At June 30 2012, yes.
By April 2013 there would be a positive cash balance of c. £10m-£15m based on ''normal'' expenditure.
ALL issues relating to the bond issue and club finances
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At June 30 2012, yes.
By April 2013 there would be a positive cash balance of c. £10m-£15m based on ''normal'' expenditure.
Being fair, he didnt mention wages etc
I think he is talking about solely incoming monies.
So add the income for the coming season to whats in the bank and you have about £450 million total.
However, from that, you need to take out interest payments, wages, taxes, running costs, blah blah blah.
No necesarily. What if we sold Rooney for £50m and bought a replacement for the same money? It would have feck all to do with this debate, but would pretty much gurantee the £75m gross.
If, on the other hand, we sell no big players and take next to nothing in transfer fees, then it's irrelevant which we look at, they are pretty much teh same.
So let's stick to net, which is the more reliable measure in either scenario.
(Obviously
).That's fair enough, I'm happy to talk commitments rather than cash flow on this.
As I say.. at the start of the month I have £2,300 in my account.
Do you think the bank manager would give me a loan with payments of £2300 per month because I can prove that on the first of each month I have the funds there..
No he wouldnt. Because he would have the brains to realise that looking at the point when the money goes in, is stupidity. What you look at is the end of the period BEFORE the money goes in. That tells you what you can and can't afford.
When did I make this claim? I have categorically stated many times that I am in no way a financial expert! Just thought I'd clear that one up.
I didn't say that though. I said that we will generate £290m this year. We have just made £285m LAST year (£278m the year before etc).
I then said take off the various bits and bobs (such as bills and wages etc).
We do NOT need £450m to run the club and pay the Glazers what they want. If this were the case, the club would have been bankrupt years ago with or without the Glazers.
I'm not playing games.
Quarter three ends on 31st March.
I'm saying that if there was a £125m PIK repayment and a net cash ouflow of £75m between now and then on player capex then we'd be no worse than £15m overdrawn.
And any actual difference in those two items will be reflected in the club's cash balance. This is all based on Anders' figures and flat growth, Fred, so you're betting him £50 too.
I think claiming £250 million in wages is "bits and bobs" has to go down as the mother of all understatements
Excellent. We have a deal then.
No, I am agreeing with Anders.
They will do one or the other.. But they wont do BOTH.
Which one will they go for, I don't know.. Personally I havent ever been 100% convinced about the PIK argument ( as you havent been either ).
I still think that there is something somewhere that will allow them to get some funds back into their shopping malls to ease the burden on them.
hi guys what are the chances that the glazers would do a hicks and leave the club for good?
I think they will ultimately do both but not to the extent that there's a £125m PIK repayment and a £75m net cash outflow on players. I think both of those figures are unrealistic, for reasons that I've already mentioned, but my point is that theoretically that expenditure could be financed by the club and it wouldn't in any way be ''tricky''.
He's not saying that. He's just saying that that's what we'd have if there were no expenses because thinking of it that way helped him get his head around the mechanics we were discussing at the time.
Considering that you are predicting a £125m PIK repayment and a £75m net book expenditure on players, I'd be intrigued to know what current cash commitments we have outstanding on any players, if anybody has that to hand?
Not too much, I guess, given that Berbatov was our last big signing, but presumably there are bits and pieces for the recent ones outstanding?
Our cash in bank went up £13m in the last financial year though Fred.
In any case, I don't think is particularly relevant to be honest. The club is running within its means and has managed to amass a £164million cash surplus. Yes there's the "Ronaldo money" in there (or some of it anyway - we did actually spend £20m of that) and there's the AON money in there but it isn't all down to those two factors.
Even with my own crude calculations, I can't see why there shouldn't be £50-60m in the account for transfers at the end of this financial year.
(If GCHQ says this figure is different though, go with his! My figures are "back of a matchbox" and I did them just to get my head around the situation)
No it won't. The wage bill is £130m.
Yes, valuation can be a multiple of EBITDA but you have to take off debt in order to establish value - at least what someone will actually pay you for it or what you will get out of it, net. You measure that against what you put in originally (in their case £275m) Incidentally, who's to say it is 12x. It might be less as in Liverpool's case - 8.5x. I agree that the bond debt is fairly insignificant if the clubs net profits continue to grow at the rate they have been. The PIKs are another matter and only affect the club to the extent that the Glazer's draw out cash to service them - cash that could be going into the team, say.
I would have thought the Glazers have to eliminate their PIK debt or refinance it on more favourable terms (if they can). Rolling up that debt at 16.25% over the next seven years would be horrendous.
Of course they're not stupid, they have every intention of providing the team with what they consider is sufficient wherewithal to stay competitive. The issue is, how competitive ? Actually winning major trophies or perhaps staying in the top four, qualifying for the ECL, reaching the knockout stages and maybe winning the odd thing. Would that be deemed sufficient to keep revenues growing ? Maybe that can be achieved without signing top players whose costs have a significant effect on the bottom line ? It's probably what will happen this season and next, who knows? But will that be enough to satisfy the fans, I wonder ? Fans who have been fed on an unprecedented period of uninterrupted success over what is now a protracted period.
Very slim chance whatsoever I would imagine.
The two situations are similar, however G+H lacked one thing the Glazers had at their disposal, and that is options.
G+H basically ran out of people to borrow from, and when that happened they have no means to re-finance to get themselves out of the shit.
As we've seen with the Glazers, they do have a knack of pulling off re-finance deals which buys them more time. Time which being fair, they've used to their advantage by increasing revenues in the commercial department.
G+H didnt do that. They almost sat there hoping it would all go away, and when they couldnt afford to pay then RBS simply said "feck you" and took the club from them.
Forget what people tell you, RBS took over LFC seven months ago.
Now, looking at Uniteds position, what you have seen at Anfield is EXACTLY what would happen if United were to get into trouble. THe banks would appoint a new board and instruct them to find a buyer.
As in the case of Liverpool, the board basically have sold it to their preferred bidder. Not necessarily the highest, which is where G+H are looking to sue. They claim the board should take the highest bid irrespective of who it is, as its their club and RBS has a duty to obtain the best price for it. RBS however disagreee, arguing that G+H basically gave up all rights to the club 7 months ago and if RBS want to sell it for £1 they can do.
So back to the original point.. Would we ever get into that sort of mess. In the foreseeable future no. we wouldnt. The Glazers still have options open to them and the finances as Anders says, are not the worst they could be. Not great but not the worst.
However, if the value of United drops, the chances of them selling get less and less, and if revenues fall sharply then the worst case scenario would be the situation that Liverpool found themselves in.
As a side note, I would like to point out to those that say the banks taking United would be the worst case scenario. The evidence over at Anfield suggests quite the opposite. If we could force the revenues down then what happened at Liverpool would happen to United, and given the owners, the debts and everything considered, I think the LFC are more than happy with the outcome.
I suspect if we could force the same situation we would be equally happy.
Sorry yes.. I was taking 50% ( roughly of £490 million ) when its 50% of £290 million..
So my bad on that one.
Cool.
Do I take it you are now gonig to go away and not come back until July 2012?
I'll be here all the way, don't you worry about that. And if it's anything like our last tete-a-tete then there will in fact be a net CASH outflow of £75m on players between now and then.
You forget they had £60 million sat in the bank the day they took over.
So they've actually only got a cash surplus of £104 million.
I think claiming £250 million in wages is "bits and bobs" has to go down as the mother of all understatements
Oh come on! What did you want? A list?
I am basically leaving it open for you to insert your own stuff in there and do the calculations for yourself. If I did it, I would leave something obscure out and all hell would break loose.
I'll be here all the way, don't you worry about that. And if it's anything like our last tete-a-tete then there will in fact be a net CASH outflow of £75m on players between now and then.
Indeed that would be very like our last our last tete-a-tete... in as far as you would have been proved wrong once again:
Oh come on! What did you want? A list?
I am basically leaving it open for you to insert your own stuff in there and do the calculations for yourself. If I did it, I would leave something obscure out and all hell would break loose.
I know what you meant, its just the bit describing wages as "bits and bobs"
Half of the years income going to players and you make it sound so trivial..
I can just see Gill sat there
"feck me.. we've got £300 million in the bank.. but I am sure theres something I've forgotten to do.. a bill I've forgotten to pay.."
Oh come on! What did you want? A list?
I am basically leaving it open for you to insert your own stuff in there and do the calculations for yourself. If I did it, I would leave something obscure out and all hell would break loose.
I've just realised what you were on about with the £290m... you were including next season's summer ST etc bonanza, weren't you?
And so in effect double counting (this year's and last's).
It's like saying that the day after tou get payed you have £3,000 in you bank account, and the mext month you will get payed £3,000 so that means you have £6,000 to spend!
In your case I'm sure it was accidental, but that's the kind of trick GCHQ likes to pull...
In your case I'm sure it was accidental, but that's the kind of trick GCHQ likes to pull...
Would he do such a thing.. Perish the thought.
He mentioned the RCF but didn't say how large it was. A rather significant omission I'd say.
Guess we'll agree to differ on that then... it's not like he was pretending it didn't exist.
Indeed that would be very like our last our last tete-a-tete... in as far as you would have been proved wrong once again:
You criticised me repeatedly (there are other posts) for projecting a £160m cash balance at June 30 2010. Remember this was pre-season ticket renewal period when you were talking up the prospect of a huge boycott which would put a serious dent in the club's cash reserves. Anyway that's old ground...
What are you grinning about btw?
Oh come on. It's absolutely essential for someone reading that to know how large the RCF is.
The first reply to his article points that out rather neatly.
No, I wasn't. £290m is what the club will bring in during this financial year (give or take a million or two).
In the last financial year (up to 30th June 2010 - which also includes some of this season's ST sales, I should imagine) we had generated £285m revenues.
Next year (this year!) looks likely to be more of the same.
It's like saying that the day after tou get payed you have £3,000 in you bank account, and the mext month you will get payed £3,000 so that means you have £6,000 to spend!
In your case I'm sure it was accidental, but that's the kind of trick GCHQ likes to pull...
The point of the discussion which is cash-flow - what is in the bank and when.
Think about it. On 30th June 2010, we had £164m in the bank having generated £285m revenues.
Assuming that we generate another £290m this year and we had nothing whatsoever to pay out, how much will be in the bank on 30th June 2011?
No, the 'value' of the club does not have level of debt deducted from it, you're talking about 'profit' in case of sale.
Value = approx. 12.5X EBITDA
I assume Liverpool is being undervalued due to the desperate circumstances surrounding the sale.
PIK's
Once the £70m carve-out is applied, the 15% Glazer-owned portion is taken into account, and, as i stipulated, a second payment of £30m-£40m a few years down the line (in 2016 in my original example) the interest roll-up isn't that drastic. The PIK's would be at £250m(ish) come 2017; total debt £750m; very little when you consider that the asset has been able to flourish with healthy investment.
As to what you're saying about us only aiming for a top four spot rather than endeavouring to be #1, it's plausible, but would be a tricky balance to achieve, and with our great foundation from which to launch title bids and solid cup-runs it would seem a step backwards for no apparent gain. I think that if the business plan is build and maintain a commercial empire unrivaled in world sport then a world class playing squad at least on par with the other big-boys would easily be the best and most profitable way to achieve this.
Success cannot be guaranteed, but with the right investment competitiveness and with it marketability can, and that's what makes the Premier League and United in particular such a great commercial prospect.
Keeping and building upon our overseas support (our global support) is key imo, and the only way to ensure this is to invest in the team when the team needs investment.
To be fair to anders, GCHQ, he did ask me to have a read through a draft of that Blog post before he posted it and I thought it was a very good piece and I didn't pick up on the £75m not being mentioned.
I think that sometimes, especially with a subject that you are familiar with to the nth degree, there can be a tendency to omit certain things because you just "assume" that it's common knowledge. I know that when I saw the reference to the RCF, I just thought "£75million" in my head and that is perhaps why I overlooked it, myself.
Giving Anders the benefit of the doubt, I'd say it was an oversight rather than anything deliberate.
I'm not predicting a £125m PIK repayment. I think it will ''just'' be the £70m carve-out. Does that mean the bet is off? Oops..
There was c. £8m net committed to expenditure on players at the end of the financial year (including £8.3m for Bebe in the post balance sheet notes).
There are, I reckon, three maybe four contributors to this thread who have a fecking clue what they're on about and a few who are trying to understand by asking questions. The rest are wanking on with supposed authority about stuff they haven't got a fecking inkling about. It's utterly retarded.
Which category does that little rant belong in Red Richio?
Maybe Crerand's the only one who really knows what's going on. You know, like that autistic fella in The Cube or something?
I've edited the post to include an explanation of the RCF in the text. I hope that satisfies you. As TMRD said sometimes it is hard to stand back from a subject and capture all its aspects.
Unique among others on your side of the argument I find myself really disliking you which is bad for a faceless voice on the internet. I can't work out exactly what it is, but it could be your sneering tone.
You could have just said "hey Anders, don't you think the RCF is worth mentioning?" but no.
Can I suggest (again) that you start your own blog, I could even give you some tips on promoting it if you like.
The frustrated know nothing cnut category. That's one step up from crerand, Fred et al.
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