The Piks are secured against the club which is why most people include them in the debt figure.
Expenditure on new players was c£28m I think, that wouldn't have included Bebe as he was purchased in the 10/11 financial year (for £8m it seems).
ALL issues relating to the bond issue and club finances
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The Piks are secured against the club which is why most people include them in the debt figure.
Expenditure on new players was c£28m I think, that wouldn't have included Bebe as he was purchased in the 10/11 financial year (for £8m it seems).
This is a key point, as far as I am concerned.
After our discussion last night, I hate to bring up Anders again but hasn't he being saying something pretty definitive for the last ten months and what he has said has affected just about EVERY discussion relating to our finances (yes, some people may have drawn their own conclusions independently, I just don't think that everyone has - I believe that Anders has been the original source of the views of many people.)
I have said in the past that MUST have LIED in their propaganda and have been hauled over the coals for using such a strong term but the fact is that they have been including monies in their figures which show that the Glazers have taken money out to pay off their PIKs which hasn't even been taken out yet.
The response to this has been something along the lines of "Oh come on! We ALL know that they WILL take the money out and the next financial reports will show it there in black and white - £70million carve out taken to pay off the PIKs. You must think we were all born yesterday."
In lieu of any proof to the contrary, many of us have had to back down on this one, even if we felt that the usual way of doing things in this country is "innocent until proven guilty".
What these financials have done is blown around 1,001 pre-conceptions about the Glazers and our financial situation out of the water.
There are a lot of so-called experts who will now have to admit that they might be able to read a balance sheet but when it comes to understanding the Glazers, they haven't got a clue.
Face it folks, these people keep their cards close to their chests. Not just to hide stuff from us but from our competitors too. I am pretty sure our competitors were fully expecting us to not be in such a strong financial position this morning, but we are and so where does that leave them? Shitting themselves, most probably.
Reports of Manchester United's demise have been greatly exaggerated.
The worst thing is that the people mostly responsible for spreading the belief that we're up shit creek is US, the club's own bloody fans!
I have been out and about this morning and so I still haven't had time to fully digest everything. I still haven't had time to read Anders' initial take on it and I am hoping that GCHQ will find the time to give us his own detailed take on the situation.
There are clearly some things which we all don't understand (the non-financial costs being the thing that very few people understand) and this headline figure of £83million "financial loss" is catching everyone's eye and causing people to, unnecessarily, get all hot under the collar about.
The other thing I'd like to clear up is that, as far as can be proven now is that our debt IS £500million. Not £700million. Not £800million. Not £1billion.
People now have to take whatever the Glazers owe on their PIKs and totally exclude them from their calculations of Manchester United's finances, as far as I am concerned and the situation is as many of us (including the ridiculed David Gill) have been saying for months now - the PIK debt is not Manchester United's debt.
This is a possible scenario and it could well be that the £70million carve out is intended to be taken out at some point in the future (why put it in there if they have no use for it?) but that they decided for whatever reason that taking it out now would not be prudent.
Whichever way you look at it though, any suggestions that the Glazers will just bleed the club dry in order to line their own pockets as soon as possible and to hell with the state it leaves United in have been proven to be completely unfounded.
I still maintain that whilst we can go along with what you have said there as being a possibility, it should no longer be the driving force being the anti-Glazer arguments.
For whatever reason, the Glazers clearly do not see the PIK debts as the malignant, all-encompassing, decision-driving force that we do.
Squad limits will play a part in that, too, though. But really the football manager signings are ridiculous and for the most part (unless you're doing it with English/British players) far from guaranteed success. I'd much rather the club spent money wisely rather than splashing big bucks on risky marquee signings.
As for the money, it's been the demise of clubs when it stops coming in, their debt gets recalled or their benefactor says "no more." So far there is little, if any indication that the money will stop coming in at United...and we know that the majority of the debt isn't due for a good few years yet.
It isn't a great scenario to carry this debt but there isn't a clear and present danger as far as I see it. As with any debt carrying exercise it's expensive as feck but the Glazers are managing it reasonably well.
That's a contradictary statement man. If revenues and profits increase in reality the debt decreases.
Together with the £504m bond refinancing earlier this year, and the interest accumulated on the PIKs surely that's an increase in debt since the takeover? If I remember correctly the Glazers also have an option to take £95m out of the club’s cash reserves which if not used to pay off United's debts will add further debt on the club.
I disagree, the only beneficary of the Glazer ownership is the Glazers, Red Football more important than Manchester United Football club, the debt has been carried at the expense of the playing squad the effects of which are sadly beginning to show.
I may have read that wrongly, then. They are seured against their shareholding in the club. But the total debt according to the report I saw was 521.7M which clearly doesn't include the PIKs.
This is what's confusing the hell out of me! it's the biggest drain on the Glazer/United books yet nothing is being done to eradicate the debt. There surely must be clauses beyond our knowledge.
You're right on the first part, from my perspective that's hardly shocking, though. We all know they bought United to make money.
Sadly, I expect more from you Crerand when it comes to being knee-jerk about results on the pitch. The season's barely begun, we've not lost a game...what exactly is wrong?
There has to be. As someone mentioned previously, early repayment penalties are the most likely. Lenders hate to lose money by people paying back their debts early.
You were right, they are not included in the debt of the club. The PIKs are held in another vehicle. I was just explaining why people add it to the United debt.
I figure that's erroneous then, but I can understand the reasons behind it.
Indeed, it would seem as such.
United will end up paying. I can't see any other way the Glazers can raise that sort of money...
I am not knee jerking. I have long held views on our transfer activity which I am not going to go into again. I am worried about our present squad with so many now in advancing years and alot of the new signings still to deliver. I am pleased however we are undefeated but most fans are unhappy with our league position, still early days though. We ignore the warning signs of Glazer ownership at our peril, the money wasted since they came here obscene
I understand your pain. However, what's done is done!
The only two scenarios we now have left is for the Glazers to manage the club well, or someone better and with deeper pockets comes along and bail us out. Moaning is not going to pay the debts.
United's debt is now tied up in the Bond Issue. That is now safely tucked away and can largely be forgotten about. All that the Glazers need to do is find £45million per year to pay the interest to the Bond Holders. In 2017, the Bond expires and the Glazers will have to refinance it (probably with another Bond Issue).
The nifty part though is that the debt will still only be £500million. It does not go up. It stays exactly the same. However, due to inflation, it sort of becomes "less", doesn't it? £500million in 2017 will probably not buy you what £500million will get you now. You think back to how much a lot of other things were back in 2003 and you will see what I mean.
Now. The PIK debt is a complete mystery at the moment but what we do know is that these are the Glazers' personal debts. I cannot actually remember how much the last known amount that was owed on them was but I think it was in the region of £220million.
Because these are secured against "the assets" of Manchester United (we assume that this means ALL the assets but it is ambiguously worded as merely "the assets") then people include these as being part of Manchester United's debts.
Part of the rationale behind this is because (EDIT: Some People Believe) whilst we might not be technically responsible for the payment of these PIKs, the Glazers will take as much money out of Manchester United as they can in order to pay them off and so we end up paying for them just as surely as if they were our own debts.
These PIKs are rising at 16% per annum at the moment which is clearly ridiculous and, because people assume that "Manchester United money" will be used to pay them off, the amount that we will need to pay off is going up at 16% per annum. You can see why people say that "our" debt is rising rapidly.
The fact is that it isn't though. The Glazers' debt is going up, not ours. Ours is still £500million.
Recent revelations that the Glazers bought up at least 20% of the PIKs themselves recently have only clouded matters further as no one knows for certain how much they bought (20% remains an assumption) and how this affects how much they now owe on them and how fast they need to pay them off.
For the sake of my own sanity, I now adopt the attitude that the Glazers have debts and it's a complicated situation and we will probably never get to the bottom of it. It is better to know that they are there but not lose too much sleep trying to fathom it all out.
The £95million you refer to is the £70million carve-out afforded to the Glazers by the Bond Issue and the £25million dividend that the Glazers can take out if certain EBITDA targets (profits, basically) are met.
Everyone has been saying that this £95million will have been shown to have been taken out today in order to pay off the PIKs but at least £70million of it hasn't.
What this says about the relationship between the PIKs and Manchester United is now down to your own interpretation. I know what mine is.
You call it moaning I call it genuine concern, I am a season ticket holder who feels entitled to my opinon. Im well aware there is no quick fix but I will not apologise either for my opposition to one of the biggest threats this club has ever faced, the Glazers
I'm going to have to to give some kind of recognition in the annual redcafe awards at this rate.
It's hard to replace Giggs and Scholes, especially when they're playing well. Fergie's been through it before, bringing players in too early (see Kleberson and Veron for starters). We don't know his retirement plans, either, so his prudence in the transfer market, which isn't as extreme as some make it out to be, may have the best intentions. As long as we're banking cash and have some facility to make purchases, even a credit facility, we shouldnt worry too much.
The money spent on interest and fees is obscene, you're right about that.
I salute your stance, Crerand. You are spot-on and dare say it. However, I am not sure we are already seeing the results of the debts, but I am sure we are either there or there-abouts. The squad we have now is getting old for sure (I have forwarded the statistics on the current squad versus age in another thread, and that topic is not open to debate), but it's a little early to write us off when it comes to grabbing the Premier League trophy, or the Champions League for that matter. I am confident that we will be one of the major contenders in either tournament. Do we need to make several major player-investments in short term future? Hell, yes. Do we have the cash to do it (no, I didn't say "can we get a loan")? Hell, no.
We all have concerns. However as I've pointed we have very few alternatives. The damage has been done. I'll say it again, these sort of takeovers should be be banned.
I am not taking away your right to an opinion.
There is £163m sitting in the club's bank account. We all thought that £70m or so would have been taken out to pay down the PIK debt... but, bizarrely, it hasn't... yet. It seems odd to say, but, for the moment at least, we do have the cash.
I am sure you speak for us all here. Some admit that, some don't.
Sorry TMRD but all that is an attempt at damage limitation, not bad either but nothing can cover the huge cracks that have now appeared in you and others arguements over the past few months. The debt will weigh heavily on this club for the as long as the Glazers reign and is bound to eventually affect performance, luckily they inherited a great squad
We may be banking cash but the debt will have first call on it for years to come this is bound to have an effect
Splash the 160m in the bank on Messi!!
According to Red Issue's article the accounts only cover up to 30 June (is this true?) and the PIKS can only be attacked at the half year points 31 Jan and 31 July.
I know very little, but I think I'm right in saying they would need to include a note of any major cash transactions since 30 June in the accounts? The Bebe cash outlay was included as a note for example.
They are correct about the financial year.
If they had paid it in July it would have been noted as a Post Balance Sheet Event in these accounts.
Not a clue Peter, oddly alot of the financial whizz kids are absent from posting today, I wonder why? If you are right I am sure then the PIKs were addressed on the 30 June, being able to leave them on these accounts would just be to save a bit of face
Won't be too bothered with the loss if its due to non cash expenses and we are on the other hand building a cash fund. Which we certainly are, I guess Gill said we have around £180m in the bank.
Now no one for sure knows if the loss is before the financial charges of the PIK or for that matter how much cash we have.
You certainly need to add back about £53m in non cash expense and so bond issue expenses as one off (not if they are being written off over a period of years).
Was the issue of bonds at face value or at a discount?
To be honest, the results aren't as bad as they've been made out to be, but they are bad nonetheless.
Now no one for sure knows if the loss is before the financial charges of the PIK or for that matter how much cash we have.
You certainly need to add back about £53m in non cash expense and so bond issue expenses as one off (not if they are being written off over a period of years).
Was the issue of bonds at face value or at a discount?
To be honest, the results aren't as bad as they've been made out to be, but they are bad nonetheless.
Like who? Rood already explained he wouldnt be online today. Redjazz? Maybe he's at work?
Jesus, you do have this weird habit of throwing a wobbler if the likes of ciderman or GCHQ don't post anything for an hour!
I presume your last comment was meant to be ironic!
I think we all agree that United had a good year; I’m not denying that.
The point I’m making is that the debt burden is not healthy (as you agree with); we could still end up in a similar situation to Liverpool in the worst scenario in 2016, just as it could happen that we easily refinance in the best scenario.
What worries me that the Glazers seem to be doing very little to actually get rid, or at least reduce, the debts. I don’t believe that we can continue with such debts indefinitely. The Glazers will have to pay the money back at some point and that will be the judgement day…
Personally, I would love it if those PIKs suddenly disappeared or if the cash was held simply to cover the debt. United are very good at developing players and bringing them thorugh or selling them on for good sums. With Fergie at the helm we'll always be pushing for honours.
And talk a ton of shite about a topic he doesn't understand amongst a number of people actually trying to make sense of complicated results. I've been trying to get an understanding of the clubs financial position from this thread and it's being made somewhat harder by crerand making grand statements of fact about things he has no level of expertise in. He's guaranteed that the £70m would be gone. He guarantees all sorts and the number of times I've had to Mark his words are legion.
No wobbler intended, its says alot for todays news when their posting is somewhat quiet, just making the point. If it had been good news they would been on here giving us all hell. I predict this thread will soon disappear as there aint alot more to say
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