Before June 30th, they could have taken £95m.
Now they can still only take £95m.
Had they taken their full entitlement then they would have been able to have taken £120m now, I would have thought, so delaying it hasn't helped if that was the idea.
ALL issues relating to the bond issue and club finances
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Before June 30th, they could have taken £95m.
Now they can still only take £95m.
Had they taken their full entitlement then they would have been able to have taken £120m now, I would have thought, so delaying it hasn't helped if that was the idea.
No, not quite.
The £95m (£70m and £25m in two separate clauses) can be taken anytime - 2010-2017.
The ongoing dividend has a rolling test from the date of the bond issue. From that date they can take 50% of the CNI (basically EBITDA minus bond interest) IF EBITDA is at least twice bond interest.
We all normally talk about that latter one in terms of annual dividends, but it can be "stored up" and paid after 18mth, 2yrs etc or done quarterly. It's rolling.....
Yeah which would be great for the lenders, but nobody would borrow high-interest on such oppressive terms; there's two parties in the agreement, remember?
But we know that the Glazers were desperate and the banks had basically refused them the extra.
So faced with either high interest rates, and restrictions or no purchase of United, common sense tells you what option they would go for.
If the Glazers could have found better terms elsewhere, they would have done, but no one would lend them the money, so they went to the corporate equivalent of a loan shark.
I can kill that off straight away Fred, no repayment restrictions post year 2.
Mike, big question on FFP and I have to go out! Quick answer is that cash position is irrelevant. Any recycling of proceeds adds to amortisation (less Rooney's amortisation, probably very little now). I don't think FFP is a big issue here (i.e. the Rooney situation).
There are loan sharks though and then there are loan mega-sharks vs. giant-octopi; i think you're picturing the latter; nobody's desperate enough to take a loan from a loan mega-shark vs. giant-octopus. If i were to guess i'd say that the high interest alone was enough of a stinger in the deal to match their 'desperation', i doubt there's anything much more sinister than just a simple high-interest loan going on here. You could be right though, it just seems overly harsh to me.
I would imagine that given the sums involved and the risky nature of the venture being sought, they would place very tight restrictions on the person borrowing the money.
Alongside teh high interest rates, they'd obviously want to make sure that whatever they lent could be repaid back at some point, and most importantly if the deal was terminated early, they got suitable compensation for the lost revenue they would no doubt suffer by it being settled early.
GIven that the banking crisis hadnt really kicked in then, I think the Glazers would happily of taken such a deal because they fully expected to re-finance in a year or two anyway and they fully expected to have made enough to cover any costs that re-financing would incur.
IIRC the FFP regs. at any given time take into account income/outcome from each of the previous three seasons to get a total break-even figure for that whole period. When the regs. come into play then it wont be year zero and counting, all football related financial activity going back three seasons will go towards the break-even figure, which would cover Rooney/Ronaldo's transfer etc.
Could be wrong though; the damn rules seem to change everytime i read them.
No repayment restrictions post year 2.
It makes sense because the PIK's by rights are long overdue anyway, they were never designed to be strung out this long.
I think you may be wrong there. The FFP regs say this about the first period:
Meaning a club has to break even over the two 11/12 and 12/13 accounting periods when combined. I can't see a provision that takes into account cash balance at the start of the 11/12 financial year - though I might well be missing it.
Hypothetically, if we received £50m for Rooney in a lump sum in January 2011, and didn't buy any players until the summer window, I think that the Rooney and Ronaldo money is no longer available for us to spend under FFP as it was received before the start of the break-even calculation period (1st July 2011).
No doubt you would get some discount for paying off early as you would be ending the lender's risk, but the idea that you could save all the interest just can't be right. The entire point of piks is that they are high risk from the lenders point of view, and the borrower can't borrow anywhere else.
Where've you found that cider?
No doubt
They were only ever meant to be a stop gap until they could refinance under better terms, but hte banking crisis fecked that idea up.
Anders said about five posts before me.
Right. Thanks for that anders. And that's supposed to be clarification? Why don't you just send the words over to me one at a time in a random order and let me put them together myself instead?
So... this would suggest that the answer to the earlier question of whether or not these divs can be taken retrospectively is "yes"?
They could, then, take no divs for seven years and then taken the whole rolled up lot at the end of 2017 (I can't see why they would do this but in theory, it is the case)?
Correct.
he he, so he did.
Well, Anders then, If I may ask, where did you get 'no repayment restrictions post year 2' from?
I'd best repeat again that I have no accountancy knowledge whatsoever, just trying to make sense of it the best I can.
The likely reason why they haven't paid down the PIKs and have a massive cash balance is that there was a technical restriction on paying them off at the last half year (possibly you have to give 6 months notice of intention to pay down and that wasn't possible pre-bond float)
Right. Thanks for that anders. And that's supposed to be clarification? Why don't you just send the words over to me one at a time in a random order and let me put them together myself instead?
So... this would suggest that the answer to the earlier question of whether or not these divs can be taken retrospectively is "yes"?
They could, then, take no divs for seven years and then taken the whole rolled up lot at the end of 2017 (I can't see why they would do this but in theory, it is the case)?
Apologies. Yes they can take them retrospectively!
Is it not from 'the beginning of the first fiscal quarter commencing after
the Issue Date to the end of the Parent’s most recently ended fiscal quarter for which internal financial statements are available'?
Wouldn't the first 'annual' period be from April 1 2010 to March 31 2011?
Apology accepted and returned- I don't think it's all that relevant tbh.
But there might be some 'seasonality' impact, if dividends are to be drawn annually (or semi-annually). Assuming there are no specified pik payment dates, March 31 wouldn't be the best time of year to take dividends.
This is now going to become very interesting.
Whether his statement is bollocks or not, Rooney has essentially called the Glazers and Gill out.
The fans have already been told the Ronaldo money is still there, along with the yearly transfer budget.
Now what. Something has to give.
Whether his statement is bollocks or not, Rooney has essentially called the Glazers and Gill out.
The fans have already been told the Ronaldo money is still there, along with the yearly transfer budget.
Now what. Something has to give.
I knew you'd got hold of those PIK documents....
Any news on the top secret info that you've been hiding from everyone?
Yep, and it's held in an interest bearing account that must be making at least 3-1/4%
Firstly I haven't got the PIK documents and secondly I can't talk about the other thing because (like the PIK redemption terms) I can't expose the source.
I'm really sorry but I've given my word.
I'm surprised no one has picked up this article yet:
Manchester United Debt Soars as Fan Backlash Concerns Glazers - Bloomberg
'Manchester United’s owners are shouldering 16.25 percent annual interest charges because of concern they’d anger fans by using the soccer club’s cash to pay off the loans, two people with knowledge of the situation said.
United fans have protested against the Glazer family since they added debt in their 2005 takeover. Club officials told investors Oct. 8 the owners are concerned that using team funds to pay down debt may create a new backlash, said the people, who declined to be identified because of the sensitivity of the issue and the confidentiality of the information.'
Manchester United Debt Soars as Fan Backlash Concerns Glazers - Bloomberg
'Manchester United’s owners are shouldering 16.25 percent annual interest charges because of concern they’d anger fans by using the soccer club’s cash to pay off the loans, two people with knowledge of the situation said.
United fans have protested against the Glazer family since they added debt in their 2005 takeover. Club officials told investors Oct. 8 the owners are concerned that using team funds to pay down debt may create a new backlash, said the people, who declined to be identified because of the sensitivity of the issue and the confidentiality of the information.'
To be honest, it doesn't really say any more than we already know.
Tariq Panja was the journalist responsible for the revelation that the Glazers bought a portion of the PIKs back in 2008 which was a decent bit of journalism but that article is all a bit yada yada, really.
The quote in there from Drasdo has me a bit worried and I hope Tariq isn't just going to become yet another mouthpiece for MUST.
I am aware of the argument that the only thing stopping the Glazers taking their money is a fear of a fan backlash but I don't really buy that to be honest. As far as the fans are concerned, we have had it drummed into us for ten months that the money is as good as gone and we have been merely waiting for written confirmation in the accounts.
At this stage, I don't see how Glazer opinion could possibly be swayed any more one way or the other and to suggest that they are costing themselves millions of pounds a year solely to stop a section of fans who already hate them from hating them even more is a bit ridiculous, really.
I personally wonder what would happen if Fergie spent £160million on players next summer - now THAT would put a cat amongst the pigeons! (Won't happen, I know!)
Well if they did that, everyone would admit that they'd been wrong on accusing them of not investing in the team. But as you say, it won't happen. Those PIKs aren't going to pay themselves.
That said, the story about the Glazers taking the protests into account when deciding not to draw money out this time around is interesting. The sources are, by all accounts, right at the heart of this.
But if this is true, when exactly do the Glazers intend on taking the money (after all, the entire point of the bond was to allow them to use United's money to pay off their own debt)? Presumably they knew of the Rooney situation back in mid-August - did this also have an influence? The PR's going to be bad whenever they do it but that story plus Rooney within a matter of weeks could have been a step too far even for them.
So what is going to happen? Rooney goes for £50m, Glazer wack out £80m on a couple of big names, then the following set of quarterly accounts show £95m out for the PIKs?
Well if they did that, everyone would admit that they'd been wrong on accusing them of not investing in the team. But as you say, it won't happen. Those PIKs aren't going to pay themselves.
That said, the story about the Glazers taking the protests into account when deciding not to draw money out this time around is interesting. The sources are, by all accounts, right at the heart of this.
But if this is true, when exactly do the Glazers intend on taking the money (after all, the entire point of the bond was to allow them to use United's money to pay off their own debt)? Presumably they knew of the Rooney situation back in mid-August - did this also have an influence? The PR's going to be bad whenever they do it but that story plus Rooney within a matter of weeks could have been a step too far even for them.
Rooney goes for £50m, Glazer wack out £80m on a couple of big names, then the following set of quarterly accounts show £95m out for the PIKs?
I really have a hard time believing that the Glazers are worried about PR for themselves.
If PR at the expense of personal losses was their concern then they surely would have insisted that Fergie buys someone, anyone - so long as he costs at least £30m - during the last transfer window? The money was definitely there for this to happen. I don't think anyone can argue with that.
The reason why the money wasn't spent must, therefore, be as Fergie says - he went for a player, the player didn't want to leave his country and so he decided to stick with pretty much what he had (because what he had didn't do too badly last season).
As things stand, there's just a shitload of money sitting in the account which doesn't appear to serving any useful purpose on or off the field (Anders reckons it's attracting around 1.1% interest so that's obviously not part of the grand plan!). Personally, I can only think that there was another reason why the money wasn't taken. From a PR perspective, nobody seems particularly impressed that we have £164m in the bank.
It's just a weird one.
The PR is going to be bad for the Glazers no matter what they do because, as you well know, there are a certain body out there who twist everything that happens at United into "evidence of the Glazers being bad for United".
We sign a player and they moan that the debt hasn't been paid off or the "club lost money last year".
We don't sign a player and they moan that there's no squad investment.
I really don't see how the Rooney situation would have impacted on their thinking and I hope that this wasn't the case. Players come, players go and that is part and parcel of football.
So long as Fergie is given the funds he needs to fill the void then I don't see what more anyone can ask.
The accounts suggest that even without taking the "Rooney money" into account, there should be a significant sum available for transfers either in january or summer (around £50-60m) and that is assuming the Glazers take the £95million.
It's not necessarily about personal pr, you have to look at the bigger picture and their attempts to sell the brand which is their main way to increase revenue now that they've frozen ticket prices.
A club with fans boycotting and very visibly protesting inside and outside the ground is not going to be as marketable to the global and local Market.
A club with fans boycotting and very visibly protesting inside and outside the ground is not going to be as marketable to the global and local Market.
Depends who they have doing their PR work.
So far their PR has been pretty abysmal
And that's just on the cafe.
Fair enough but if you really want to look at the bigger picture then I could argue that these things could even make it MORE attractive to a buyer who says the right things to the fans.
It is like the situation at Liverpool. The good guys come along and shoo away the bad guys and now the sun shines out of the new owner's arse. If the problem is solely the Glazers then remove the Glazers and the problem goes away, right?
I would suggest that the most off-putting thing to any new investor is not the protests as such but the reason for the protests - a group of people who will protest any owner unless they give them what they want - a seat at the table.
The main thing that puts off investors for any purchase is price.
Well, the price is something that gets negotiated between buyer and seller.
I just think that if I were a person looking to buy United right now, I would be more concerned about MUST than anything else.
Whether it costs £500m or £2bn to buy United, it is a lot of money to sink into something when there is going to be a bunch of people trying to throw spanners in the works at every turn.
You clearly don't want to acknowledge this so let's agree to disagree, eh?
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