to work with a few fans of varying clubs who always played the 'United bought their success' bullshit, and I tried to point out that United's funds were self generated unlike Chelsea (and now City but that had yet to happen), but they didn't care, they just repeated the same nonsense over and over, very frustrating.
Via Swiss ramble, the financial guy.
1. How do you know we will be able to re-finance in 2017 and more favourable rates? Do you have a crystal ball?
2. I’m not denying the operating profit is healthy; in fact it’s bloody amazing considering we’re a football club.
However, we are 600-700mln in debt. That’s a lot of money, really a lot. And we’re making a loss every year. The cash reserves may have increased by 14mln, but the loss was 83mln. AND we paid more on interest than we did on players; try explaining that to the customers (fans) who pay good money to watch United.
Our situation may not be as bad as Liverpool’s for now. But they were only 300mln in debt compared to our 600-700mln. And there is no guarantee we will be refinance in 2017, let alone for more favourable terms.
To conclude, we are a healthily club apart from the fact that when our current owners purchased the club they decided to do it with borrowed money and put the debts back in the club…. that’s the problem.
These are good results, better than I thought they would be, the cost control is amazing. If I was the Glazers I'd be concerned that they are wholly reliant on commercial income to drive growth in the business. I know people disagree on the potential.
Just to keep GCHQ happy and prove I'm not a propagandist:
Ignore goodwill amortisation
Ignore amortisation of issue discount
Ignore unrealised FX swaps
They are all irrelevant and non-cash
The swap loss is a £40m abomination but we already knew about it.
More on here:
the andersred blog: Manchester United results 2009/10: first thoughts
Just to keep GCHQ happy and prove I'm not a propagandist:
Ignore goodwill amortisation
Ignore amortisation of issue discount
Ignore unrealised FX swaps
They are all irrelevant and non-cash
The swap loss is a £40m abomination but we already knew about it.
More on here:
the andersred blog: Manchester United results 2009/10: first thoughts
I think the general discussion has raised all three as possibilities, but no one is in a position to say anything definitive.
It's more than possible that the dividend will be taken before the end of the year, but then will not be known about in the public domain until 2011 during the business end of the season where (they might hope) we are competitive and it will be less of an issue then if combined with a c£80m accounting loss.
The loss or not is irrelevant, the 600-700mln we need to re-finance in 2016 (yes, 2016...) isnt!
I saw that too, any of the financially savvy caftards care to explain the implications of that?
Surely we should be concerned about the 'low investment' in the playing squad. Fergie is taking the route of spotting young talent. But that can be hit and miss.
A healthy mix of buying proven talent and great prospects is the way to go.
I'm not all that assured.
A healthy mix of buying proven talent and great prospects is the way to go.
I'm not all that assured.
That's more like it Anders. I think it's fair to assume that the management fee wasn't taken either based on the ''other operating expenses'' figure. Would you agree?
What was said about the dividend entitlements in the conference call? And anything on the corporate hospitality capacity utilisation numbers?
The only thing which has been increasing rapidly since 2005 is the debts.
I'm not quite sure how you define that as "improving rapidly".
andersred said:
Very good summation.
Thanks for the summary. Easy to understand. Any thoughts on the dividend question?
No.
Why not pay off the debts and save some money?
The board may feel that a fair amount of money will need to be spent in the summer to replace Giggs/Scholes/Neville/VDS
Surely it can be borrowed back when needs must?
It could be some tax saving scheme.
A fair amount that we don't have, the money in the account will eventually go the Glazers when the dust settles
Sorry, by all accounts it's 520 million in debt. The PIKs aren't loaded onto the club, according to what I've read. Yes the Glazers will take profits out to pay them but the risk is squarely with them.
As for future refinancing, I've no doubt the Glazers will do another bond issue when the current ones are coming due, with fiscal performance like they're getting out of the club they won't have any trouble finding investors.
As for players, United spent somewhere between 20-30 million depending on who you talk to (Smalling, Hernandez and Bebe), what more do people want? Oh, right, they want us to break transfer records every window; how very fiscally prudent.
This debt isn't a good thing to have obviously (one would prefer debt free to indebtedness) but judging by the numbers it isn't a serious problem like Liverpool's. This club has overcome so much in its history do you honestly believe that something as base and trivial as money is going to bring it down?
Tax saved wouldn't be more than the 16% interest on the PIKs though? That would only make sense if the Glazers owned more than 20% of the PIKs themselves.
Maybe there are some provisions or early repayment penaties in the PIKs which mean they are delaying the payment?
That's the worrying part when you consider that we will need some serious investment next summer. I just hope when Fergie tells them this they will back like they did in 2007.
Pure speculation. The proof is in the bank, there's money to spend, it's called saving for when you really need it.
Your optimism Doc is to be admired, however money has sadly been the demise of several clubs. At best we will have no money for any sort of investment for a long time, we will sell to buy
The debt has hardly increased at all since 2005. Revenue and profits have.
We shall see how squad investment pans out over the next two or three seasons; my guess is SAF will continue to be backed in the transfer market and when that crucial time comes that Scholes, Giggs and VDS need replacing the funds to make the squad changes needed will be in place.
We all know why 'low levels of squad investment' are apparent over course of the Glazer ownership; the sale of Ronaldo ensured that net-spending has been low; there's no need to drag that all up again as opinions are set and varied. What's important is that funds are in place when they're needed; that when SAF calls upon the owners to support him, financial support is forthcoming; the figures suggest that the club is in a comfortable position and is able to support the banks and the squad alike.
Can a man earning £280k a year keep up a £510k mortgage and still afford to feed and clothe his kids? Of course he can.
The club's finances appear sound.
It's the only plausible answer I can think on in my capacity as a simpleton.
There are certainly other possibilities though:
1. The Glazers own more than 20% of the PIKs.
2. The Glazers have other money outside MUFC that they plan to pay down the PIKs with - seems unlikely as we don't know of any other cash reserves they have.
3. They are afraid of a full scale fan revolt if they took the money now, and feel the loss in matchday revenue from such a revolt would be greater than the 16% PIK interest.
4. They feel the club needs to use the money for asset purchases and this is more important than the PIK debt at present.
5. They plan to pay of the PIKs by refinancing somehow.
Even the pro Glazers admit this money is earmarkred to pay off their personal debt, ie the PIK's. The accounts today were so bad they probably decided to wait before moving it to try and take some of the bad look of the whole thing
United posts £83.6 million loss | United Rant
Think Redcafe is mentioned somewhere in the comments below.
Think Redcafe is mentioned somewhere in the comments below.
This is the road to walk!
Good work Anders. The last part is so true.
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