With respect Rood. I have been a fairly vocal participant in this debate since January. The debate has been going on in more places than the Redcafe, you know.
ALL issues relating to the bond issue and club finances
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With respect Rood. I have been a fairly vocal participant in this debate since January. The debate has been going on in more places than the Redcafe, you know.
Oh don't worry, I won't. That's exactly what I was after, cheers.
Can you appreciate that there are great concerns over the level of debt which people expected to be under control with the increased commercial and ticket prices?
Of course I appreciate it and it was due to these concerns that I myself started to seek "the truth" of the situation.
I'm a Manchester United supporter myself, don't forget.
You can't deny though that the situation has been grossly exaggerated by some sections and this only leads to an exacerbation of those concerns. Whilst this behaviour might further the aims of those making the claims, I feel that they are not acting in the true best interests of the fans when they feed on the fears and concerns of the fans in this way.
It is a shame that a relative handful of ordinary supporters have had to put themselves at odds with other Reds in an attempt to try to bring what we see as some sanity to the situation.
You think the debate just started in January?! It might have drawn more interest since the whole bond thing but it has been going a lot longer than that - even I am a relative newcomer to it all !
Plus I am assuming that finneh's ridiculous suggestion is based on contributions to this thread which of course have been going on long before noobs like you and he were ever around.
To be fair, he does have a point and there are some posters who add nothing new to the debate - I tend just to ignore certain posters in this thread nowadays.
Anyway don't flatter yourself, you are only 'possibly' worthy of being allowed in this thread according to finneh
You think the debate just started in January?! It might have drawn more interest since the whole bond thing but it has been going a lot longer than that - even I am a relative newcomer to it all !
Plus I am assuming that finneh's ridiculous suggestion is based on contributions to this thread which of course have been going on long before noobs like you and he were ever around.
To be fair, he does have a point and there are some posters who add nothing new to the debate - I tend just to ignore certain posters in this thread nowadays.
Anyway don't flatter yourself, you are only 'possibly' worthy of being allowed in this thread according to finneh
OK. I'll draw a line under this one at that.
Alright caftards, anything interesting been said in this thread in the last month?
Last time I had a few weeks away I came back to find Fred had been temporarily banned, and GCHQ was being sued, so I'm expecting great things!
Last time I had a few weeks away I came back to find Fred had been temporarily banned, and GCHQ was being sued, so I'm expecting great things!
I think the situation has been greatly over-egged by both sides from the WE'RE DOOOOOOMED brigade to the "we're fine, everything's great" people.
Based on cider's suggestion about the PIKs paydowns yesterday, it remains the case that with a 15 or 20% PIK ownership there is still over three quarters of a billion pounds to be found in a little over 6 years.
Most things beyond current contracts are complete unknowns, from new shirt and TV deals to player ins and outs. We may get lucky and Norwood and the lads blossom into good enough players for a title-winning side or we may have to dip into the market for established stars more. That's for the Transfer Forum though but if we assume a 20 million net spend with a possible spike next summer to replace Scholes, Giggs and Van Der Sar with "best in class" then I'd suggest that's a reasonable guess at what would happen, wouldn't you?
Ticket revenue is a bit of a toss up with the season ticket waiting list versus the ticket price freeze versus the current UK financial situation. I don't think there needs to be any major guesses and we can adjust from a slight annual increase as it happens.
No carve out or dividend taken this year. Yet. That remains a big unknown. Was it just a facility or a definite intention? Let's wait and see.
As for 2017, we don't know the exact figure that will need refinancing and nor do we know the percentage of that that will be refinanced. You will get the "Glazers have us in more debt 12 years down the line than when we bought the club" line. To be fair, that's true. What would be interesting is to see Gill or Glazers publicly defending the debt situation and allaying fears of the general public.
As for next year's accounts, what will be different?
There won't be the refinancing costs to knock off the EBITDA figure.
There will probably be transfer costs associated with replacing key players if bought in time.
There may be the carve out and dividend to take off.
What would the EBITDA and bottom line figures be in that case?
Read back through the thread!
Seriously though, the end of year accounts were published last Friday and they showed that the Glazers have NOT taken their £25m dividend, have NOT taken the £70m carve-out and have not even taken the £6m "Management Fee".
There was £160m in the bank.
Revenues up to £285m and EBITDA broke the £100m mark.
This has clearly left the likes of Anders (and many of us who had accepted his theory as being highly plausible) scratching his head a bit and he has since gone on a mission to find out how he could possibly be wrong.
This has led to him uncovering some things about the PIKs which he is not willing to share until he has confirmed them to his satisfaction.
He claims that an impeccable source has told him that the Glazers only bought 15% of the PIKs in 2008 (and not 20% as we were originally led to believe).
Other than that, I don't think there's much else to report.
I see you rather conveniently haven't mentioned that there was a £32.5m net cash outflow on player capex last year in the nine month period to the end of March. Does that not affect the cashflow Redjazz? Of course it does. The net cash player capex figure fluctuates very significantly from year to year but in order to offer a reasonable guide as to how much cashflow falls by from the start of the year to the end of Q3 then I'd suggest we use the ''guideline'' of £25m net player capex pa. The vast majority of cash outflow on player capex does occur during the first nine months of the year so I'd suggest a figure of £22.5m by the end of Q3 is what we should be using. So that obviously brings your figure of £55m down to £45m.
It's also worth stating that the gross cash outflow on the refinancing, interest payments and swap loss was c. £50m in the nine month period to the end of Q3 in the last financial year. The net cash outflow was £48.6m. The net cash outflow on interest/swap loss in the first nine months of this year should be a couple of million pounds less than that. That brings the reduction in cash from the start of the year to the end of Q3 down to £43m. It will be less this year unless there's some transfer activity in January but we have to use the guideline of £25m per year in order to offer a reasonable estimate of the typical reduction in cash.
Cash reserves could be c. £200m by June 30 2011 if there are no significant outflows on player capex before that date and if the dividend carve-out hasn't been taken. Even allowing for the dividend carve-out there will be c. £130m cash available for transfers next summer. It really doesn't matter what the cash balance is at the end of March in any year so as long as the RCF isn't utilised to the sort of level that you correctly suggest isn't wise (£50m).
Ultimately, it's abundantly clear that the club will have huge cash resources available for player capex next year even if the £70m dividend carve-out is taken. What's more the club is also able to finance a net cash outflow on player capex of c. £40m per year without actually reducing cash reserves from year to year.
This simply isn't a choice between dividend carve-outs to repay the PIK notes and significant expenditure on new players. We can and probably will do both.
Unlikely, there is a large difference between us and Liverpool despite us both having owners who plan to make the most money from the club.
Firstly, unlike Liverpool, our owners have no need to find money to build a stadium in order to maximise revenue from that area. One big reason why Liverpool have fallen is because despite both teams spending similar amounts, our earnings have always been much higher than theirs due to our larger matchday revenue.
Secondly, despite the Glazers unpopularity among the supporters, the Glazers HAVE a (dangerous) business plan and though we might not like it, they have a plan which they (and the bank) think might work and so far they have been proven right. H&G might have the same plan (increasing revenue more than the debts and interests), but Liverpool's on-field problems have led to even more problems for their owners.
For the Glazers' plan to work out, it is in their best interest that we have continued success on the field and I'm pretty sure that they would have planned on making sure that we have money available for when the club needs to spend.
Absolutely. I personally have never taken the attitude that everything is fine, it clearly isn't. I still have concerns, but to me, it is all about putting things into perspective and looking at the wider context.
Well, this remains an assumption, I'm afraid. That is the fact of the matter as things stand.
When the Bond Issue expires, it will be refinanced. If the Glazers cannot obtain that refinancing then they're up the swanny, I suppose. We have no idea what the implications of this would be for Manchester United at the time. Personally, I cannot get too worried about that at this time. Seven years is a long time, especially in football.
For now, that part of the debt is taken care of and we generate more than enough to deal with the interest without impacting greatly on our ability to compete (even minus the £45million, our revenues are more or less still on a par with our main rivals and, in most cases, far greater).
As for the PIKs... what more can be said that hasn't already been said? We just don't know.
This is what David Gill says:-
Disingenuous? Lies? Or the truth?
Is this not the case for every football club though? I said last night that my argument would be done if the Glazers took money at the expense of the transfer kitty.
As you said, this is largely a discussion for the transfer forum and there are a lot of unknowns about the players we already have (Anderson, Carrick, Hargreaves, for example, and even the retirement of the oldies is not actually confirmed at this moment in time and this is without getting into the progress some of the youngsters might make this season).
I would suggest, however, that the answer to all these questions will only be known around next April/May. If the Glazers take the money before the answers are known then they are jumping the gun and potentially putting us in a vulnerable position.
We might need £50million next summer or we might need £20million - we just don't know right now and I would like to think that the Glazers will establish that situation before dipping into the funds to the tune of £95million and it has been my argument all along that they will do precisely that.
I would suggest that if the team can remain competitive for the next seven years and perhaps pick up a trophy or five then it would be very difficult for anyone to say that the debt has had a major impact. It is inconceivable to me that we'll all still be having these conversations by then. I bloody hope not, anyway!
I'll leave this one open to others. On the face of it, it is difficult to see how the end figure can possibly be better than this year's if either of those major expenses get taken away - not unless we bring in a shitload of money from somewhere.
Sell Rooney? (No, I didn't say that!!!
)A1Dan, it turns out that you were quite correct to repeatedly criticise me for projecting a cash balance of £160m at the end of the 2009/10 financial year.
I was wrong to do so and I can only offer you my most sincere apologies.
Turns out the actual figure was £163.8m.
Have you had chance to take a look through Redjazz's figures regarding the cashflow situation, GCHQ?
If so, any thoughts?
Fortunately there's no need for an apology, as I never questioned that figure.
Not like you to make up what other people have said to try and bolster your arguments, GCHQ.
Oh, hang on...
Fortunately there's no need for an apology, as I never questioned that figure.
Not like you to make up what other people have said to try and bolster your arguments, GCHQ.
Oh, hang on...
You claimed it was c. £160m of borrowed money in that post?
That hardly improves your position.
Don't make me go and dig out those other posts of yours A1Dan.
Post 5423.
You claimed it was c. £160m of borrowed money in that post?
It is exactly that.
If you hold cash, but owe more, then the cash you hold is borrowed.
It's simple thruths like this that most people can see easily, while you prance around trying to look clever while actually just looking a bit silly.
They could go and take out another billion in bonds / PKIs etc, and have a cash balance of £1,160m. Would that make us better off?
Oh dear...
https://www.redcafe.net/f6/aon-become-new-sponsors-297739/index4.html
Post 125
A1Dan
So that figure is based on speculation on future income? Oh, this is too good. Funny how we all have to ignore the huge loss of cash in the 9 months up to May, as it didn't include ST sales, but as soon as we get to June, we can forget all about seasonality, everythings fine we're cash rich! You're priceless, you really are.
https://www.redcafe.net/f6/aon-become-new-sponsors-297739/index4.html
Post 125
Keep trying...
Actually maybe don't... unless you can do a lot better than the above you'll just keep embarrassing yourself.
TMRD, I have no doubt that Gill does not lose sleep over the PIK debt. Neither do I. It would be nice if it was explained how it worked in terms of it sitting in the Red Football group of companies and what the impact would be on us, but that isn't going to happen. If we assume that the money will come from the club to pay the PIKs then that's fine. However, what points down the disingenuous route is that the PIK debt could well be lumped in with the club debt come 2017.
A bit like the SU statement back in early 2005 about the club being f*cked in three years based on the Glazer plan. It was what they believed at the time and at the current time Gill is correct in that it is technically not a club debt. That said, failure to pay it off has a direct impact on the club. As such and given the unknowns surrounding the PIK terms and conditions, there's little point delving into it in more detail until the detail becomes available!
A bit like the SU statement back in early 2005 about the club being f*cked in three years based on the Glazer plan. It was what they believed at the time and at the current time Gill is correct in that it is technically not a club debt. That said, failure to pay it off has a direct impact on the club. As such and given the unknowns surrounding the PIK terms and conditions, there's little point delving into it in more detail until the detail becomes available!
WTF?
You're saying the £163.8m cash in the bank is borrowed money because the club's borrowings are higher than that figure?
Desperate Dan has gone without his medication again.
Keep trying...
Actually maybe don't... unless you can do a lot better than the above you'll just keep embarrassing yourself.
Oh I think it's rather obvious who's feeling a little bit embarrassed right now. Still, it was nice of you to eventually drop in and say hello. Can't think why it took you so long.
Yes, of course it is. That is just too obvious for words.
I strongly doubt there is any medication strong enough to counter the dillusions you seem to live under.
Yes, of course it is. That is just too obvious for words.
I strongly doubt there is any medication strong enough to counter the dillusions you seem to live under.
Just saw your edit. The cash at bank figure wasn't increased by the borrowings that the club took on. In fact it was reduced.
Do you understand now, A1Dan?
Yes indeed. That'd be the one who's been shown to be making up what other people said.
As can clearly be read in the thread you linked, I've never questioned the cash balance, only whether it has any bearing on our true financial situation.
However you try and dress this up, your initial contribution to this little exchange is a total fabrication, and fortunately that is there for anybody to see.
There's really no other way to see it, and the sooner you realise that, the sooner you'll stop embarrassing yourself.
It's unfortunate for you that you always have to pile in trying to put other posters down, without thinking about what you post first.
It's also unfortunate for the rest of us to be honest. I pop in here for a little sensible chat on the situation and within 5 minutes you've made your silly attempt at a put down and the whole thing gets side-tracked as usual.
Now I remember why I got bored of these threads. And you wonder why people get pissed off with you and start telling you to f off?
Yes, of course it is. That is just too obvious for words.
I strongly doubt there is any medication strong enough to counter the dillusions you seem to live under.
Sorry Dan, but that's like saying I've got a mortgage for £70,000 and my £2000 in my current account is borrowed money.
''So that figure is based on speculation on future income? Oh, this is too good.'' A1Dan, June 2010.
OK. Cheers. You must have posted that while I was posting my own.
I hear what you're saying there and it is re-assuring but I keep thinking of the actual cash-flow as a line graph in my mind.
We know that that we start the year with £163m in the bank and that this drops to £x in December and then bumps up again in January when we receive the TV money but then drops again in April before, I presume, the Prize Money and ST income starts to come in and puts us right back up again.
However, it is also know that we have, in the past, needed to temporarily dip into our RCF in order to tide us over during the lean periods.
How could the Glazers take £70million NOW and leave us in a position to surivive these low points (even with the current RCF)? And this is obviously not taking into account the £25m dividend which would only make it worse.
I can see all that money there in the bank but something isn't quite fitting for me because, by all accounts, the vast majority gets spent during the course of the season.
I think what I am saying is look at the cash in bank figure at the lowest point and pretend a further £95m has been taken away. Is this possible?
And, if we take £95m away and take another £25m for players (which may or may not even be enough) then take £120m away from your forecast £200million to leave £80m - how can we go forward with just that kind of money in the bank? Surely that will be nowhere near enough to cover the "low" points in the year?
Apologies if I am being completely thick here. It's a genuine question.
Thats not right though is it? Thats like saying that my money in my bank that I get from my day job is borrowed because I owe £100k on my mortgage?
Another edit. The second part of that post is sheer hypocrisy of the highest order. All you've ever done since I started posting in these threads is attempt silly put downs against what I and others have said.
Exactly. It's preposterous.
Yes I understand clearly - You have a very odd idea of what debt is...
I'm not saying that the £160m is in any way due for repayment to lenders (though as discussed in great length it could potentially be put to that end). But even if you are happy that the borrowing is sustainable in the long run and won't damage the club, you can't deny it's there!
Amen to that.
OK, we can turn it round and say that the stadium and playing staff are all borrowed, and the cash is not, just as while you have a mortgage, part of your house is in effect borrowed, but it doesn't really change anything.
The fact is £700m (or whatever the current figure is) of the club's assets are borrowed.
If your mortgage is flexible, and you have a large cash surpless sitting in your bank account not being used, then the sensible thing to do would be to pay off some of your mortgage.
No, I don't have an odd idea of what debt is.
You on the other hand, have an incredibly odd idea of what borrowed money is. It certainly isn't the cash that Manchester United have in the bank.
Yes - as you can see I was comparing your dismissal of losses already run up with your insistance on quoting future revenue figures which had not yet been realised. Go talk to an accountant about prudence.
As you gleefully pointed out in that thread, cash is at its lowest at the end of the season, and at its highest at the start, when season ticket monies have just come in. And yet you insisted on bangnig on about the fact that come September we would have £160m, even though the conversation was taking place in June!
I still don't get what you're trying to say.
But the money in United's account isn't "not being used" and that is an important distinction.
If you had £10k in your bank which you could use generate (say) £20k within the next few years then paying the £10k off your mortgage would actually be the wrong thing to do.
The 'vast majority' won't get spent during the season though, TMRD. (edit. On running costs)
The prospectus says that historically we've used the RCF in December and April, but this doesn't mean that we've done so every year. Presumeably we've had to use it during seasons in which we've started the year with relatively low cash in bank reserves.
Even if we deduct the £70m carve-out now we'd still have £94m remaining; easily enough to meet our running costs without needing to make use of the RCF.
If GCHQ is right then and our cash low-point in December will see a drop of around £45m, that still leaves £49m in the bank.
So we'd have to spend a £49m net up-front on transfers in January before the RCF is even needed; not likely.
If Redjazz is right and the low-point sees us drop £80m in December, we'd still have £14m cash in bank, at which point the RCF might be needed in case of transfers; but only in case of transfers in January.
So with only standard running costs we'd never come close to touching the RCF this season even in the worst case scenario; our reserves are just so high.
You have to also remember that the cost of most transfers would be paid in installments. Signing a £20m player in January would not necessarily mean that £20m would get deducted from our bank account in January
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