Cashflow yes (there will still be some minor costs) but not operating profit which is what we started this discussion about. That's complete and utter bollocks about Queensland Road. Where on earth did you get that figure from?
ALL issues relating to the bond issue and club finances
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Cashflow yes (there will still be some minor costs) but not operating profit which is what we started this discussion about. That's complete and utter bollocks about Queensland Road. Where on earth did you get that figure from?
I can't tell if you are being sarcastic here but the belief is that the PIKs are secured against "the assets" of Manchester United (all of it/them?).
£200million loan secured against a £1billion asset?
You misunderstood the point I was making.
Yes, sorry, just re-read. "ABOVE the value of the asset secured..."
It's getting late!
Now, about that email...
I know nuffink. Anders is clearly in possession of more information than I am.
We'll just have to watch this space - expect a Blog entry next week at some point, I suppose... should be interesting.
A healthy valuation of United would be maximum 8-10x EBITDA, probably less. To pay above this figures would be pure madness. Why?
1.We are going to change manager for the first time in 25 years. In the near future we need replacement for several key players. = Instability
2. Our famous waiting list is gone. = Matchday revenue are maximum for the near future.
3. We have increased our incomes from Media and Commercial with 5,1% and 16,4% since last year. After one of the most successfull periods in the clubs history. = This revenue will flat out.
Potential buyers except the RK? Well I qoute Liverpool chairman Martin Broughton.
All in all this give the Glazers many things to think about. Off course in 6-7 years time the situation could be different but at the moment there is no money back guarantee for the owners.
What do you say Anders?
Is it correct I draw hefty bonuses/dividends/management fees whilst the company is suffering, knowing full well if the company goes to the wall I will be safe form scrutinisation?
Is it right to privatise the profits and let the losses be collective? You cannot simply reap huge profits when things work out, and let the company, lenders, and the day to day small businesses who are owed thousands to go to ground when things do not work out, simply because it's too easy to call in the receivers and suffer the consequences?
Greed is the motive here! The bankers as well as investors are blinded by the prospect of huge returns with very few personal risks or consequences involved. They can borrow obscene amounts, mismanage the company knowing full well they will lose very little on a personal level.
Free country mate.
Or is it?
Was this a clue?
Is it something to do with the tax man?
This is why they are called Limited Liability Companies, though. The business-owner is not personally liable for the losses. The company is a completely seperate legal entity. Looking at it the other way, if a person stood to lose everything they own because of one bad business decision, far fewer businesses would be set up which would harm everyone.
The banks lend monies to businessmen after scrutinising their business-plan and making their own decision. If their decision was wrong, that is the risk they take. If their decision is right, they get shitloads of money for doing very little (interest payments).
The banks trust that a businessman is not just setting up a business in order to take out some money and then let it go into administration. In the long term, a businessman can make far more money by running the business properly and this is what the banks rely on.
I don't shed many tears for banks, though. They screw more people over than any businessman ever did.
I am not a big fan of the word "greed" and I don't think banks are blind. They went a bit silly a few years ago and got stung badly as a result (I think they are recouping their losses and then some now though).
In the case of the Glazers and Manchester United though, they have taken very, very little from Manchester United for themselves and this is what is so confusing.
They haven't taken anywhere near what they could and the question is: Why not?
If a business pays out dividends which cause it to become insolvent, then the board members and directors have behaved illegally under company law and are personally liable.
It is common for lenders to impose conditions on the amount of money that can leave a company in fees and bonuses whilst the debt is outstanding.
If a lender loans money to a Ltd company they understand that they cannot go after money from other entities in the event of default. That is part of the risk of lending money, you have to judge the risks and only lend a reasonable amount that you feel confident of recouping.
My understanding was a bit different.
You have the £42.3m interest payment to deduct.
What I would appreciate GCHQ, Anders or someone else clarifying is whether the £40.7m financing cost was a cash payment or not.
If it was, that would leave us with an EBITDA less cash outlay figure of £17.8m to cover transfer activity. Obviously that's fine at the moment, but would that be acceptable under the FFP regs?
I disagree. Both points are vital - neither point is bigger. As you've illustrated, the club needs the fans.
The £100m profit is at the cost of the season ticket waiting list, disillusioned locals and the division of supporters.
Returning pricing to 2005 levels + inflation would be fine by most, if not all fans.
You could argue that at any level of the Premier League
Would we have won the Prem with two extra players? Probably
Would Liverpool have got top four with two extra players? Subject to the quality, probably.
Would Villa have made top four with two extra players? Doubt it
Would Pompey have survived with two fewer players? I doubt it.
Every club takes a gamble on signing players (or not).
Which out of City and Arsenal would you suggest wouldn't swap?
I can see why - a quiet acquisition of 60% of the PIK would make them much stronger, let alone 20%.
Yes, we meet the FFP regulations with ease as I understand it.
By the way, transfer activity is already included in the accounts, it is not separate from them. The costs of player wages and purchases are already in the figures.
The refinancing cost was a definite cost to the club and is one of Anders' main bones of contention as he sees it as a cost with no real benefit to the club and was done solely to benefit the Glazers (the Bond provided them with the ability to take out the £70million carve-out and their £25million dividends if certain EBITDA targets were met).
I might be wrong but I think GCHQ's main bone of contention with Anders' reporting of it is that he hasn't really highlighted very well that although a significant cost, it was a one-off cost specific to this year. We won't be seeing that £40million come out again next year.
So, whilst a cost, it was an exceptional cost.
My personal view is that the Bond has made the situation more stable because we are no longer at the mercy of the banks. The money cannot be recalled by them and we don't need to refinance for another seven years.
Of course the club needs the fans. Every club needs its fans. Without the fans, what's the point of the club? Who are the club playing for without fans?
But you have just done some rough calculations and have arrived at a figure and are now asking "would that be enough for the FFP Regs?"
I don't know what the matchday income would be if we went back to 2005+inflation but I suspect we could knock £30million off the bottom line at least.
If the current situation isn't enough, then this would only make things worse.
The ticket price situation has been done to death, I think. I am genuinely sorry for the people who have been priced out but I also think that a) the numbers of people who fall into this category is seriously over-played by the anti-Glazers and b) the general recession hasn't helped these people and the Glazers aren't responsible for that.
I'll get called out again for saying this but it's my strongest view and so I'll keep saying it. MUST are more responsible for the divide between the supporters than the owners because of their completely biased and, at times, wholly inaccurate reporting of the situation. I get the feeling that we could be owned by Father Christmas and MUST would still be trying to get him out because they want a fan-based ownership.
At the end of the day, as said a million times before, our ticket prices are reasonable for a club of our stature. You might compare them to Manchester City's ticket prices (being a local rival) but City are being bank-rolled by a billionaire at the moment. When the FFP Regs come in and they have to start living in the real world, I think that unless these casinos and what have you start bringing in the bacon then the first and most obvious port of call for the owners who will desperately need to increase revenues will be ... ticket prices.
Arsenal probably wouldn't swap. City most definitely would swap.
Have you even seen City's accounts? Their wage bill alone is more than their total revenue.
Dividends are generally not paid when there are no profits. However, you can easily call it management fees and take the money out of the company despite it not performing. The lenders/bankers are on also on big bonuses to lend during good years and therefore due diligence is not done properly.
I'd say asset-based lending, which should also include assets belonging to the business owners is the way forward. It lowers the risk for lenders and should make borrowers more careful when making decisions to borrow and day to day running of the business, knowing they have to take personal losses if they get it wrong.
Definitely not. Around 75% of small businesses fail within the first 5 years - there's no way we should be making them personally liable. Many entrepreneurs have to put some personal assets up as collateral to get finance anyway.
The risk with starting/owning a business is that it goes under and you lose all the hard work you put into it. Stripping someone of all their personal assets because a business happened to fail is ludicrous, and would kill entrepreneurship, growth and personal aspiration. As someone who is considering starting a small business at some point, I can say there is no way I would do it if I knew I could lose everything. The thought of spending several years of my life and then having nothing to show for it is bad enough.
I might be wrong here but aren't H&G at Liverpool criticised for using over-leveraging with their purchase of Liverpool which has ultimately led them to lose control.
Apparently, they stand to lose £140million of their own money as things are, though, don't they?
I think it is a myth that the Glazers could have come along to United, made an absolute arse of it and walked away scot-free.
Given that as far as we know, they have taken out just £23million for themselves over the last five years, I would suggest that the risk/reward ratio has been stacked heavily against them for the last five years.
I don't disagree in principle with what you are saying when it comes to things like football clubs. They are clearly an exceptional form of "business" and perhaps some rules could be brought in to protect them from LBO's in the future.
I suspect it is difficult to do though without affecting business across the board though and a great way to send the economy even further into recession is to make it (even more) unattractive for people to start businesses.
I think the problem here is that "scott free" is being mis-defined.
I think its widely accepted that they took huge loans out against their malls to fund their purchase of United. Loans that they are now having to repay.
Now supposing they do go belly up ( not saying they are, or they will, but merely being hypothetical ) then they get hoofed out of United by the banks who come in and take the club from them.
Now on a personal level, they wont lose anything with relation to United. Its not like the banks can come in and take over the Buccs or we'll see Joel and Avi sat outside Waterloo Tube station with a begging bowl and a mangy dog.
What they will still have though, is those bills still attached to the malls.
If they get into trouble with United then its bad for United. Its also extremely bad for the Glazers because as I've maintained all along, at some point or other the money he took out of the shopping malls to fund United is more than likely only a loan, and at some point or other, they are going to take that money back to settle the bills attached to the malls.
This is costing the Glazers as much as it is United...
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Very good article on the program Sunday Supplement about the Glazers.
Much as how i hate Custis, he's got it absolutely SPOT ON
Very good article on the program Sunday Supplement about the Glazers.
Much as how i hate Custis, he's got it absolutely SPOT ON
Absolutely, although he failed to mention that two of the main reasons why there haven't been many protests this season (with the exception of Scunthorpe away) have been (a) many of those who led them have boycotted, and (b) security at OT is far more stringent than last season.
Have you seen City's levels of debt?
Have you noticed that their backers seem a bit flusher for cash than ours?
Yes, our revenue is rising, but how much more can be squeezed out of people? Media rights could potentially plumment as a result of the court case that is going on with the Portsmouth pub landlady and her use of the foreign TV package for football. Could go either way and leads to uncertainty.
Ticket prices are at maximum really.
That leaves commercial revenue. We've just started the Aon deal, so that's static for the next four years. How much more can we grab from commerical revenue?
Rough calculations? I've used the accounts themselves and I'm looking at what of the figures are actual cash outgoings of the numbers that take us from over £100m EBITDA profit to an £83m accounting loss.
The fact that things are one-offs is irrelevant - at least that's how the Ronaldo sale was dismissed. Although that's two years on the trot that we've had a very large exceptional item.
Saying MUST are responsible for the divide is ridiculous. If the Glazers hadn't carried out a highly-leveraged buy out, there would be nothing to protest against.
While the Glazers aren't responsible for the recession, they certainly haven't helped fans with the ACS (or face exclusion from the loyalty pot as it has evolved into) or the price rises. You say to dismiss City and I agree. I don't care what other clubs are charging; our prices have risen at rates well beyond inflation and while it's been "done to death" you still bizarrely defend them.
Unless we were defaulting on a loan, why would the bank really want to call it in? They'll miss out on future interest payments because the redemption figure (unless you're lumping all interest on at the start like the home shopping catalogues and similar do) then there's no reason for them to call in a loan that is being repaid.
What was the exact amount of the bond issue? If its <600m why does the thread title say otherwise?
Was going to link to that same interview, but there you go.
I have to say, I also agree with everything he said.
Regardless if you're in the crowd that accept the debt brought on the club as a burden that is unfortunate, but manageable, and not a hindrance to the ability to maintain success on the pitch, or if your in the crowd that see the debt as a lead necktie, and the road to ruin, I don't think that anyone can argue that the Glazers are in this for their love of the game, or of United or the clubs history.
While some may argue that they couldn't care less what the owners motivations are as long as the results are positive, it doesn't sit well with me that this is simply a business venture
The costs of the bond issue will only be a one off if the Glazers sell. Otherwise we will be doing another hundred million producing another issue.
Unfortunately football at the top level in this country has become a business, something which doesn't sit well with many.
I think you're missing the point completely.
I am talking about the accounts on a year to year basis.
If Monsour was prepared to keep putting in £200million (or whatever it is) of his own money every year to keep it going, well, fine but the FFP Regs aren't going to allow him to do this and unless they can bring in some more revenues, they'll be stuffed.
City would LOVE to be in United's position.
I can't see the Landlady winning that one, to be honest. I think it's a non-starter. If anything, I can see it backfiring on her and the pub industry as Sky tighten a few loopholes regarding the foreign channels showing PL games in England.
For the time being, it would appear that way.
How long is a piece of string? You can bet that the Glazers will be doing whatever it takes to find out.
Come on. We both know that these accounts are not as simple as that. God knows I have found myself in trouble enough times when it comes to simply adding and taking away the numbers.
If it was as simple as that, how can you start the financial year with less than £160million in the bank, lose £83million and end up with £160million in the bank?
In any case, my main point was that the removal of at least £30million by returning ticket prices to 2005 levels (plus inflation) would only make our financial situation worse.
Yes, because all Manchester United fans knew exactly what an LBO was back in 2004, didn't they? We were all savvy to the finer intricacies of PIKs, Bonds and corporate high finance, weren't we? We had all sat there and worked it out and we had all come to our own independent conclusion that it was bound to fail within three years, hadn't we?
As I said, MUST want one type of ownership and any other is unacceptable to them and they would find something to complain about and protest against whoever is in charge when they are not given a seat at the big boys' table.
They were also against Murdoch taking over United years before Glazer came along and, as far as I remember, he wouldn't have loaded us with debt.
Well, you never know. Perhaps a knee-jerk reaction to us failing to reach the CL one season, or something like that? Perhaps the banks find themselves in a load of shit again and want their money back so that they can use it somewhere "safer"? I'm sure someone with more knowledge of the situation with banks can offer other scenarios but what we have done now is bring all Manchester United's borrowing "in-house", so to speak. Surely this is a more stable scenario?
I am not saying that this is WHY they have done it. Clearing the way for the Glazers to pay off their PIKs was clearly the main reason. I just try to look for a positive to be taken from the situation.
Dunno about this to be honest. Didn't the RKs say that the existing Bond Issue would remain in place if they took over?
I think you've missed his point - it was clearly referring to a repeat of the bond issue and exceptional refinancing costs in 2017 when the current bond matures.
There's no doubting City would love to be in United's position, but there's similarly no doubt Sir Alex would have loved to have had Roberto Mancini's transfer budget last summer. City have to play catch up and are doing so the easiest way they know - spending. They've never been a particularly well run club from a footballing strategy point of view as the turnover of managers since Big Ron started with us points out. Stability isn't a word you'd ever have associated with our neighbours but a major cash injection had to happen. They've had to play the mercenary card because they haven't got the global stature or Champions League football to offer.
Still, it's not a given and more pubs will f*ck Sky off with their rising prices at a time when pubs are struggling as it is.
Agreed and good luck to them; we're going to need a lot of money going forwards.
I'm sorry if you didn't understand the question and it wasn't for you anyway. I simply wanted to know from one of the accountants how many of the entries taking us from £100m profit EBITDA to an accounting loss of £83m were actual expenditure rather than book value deductions.
To be fair, the financing the way it was set up in 2005 was going to fail. The Glazers have refinanced twice, not least because the first financial set up was unsustainable, so credit where it's due, the warnings were right and the predictions based on the documents seen were correct. However, the refinancing cancelled out all those predictions and rendered them void.
I think MUST have an extremist view to some extent. The club has always been run with an eye on the footballing side and one on the commercial side. A fan ownership model is an ideal that isn't going to happen any time soon, especially with the numbers involved. If every single (c338m) United fan put a tenner in an account, then yes, we'd have a club owned by the fans plus plenty to spare on new signings and a bigger south stand, but that's pie in the sky talk, even with celeb fans sticking more in the pot. MUST sees locals being priced out and restrictive cup schemes as well as the debt and the bond set up as a vehicle to remove money from the club and naturally have concerns about the state of the ownership. Grumbling politely about minor adjustments wouldn't get them much attention or support so they've had to inevitably spin it out. Their warnings about the amount of debt were right; sure, we can service them, but the Glazer's lack of communication with the fans certainly hasn't endeared them in any way. While they may not want to be liked by the fans, they disrespect them at their peril.
I would say that the legal team would have a field day on the bank calling in a loan that was performing fine and being serviced correctly. Especially at a considerably lower interest rate than the bonds.
Hmm. It's a bit "The World According to Custis" though, isn't it?
On the face of it, there's not much to disagree with what he says there but to take it up would mean going back to the discussions that have been done to death on here already.
What we have at Manchester United is not the ideal situation. I think we all agree on that score.
If you want to take the "ideal" (which would mean different things to different people anyway) and then start crossing off things about the status quo which falls short of that ideal then we would be here forever.
What we have is what we have. The question for me is: for all the shortcomings, bad points and things we would rather were different, can we work with it or are we inevitably doomed?
I've always said that I would rather give what we have every possible chance of working rather than decide that it's wrong, doomed to failure and should be removed at all costs from the very first minute.
A lot of Custis' misgivings about the Glazers remain things that might happen in the future. "United might fail to qualify for the CL and do a Liverpool" and "United might not be as successful when Fergie retires" and things like that.
For everyone of these things though, the opposite is also a possibility that cannot be discounted.
I would suggest that we would have concerns about Fergie's replacement whoever was in charge.
I would also suggest that any club that is geared up for CL football which fails to achieve it, would find themselves in difficulties but our revenues protect us to some extent because we are not wholly reliant on the CL income. We're not going to "do a Leeds".
The debts obviously compound the impact that these things could have on us but I think that it is fair to say that we are not one season away from complete meltdown.
You starting to see the light TMRD? Softening of the pro Glazer attitudes there
If we all agree that it's not ideal, what's wrong in stirring things up to make it ideal? MUST/Most of us want a ownership model with no debts, even if we go back a little on the record year by year profits.
While it's not all doom and gloom now, if we are able to work out on a ownership model where there's no debt, I think it's all right to protest the way MUST does.
The bad thing is, no one is able to come up with an alternative yet.
You're going off on a complete new tangent now.
Everyone is worried about our financial situation but we are able to cover our expenses from revenues generated. City aren't. City would swap accounts with us tomorrow (they'd probably want to keep their owner though, I didn't mention the owner situation).
That was all I was saying.
I'll have to take your word for it that it was "always going to fail". All I know is that the Glazers put forward their takeover plans to the PLC and they were rejected because the board felt they were too aggressive (this is when David Gill made his debt is the road to ruin" comment). The Glazers came back with a less aggressive plan and this was accepted (as the plan he had been commenting on had changed, should not David Gill's comment now be considered null and void, too?)
This second plan was clearly not really what the Glazers wanted and it was probably always going to be changed as soon as the opportunity arose.
However, MUST, with their agenda, have to have something meaty to use for their scaremongering and "doomed to failure within three years" would do the trick.
Read it how you want but that could easily be interpreted as "We'll be fecked within three years".
The Glazers have now been in charge for five years and we are a long way from doomed and given the situation with the general world economy and, in particular, the credit crunch, if certain parts of their plans have gone awry then I hardly think it is surprising.
I doubt there are many business-owners in the world who have not had to change one or two things about their operation in the last few years - if they have survived at all.
The fact is that despite all this, the Glazers have not only been able to see what needs to be done, they have been in a position to do what needs to be done and they have done it and us fans have hardly noticed a single difference when it comes to what has happened on the pitch.
There's a difference between a failed plan and a fluid plan.
Aww. You make them sound like such a reasonable bunch of guys.
I think most of my problem with MUST stems from my own ethics. I am a great believer in fairness and fairplay.
Your initial impression of something may well be negative but I believe in giving it a fair chance. MUST never gave the Glazers a chance. Because the Glazers were not giving them what they wanted, they have made themselves a thorn in their side from even before they took over.
I also believe in trying to be truthful and honest with people at all times. I have been accused of dishonesty with my arguments on here (intellectual dishonesty) but I do at least try to be honest and I do at least try to stick with the known facts unless it is a matter of opinion that we are discussing.
The problem with MUST is that they are selective on the facts that they concentrate on and even then, they embellish them to make them show the Glazers in the worst possible light.
I don't want spin or propaganda from the body that is supposedly representative of the Manchester United fans. I want the truth. I want a fair presentation of the situation put in front of me and I will make my own decision, thank you very much.
If MUST and the RKs can do a better job of running Manchester United, I want them to show me why and how they will be better. I don't want to know how crap the Glazers are.
This comes back to my ethics. There is a rule in business that says that you can't criticise the competition but you can promote yourself as much as you want and it's right - that's the way it should be.
Fan-based ownership was an option to us for many, many years and we never took advantage of the situation. Prior to the floatation, we could have purchased Manchester United for £20million and that wasn't pie in the sky.
After the floatation, it could have been bought for £40million and that wasn't pie in the sky, either.
What has happened since then though is that football has attracted money-men and is now a highly lucrative business and it has become beyond the reach of us ordinary fans and even people worth less than a billion or so can forget about it.
But it is now that the Red Knights suddenly want to rally the fans round in order to help them buy the club.
It's a pity they didn't hire MUST's financial adviser all those years ago. He can see the future.
Fair enough. Who'd be paying for this legal team, though?
There's nothing fair about buying a club with leveraged money and saddling the club with the debts.
Hmmm... I think this is one of those areas where the concept of "fairness" doesn't really apply.
I'll agree, it does seem "wrong" but I'm afraid Manchester United declared itself a club for sale from the moment it floated itself on the stock exchange.
There's nothing wrong with borrowing money and buying a business. People do it every day. It's considered perfectly fair in the business world.
All these leveraged deals are 'unfair' since they rely on interest on loans being tax deductible. This tax break was introduced to encourage investment in plant and machinery by industry, not to allow artificial schemes to take over companies. As with all tax avoidance the revenue can change the legislation and make the new laws retrospective if they feel the schemes breach the spirit of the law.
Will this be one of the loopholes the coalition want to close?
Nope. The amended takeover plans were not endorsed by the takeover panel.
When the Glazers passed the 75% limit, remaining shareholders were advised to accept the £3 per share- the club was about to be delisted and the Glazers had confirmed that they did not intend to pay dividends.
No chance. Osbourne touted it early on but has been very quiet on the subject recently (after some Tory grandee blew in his shell-like I'd guess).
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