This, coincidentally, is the figure Gill gave, I believe.
ALL issues relating to the bond issue and club finances
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This, coincidentally, is the figure Gill gave, I believe.
Quick Cider, edit back to 25 million, you were right.
Edit: just noticed you, noticing that.
you're ahead of me; i just added £10m to that figure after you pointed out that we paid £14m this year rather than the £5m in subsequent years.I'll meet myself halfway and say £30m then 
To be honest and what is most depressing is that there is enough knowledge amongst the people here to be able to put aside their differences about the Glazers and give the fans a true, objective and honest account of the situation.
That there are so many agendas and "sides" to the argument means that we forever remain in a state of flux and are constantly attempting to "trip" people up in order to score petty points.
It shouldn't be like this people. We are all Reds at the end of the day.
That there are so many agendas and "sides" to the argument means that we forever remain in a state of flux and are constantly attempting to "trip" people up in order to score petty points.
It shouldn't be like this people. We are all Reds at the end of the day.
Something you seem to have forgotten is that they have been paying interest on the loans they took out to fund that £270 million. Plus all the costs incurred in raising the finance.
If I buy a house for £100,000 and have a 30 year mortgage on it, paying £500 per month then at the end of the 30 years, if I sell that house for £300,000 then I havent made £200,000 profit because its cost me £180,000 in mortgage payments so my profit is actually only £120,000.
If they sell up tomorrow they get £400 million back. Take off all the costs, the interest they've paid over the 5 years, and they will be lucky to walk away breaking even.
Bear in mind also they've sold off houses, they've lost malls to the banks. They've had to borrow money from United which needs to be repaid.
So contrary to what you say, they wouldnt be making a nice big fat wedge by selling up now. They'd be lucky to walk away with their £270 million intact.
One or two seasons of bad results and the price of United will drop like a stone.
They borrowed £270 million to buy United. They still owe that.
The club cost £780 million to buy. So that means the debts were £510 million when they first bought the club.
The debts now stand at £725 million. An increase of £215 million in 5 years.
So they've increased the value of the club by £470 million ( and thats being very very generous ) but from that they've added £215 million worth of debt, and they've paid out squillions in fees, interest, costs etc, lost shopping malls, sold houses etc to fund it.
So how you make out that they are making shed loads of money by increasing the value of United I will never know.
Agreed.
You and I are reds. So is Ciderman..
Glazer and Gill however are not, so how we end up fighting each other and some siding with them parasites I will never know.
sure we are all Reds. But all of us together don't have enough to buy the club...and the bastards won't sell it anyway.
Red Knights know that.
Red Knights know that.
'Whatever'? Have you morphed into a pubescent?
Yeah, I guess it's a piddling amount, sorta like some of the 'other' commercial contracts nullified by it. Still though, it means that our finance costs (including the bond interest) will be c. 50m going forward.
@fred - As usual, that is so full of errors that I started to pick it apart but gave up.
I think this must be part of your plan, to be honest.
I think this must be part of your plan, to be honest.
Yeah, yeah, whatever Redjazz... get on with it... what's your point?
Yeah? Sorta? Have you morphed into a dick? Or are you taking the piss?
Yes, we know all about this Redjazz. Money is going out on stuff. But here's the good news. MORE money is coming in!
Now. Do you want to have that little discussion we had a few months ago where you were telling me how, after the £70m carve out, £25m divs and all the various fees had been taken out that we would have just £5million to spend on transfers and you thought you were being clever?
Like you really believed that you were so smart and the Glazers so stupid that they wouldn't have noticed that £5m is not enough to keep a club like Manchester United on the road?
Aren't you adding the PIK notes twice into that equation though, fred?
You said that they borrowed £270m to buy United, but that's what eventually became the PIK's, isn't it?
You then say that they bought United for £780m and so the debts were £510; but they weren't; including the original £270m the total debts on the purchase were the full £780m.
So if that debt is currently at £725m then the total debt on the purchase hasn't increased by £215m but dropped £55m.
You're forgetting too that they own £40m of the PIK notes themselves.
So that's a £95m decrease in debt versus a £470m increase in the value of their asset. £565m total profit.
Even including any personal fees they may have incurred along the way, that's a big return to have made just five years into the investment.
I'll meet myself halfway and say £30m then
Cash generation last period was 13m. It semmingly doesn't include a management fee. It also doesn't allow for an annual dividend entitlement. It also doesn't take into account the Aon negative working capital unwind of 9m pa over the next 4 years.
The JPM report predicts cash generation of -8m, 0m, 5m, 15m, 26m, from this year through to 2015 (base rate assumptions). On it's upside scenario, it predicts cash generation of 2m, 19m, 22m, 42m, 50m, over the same time period. The big uplift in the tail (for both) coming from better expected media contracts. Neither scenario includes an annual dividend working but do include a regular management fee.
For reference: The JPM report estimated that cash in bank as at YE 2010 would be 154m and EBITDA would be 92m. Without the predicted management fee, the figures would be 160m and 98m.
In arriving at an estimate for cash generation, you have to decide, I guess, the likelihood of the Glazers not taking a management fee or an annual dividend during the life of the bond (which I expect to be refinanced well in advance of the maturity date).
As an aside, the presented accounts on the MU website includes an easy to understand working of cash generation (from opening cash balance to closing cash balance, allowing for EBITDA, etc) on page 26 of the presentation.
It's picture-equivalent to the cash flow statement on page 30.
No.
The PIK notes were part of the $500 odd million loans they took out to purchase the remainder of the shares in United. That was split into two parts. The PIK notes and the bank loans which later got converted to the Bond
The £270 million was money they borrowed to buy their initial 25% stake in United, using their Malls to finance it.
The £270 million loans are nothing whatsoever to do with United. They are debts attached to their shopping malls, which they are now repaying ( or in come cases not paying, and the banks are taking the shopping malls off them instead ).
If you add up everything they owe it breaks down as follows. Roughly of course because we dont know what the precise figures for the malls are, but I am sure Andersred would have a better idea
PIK Notes £250 million
Bond $500 million
Mall loans to be repaid £270 million
that makes a total sum of £1.02 billion.
Take from that the interest and costs they've incurred since they took over, and you are not going to have much left from £1.25 billion they are asking for the club.
And all the time the PIK notes are going up and up. Eating into the equity they've increased.
Lets put it another way
Take out the £270 million for the 25% stake they had already. Completely ignore it.
They had to find £510 million more to completely buy United.
They took out the PIK notes and the bank loans to fund it.
The PIK notes stand at £250 million.
The bank loans have been converted to the bond they are worth £500 million.
So their initial £510 million debt now stands at £750 million five years later.
That means they've increased the value of United by 500 million but hte debts have gone up by £250 million as well.
That would put them £250 million better off.
But there would be costs incurred in selling up. Early redemption penalties. Lawyers fees, costs to come out of that £250 million.
Where you get £545 million from god only knows..
What worries me is that 5 years down the line, you still don't even know that the PIK notes were part of the £500 million they borrowed to buy United.
Back to the drawing board for you mate..
Take out the £270 million for the 25% stake they had already. Completely ignore it.
They had to find £510 million more to completely buy United.
They took out the PIK notes and the bank loans to fund it.
The PIK notes stand at £250 million.
The bank loans have been converted to the bond they are worth £500 million.
So their initial £510 million debt now stands at £750 million five years later.
That means they've increased the value of United by 500 million but hte debts have gone up by £250 million as well.
That would put them £250 million better off.
But there would be costs incurred in selling up. Early redemption penalties. Lawyers fees, costs to come out of that £250 million.
Where you get £545 million from god only knows..
What worries me is that 5 years down the line, you still don't even know that the PIK notes were part of the £500 million they borrowed to buy United.
Back to the drawing board for you mate..
Ok, but why are you suddenly estimating the PIK's to be worth £250m? And why aren't you taking into account the 20% which the Glazers bought in 2008?
If you took out that mortgage to start your business then yes, you do owe £70k. Which ironically is what Glazer did.
He borrowed against his malls to put in £270 million into United.
He took out loans for the other £510 million ( the PIK and bank loans ).
So his total borrowings to fund the purchase of a £780 million business now stand at over £1 billion.
In five years he's managed to end up owing more than the company he bought was worth when he bought it. All that interest, all the houses he's sold off. All the malls he's lost to the banks. And the PIK notes are still attracting interest at 16.25% p/a.
All this at Uniteds most profitable and succesful period in history.
Just imagine what would have happened if Fergie didnt have the players he had when they took over. Ronaldo, Rio, Rooney, Fletcher, Giggs, Scholes...
Imagine what would have happened if we hadnt been so succesful.
Now imagine what will happen if suddenly the success stops, the fans lose a bit of interest, the sponsors start thinking United isnt as succesful so they wont pay as much.
The value of the club will fall, but those debts wont. In fact we know for 100% certainty that at least £500 million will be with us long into the next decade. How many more malls will he lose to the banks in that time. How many more refinances at £40 million a time will he pull off. All those eat into teh profit he's made from increasing the value of United.
As I said before, they wont walk away with anything like the money people think they will make if they sell up now.
Take all the costs out. Take out what its cost them already to buy the club, and they will be lucky to walk out with their £270 million back.
They're not walking out now though, fred, what's your point?
But the PIK notes at last count were £215 million and theres interest to add onto them since that point.
Also what costs were incurred in buying that 20% ?
Then of course I havent allowed for the £10 million they borrowed from United which they have to repay if they sell up.
What I think needs to be clear is that the PIK note levels still stand at £250 million. That is what United is secured against.
The fact 20% of that is owned by Glazer is in many ways a red herring. It doesn't mean that the debts are reduced, its just that 20% of the debts belong to Glazer and not a bank.
If the club were to go bust and be sold, then Glazer as owner of 20% of the PIK notes would be entitled to 20% of any money they made.
From Glazers point of view, it means that he owes himself 20% of those PIK notes. It doesnt lower the debt levels attached to United, it merely means that Glazer has 20% stake in the debts attached to the club.
He's making money off his own debts for want of a better phrase.
( and what he does with that money is purely up to him. If he wants to go spend it on Smarties he can do )
Yes Rosie, I recollect the conversation. I said if the Glazers take their maximum annual dividend entitlement(c. 25m), then based on an average EBITDA of 100m per year over the next 4 years (actually, the avg. EBITDA predicted by JPM baserate is slightly lower), you get the following:
100m
less
50m (Bond+swap loss)
6m management fee
25m annual dividend
9m Aon unwind
5m general capex (facility maintenance)
= 5m annual surplus for player capex
Now, if they take less than their full annual dividend entitlement, the situation improves (You will this qualifier in my previous posts on the matter if you can be arsed to look).
The recent report- the glazers being pik-holders- means that they don't have to take their full dividend entitlement (assuming, of course, they either cancel or use redemption proceeds to further redeem the pik) to eliminate the pik by maturity. However, it's cheaper to eliminate the pik as quickly as possible and the fact that they are pik-holders doen't reduce the size of their entitlements.
Ffs. Male menopause?
The figures above (other than the annual dividend) come directly from the JPM report. I am merely the messanger. The figures reveal a likely trade-off between dividends and inward investment. I am sure the Glazers are well aware of what's in the report as it was an 'informed' document.
My point is that you and GCHQ seem to be under the illusion that they are sat looking at a nice big fat profit for the 5 years they've owned United, and that the value of United now means they cant lose if things go wrong. They just sell up and make a nice sum.
Thats completely false, and even worse bullshit that you two accuse MUST of peddling.
If they sell up, by the time they've paid everything off, all the loans they've taken out, and paid all the fees, they will be lucky to walk out with the money they put in, in the first place.
WHich is PRECISELY what GIllette and Hicks found. They wanted out, but no one would pay the price they wanted. By the time the debts and fees are paid, they will lose in excess of £140 million..
And you wonder why they dont want the club to be sold from under them ?
Why do you suppose the Glazers wont sell up now. Not because they feel they can make more money. Its because if they sell now, they wont make a thing and the last 5 years will have been a complete waste of time.
I couldn't care less how much the Glazers profit from owning the club; where are you getting this shit from?
I'm sleepy so i can't be bothered arguing with you now, but stop assuming you know what i think. You don't.
You're crazy if you think i give a feck about how much profit the Glazers might make if they sell the club. That's fecking mental talk, fred, so stick your theories up your fat arse.
Goodnight x x
I'll take that as a "shit.. I am stumped now, so I'll get out now before I make a bigger tit of myself"
You were the one saying he stood to make £500 million if he sells up now.
I've just showed how you have it completely and utterly wrong.
I'll hold my hands up; if what you say is correct i got it wrong about the PIK's being included in the original bank loan to buy the club; is that the point you're trying to make? That i got something wrong?
If i'm shown to have got something wrong then i'll always hold my hands up, i wont feel any shame, i'm only human. I'll remember what you said for future reference; i am trying to learn what i can afterall.
Your accusation that i somehow give a feck about potential profit for the Glazers is bizarre though; i've never even considered it until you brought it up just now; i engaged you on a point you made is all, and then you decided that the whole point was to prove something about me and GCHQ. What the hell?
You're right i'm stumped.
You're a bitter old man, fred.
When I said that The Glazers were in a similar position to Gillette and Hicks you said that they were not because if they got into trouble they would just sell up and walk away with a profit.
My point is they wont make a profit.
Thats as things sit now. The revenue coming in is the highest its ever been. The team has been through the best period in its history.
And through all that time the best they can do is break even.
After 1999-2003 ( the previous best period in our history ) the value of United started falling. Despite spending big, despite being the most succesful team, the value fell.
If that happens again then their "break even" turns into a loss. Should the value of United drop then they would start to actually lose money.
Once they start losing money then the fun starts. What will they do ? Will they cut their losses and run, or will they do what GIllette and Hicks are doing and try fight it out.
Personally I hope to hell its the former, and I place faith in the hope that they wouldnt be stupid enough to try fight it out. If I give them credit for anything its that they would have the sense to sell up and get out before it gets too messy for them, hence I believe forcing the revenues down is the way to go. Put them into a position where they realise its better to sell up than get into the mess G+H have gotten into.
Now I know what you are thinking.. "what if they do get into trouble but do exactly what G+H did and try fight it out".
Are we in effect forcing the Glazers into a situation that we all would agree would be the worst case scenario.
The only thing I can say is that if that happens then we just pick up the pieces. OK it will be a mess. OK its our own fault, but at least we can get to work then as a unified support and all pull together to try pick up the pieces.
In many ways it would be great if we could experience what Liverpool are going through, because the one thing you have to give the fans at Anfield credit for, is that they are now unified. They are all working together.
WHich is something we should have been doing a long time ago.
Anders,
According to your blog, there is a negative net spend on players of £93m over the last two financial years. Is that really the case? Wow. Certainly explains the cash at hand figure.
According to your blog, there is a negative net spend on players of £93m over the last two financial years. Is that really the case? Wow. Certainly explains the cash at hand figure.
Short memory or a newbie to football.
Obviously you have no memory of the 80s.
This is a new low even for you Fred.
I'll start off by explaining that I've included the increase in RFJV Ltd's net debt since 2005 before reaching the c. £400m profit estimate on the Glazers £270m equity stake.
You're looking at the increase in gross debt when what matters is the increase in net debt since 2005. That comes to c. £100m and when you then exclude the 20% of the PIKs that the Glazers own (net of the £10m loan owed to Red Football Ltd) that figure comes down to c. £70m.
So a sale price of £1.25bn minus the c.£560m of net debt and minus c. £20m of legal fees associated with the sale leaves c. £670m. There's your profit of £400m on the £270m equity.
So the increase in gross debt has already been accounted for. You can't take £215m off that £400m profit no matter how much you want to.
The second part of your ''argument'', and I use that term very lightly, is that the Glazers have incurred significant finance costs as well as having to sell houses/shopping malls etc to service that initial £270m equity stake.
You claim all this £270m was borrowed against the assets of First Allied Corporation. Where is your evidence of this? Andersred discovered that the Glazers had extracted $115m of equity (cash) by remortgaging many of their shopping malls between 2005-2007. They reinvested 20% of that equity back in to First Allied. Because I'm a very fair man I'll let you assume that the other $95m was used to help finance the Glazers £270m equity investment in Manchester United despite there being absolutely no conclusive evidence that this was the case. The trouble is, that $95m doesn't even account for 25% of the Glazers equity investment. The average interest rates on the new mortgages is c. 6% so even if we say the average life of those mortgages has so far been five years the total interest payments on that borrowing come to c. $30m (c. $6m per year). So yes, Fred by all means take that off the £400m profit. You need to find another c. £370m mind.
You argue that the Glazers sold properties/shoppping malls in order to finance the cost of the equity investment. Hardly earth shattering news is it? The Glazers had to come up with £270m so news about some asset sales isn't surprising.
Nobody is arguing that the Glazers could have used the £270m for an alternative investment over the last five years. My argument is that a c. £350m-£400m profit on £270m since 2005 is an exceptional rate of return. Which it undoubtedly is.
Do you think that £270m would have achieved greater returns since 2005 if it was invested/retained in property/shopping malls? Of course not!
Ask Andersred how the funds he manages have done since May 2005. I can assure you he won't have achieved anything like the growth the Glazers have on their £270m equity investment in Manchester United.
So you say they'll have been lucky to break even on that equity stake. That couldn't be any further from the truth. The Glazers have done brilliantly out of the purchase of Manchester United. And ultimately if they do well then so does Manchester United and its supporters. And we have done very well.
You won't accept any of that though because you can't bare to face the reality that you were wrong and the Glazers were right. So the ridiculous conspiracy theories keep being churned out ad infinitum.
You're a fantasist, Fred, and a bitter old fool to boot.
That's nonsense. The net cash inflow on player capex is a total of £13.6m over the last two financial years.
The total gross cash outflow on players in the five years since the Glazers takeover has been £212m or £42.4m per year.
I call bollocks, ronaldo or not.
Oh is it? The only sad thing is Glazer ownership. Not one media source has ever said that the Glazers have been good for our club as a matter of fact most are concerned, some rejoice about the prospects for our future under them. You dismiss my opinons but yours hold less water than mine, the bottom line proving that I am more likely to be correct in my thinking
puNANI -The latest recruit to the Glazer HQ.
We made the 25m bid for Tevez after he had confirmed his deal with Man City. Just a charade by Gill.
I am firm believer that all our transfer activity at this time was dominated by the needs of Red Football rather than the good of Manchester United Football club.
I'll say it again, if anti-Glazer sentiment is reduced to muppets crying because United are not buying 30m+ players then the Glazers have won.
If that refers to me than no. I don't want to be Man City, the ticket price increase and the ACS irritate me more than the lack of big money transfers. My biggest concern is the overall future of the club and our ability to maintian a high standard on the playing field. I don't want us being a club buying players willy nilly just because we can
Or hundreds of millions of pounds being absolutely wasted, which could be re-invested back into the club, into signing players, into giving contracts, into reducing ticket prices and the removal of a scheme which forces you to purchase tickets for games you may not want to attend.
If all the Glazers did was take their £25m dividend I wouldn't mind. But it's the £40m in interest payments, the £95m that is going to be going out to pay the PIK's, the £40m just wasted last year because we switched to a bond issue to pay the bank debt. All this wasted cash that can be put to better use that annoys me and other people.
Totally concur
I think the Glazers are a parasite and a burden to our club. But its easy to be totally one sided or to realize things aren't as bad as they are. If we had the opportunity to get rid of them then I'd be as happy as everyone would be to do so. Say that is true anyway, Tevez was on the bench for the majority of the season because he got replaced by a 30 MILLION pound signing. At the time, we didn't use him much and his performances didn't justify.
Valid points and I respect them but IMHO we let him go for financial reasons, I freely admit that a case to the opposite exists and the possibility is we might never know the reasoning
Exactly. Maybe if we had money, we could of kept him for another season and see how he progressed. It was known that Ronaldo would leave so it would of been handy having a player like him from the season before we sold him. He underperformed the season we sold him so need for keeping him dropped whilst 25 million was a steep amount for a player who performed poorly throughout the year. Now its basically Gills word vs the anti-glazer words so like you said we might never know why we let him go.
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