well it's now officially really bad
the united debt issues have hit the sydney news papers
the united debt issues have hit the sydney news papers
ALL issues relating to the bond issue and club finances
- Thread starter sammsky1
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well it's now officially really bad
the united debt issues have hit the sydney news papers
They've actually mentioned it here as well, in the Adelaide Advertiser.
Truly, something is wrong.
Glazer family buys time as Manchester United bond issue raises £500m
The Glazer family were breathing a huge sigh of relief last night after a bond issue raised the £500 million investment they sought to get Manchester United’s spiralling debts under control.
A formal announcement is due to be made when the New York Stock Exchange opens this morning.
More than 50 low-risk investors, primarily insurers and pension-fund providers, have stumped up the cash at a fixed annual interest rate of 9 per cent, The Times understands. The interest must be paid quarterly.
The news comes after a United delegation embarked on a week-long series of “road shows” across three continents, sporting a “warts and all” 322-page prospectus in a desperate bid to woo investors. According to the latest accounts for the year ended June 2009, United owed £509 million to international banks.
The money raised through bonds will be used to pay back that debt, secured against the club. But while the annual interest bill will remain largely unaffected, United — crucially — will be freed of the strict financial conditions imposed by lenders that would have made life hugely difficult for the Barclays Premier League champions if they were less successful on the pitch.
United will face an annual interest bill of £45 million on the bonds, similar to the £41.2 million paid in the last financial year, but unlike the debt at present secured against the club, the bonds do not mature until 2017.
That is also when the payment in kind (PIK) notes, debt for which the Glazers are personally responsible and which takes the total borrowing to £716.5 million, are due to be repaid.
The PIK debt rolls up at an annual interest rate of 14.25 per cent and has already risen to £202.1 million, but with the successful bond issue, the Glazers will have the flexibility to address that matter should they so wish.
They will be able to use up to £70 million of the £117 million of cash on United’s balance sheet to start repaying the PIK notes, which were originally held by three New York hedge funds — Perry Capital, Citadel and Och-Ziff — but which are now understood to rest with about 20 so-called vulture funds, financial institutions with an appetite for high-risk loans.
Given that the interest rate could rise to 16.25 per cent if a debt threshold outlined in the PIK notes is exceeded by August 16, however, the Glazers may now move to ensure that does not happen.
Even if the interest-rate increase does not materialise, the PIK debt will still stand at £588 million by 2017.
The Glazers’ motives were unclear last night, but the bond issue buys them valuable breathing space and plenty of room for manoeuvre, as well as the option to loosen the purse strings for Sir Alex Ferguson, the manager, or burden the club with even more debt — a scenario that would further fuel the fears and anger of fans vehemently opposed to the Americans’ ownership of the club.
Supporters’ groups who have campaigned for the removal of the Glazers are appalled at the amount of borrowing, but, tellingly, the bond issue will remove the risk of not meeting targets and give them more choice about how they spend their profits.
United have signed a 3½-year sponsorship deal with Turkish Airlines, which will replace Air Asia as the team’s official carrier.
Glazer family buys time as Manchester United bond issue raises £500m | Manchester United - Times Online
The Glazer family were breathing a huge sigh of relief last night after a bond issue raised the £500 million investment they sought to get Manchester United’s spiralling debts under control.
A formal announcement is due to be made when the New York Stock Exchange opens this morning.
More than 50 low-risk investors, primarily insurers and pension-fund providers, have stumped up the cash at a fixed annual interest rate of 9 per cent, The Times understands. The interest must be paid quarterly.
The news comes after a United delegation embarked on a week-long series of “road shows” across three continents, sporting a “warts and all” 322-page prospectus in a desperate bid to woo investors. According to the latest accounts for the year ended June 2009, United owed £509 million to international banks.
The money raised through bonds will be used to pay back that debt, secured against the club. But while the annual interest bill will remain largely unaffected, United — crucially — will be freed of the strict financial conditions imposed by lenders that would have made life hugely difficult for the Barclays Premier League champions if they were less successful on the pitch.
United will face an annual interest bill of £45 million on the bonds, similar to the £41.2 million paid in the last financial year, but unlike the debt at present secured against the club, the bonds do not mature until 2017.
That is also when the payment in kind (PIK) notes, debt for which the Glazers are personally responsible and which takes the total borrowing to £716.5 million, are due to be repaid.
The PIK debt rolls up at an annual interest rate of 14.25 per cent and has already risen to £202.1 million, but with the successful bond issue, the Glazers will have the flexibility to address that matter should they so wish.
They will be able to use up to £70 million of the £117 million of cash on United’s balance sheet to start repaying the PIK notes, which were originally held by three New York hedge funds — Perry Capital, Citadel and Och-Ziff — but which are now understood to rest with about 20 so-called vulture funds, financial institutions with an appetite for high-risk loans.
Given that the interest rate could rise to 16.25 per cent if a debt threshold outlined in the PIK notes is exceeded by August 16, however, the Glazers may now move to ensure that does not happen.
Even if the interest-rate increase does not materialise, the PIK debt will still stand at £588 million by 2017.
The Glazers’ motives were unclear last night, but the bond issue buys them valuable breathing space and plenty of room for manoeuvre, as well as the option to loosen the purse strings for Sir Alex Ferguson, the manager, or burden the club with even more debt — a scenario that would further fuel the fears and anger of fans vehemently opposed to the Americans’ ownership of the club.
Supporters’ groups who have campaigned for the removal of the Glazers are appalled at the amount of borrowing, but, tellingly, the bond issue will remove the risk of not meeting targets and give them more choice about how they spend their profits.
United have signed a 3½-year sponsorship deal with Turkish Airlines, which will replace Air Asia as the team’s official carrier.
Glazer family buys time as Manchester United bond issue raises £500m | Manchester United - Times Online
That's because he's a classic WDM ( wind down merchant ) who's mission is to smooth the total feckover of United by the Glazers
Perhaps the Mods should step in here and 'unmerge' this group of posts into a new thread?
So they sold them I felt they would. I am sure some of the better economic brains on here will break this down for us and give us the bigger picture. Now they have recieved their temporary lifeline I think you will see all sorts of propaganda to try and bring us the fans on board, David Gill will making glowing statements on MUTV after being missing while this crisis brewed. They have burnt their bridges as far as I am concerned and I hope the campaign that has started continues
If it buys you a player or two in the short term to get number 19, surely you 'the fans' will by happy enough? Even if it means selling them in the mid-future to pay off spiralling debts again.
In my opinion they will be something done to appease the fans, I just hope we dont fall for it just like your Yanks try to quieten you lot down with Aqualini. What a massive fail that was he is useless
I'm talking about serious money player(s) like Silva. I agree we should all write Aquilani off as the two games he's played he's been utter cack.
Not really sure what this means or whether it is good or bad, but if the Glazers honour their provision to channel up to £127m back into the parent company in the first year alone to start paying down the club's debt, I will be happy.
They arent actually clearing the debt. They are actually increasing it, and deferring the payments even further back than they were already..
All that $127 million does is get rid of the PIK loans quicker than they planned.
What it wont do is reduce the amount United owe, or reduce the amounts United have to pay to the banks each year..
What most people havent cottoned onto yet, is the fact that the Glazers now have to pay the investors a dividend for lending them the money...
So United arent going to suddenly be debt free, and have shit loads of money to spend. We are still going to be very very skint.. All it means is the club isnt watching the debts spiral up even higher than they have already got to..
If anyone believes this will alleviate the problems they are wrong. THe debts are still there. The interest still has to be paid, and the investors want their cut..
United are by no means out of the woods.
I dont know if anyone else has spotted it, but the PIK loans are being got rid of..
Those are Glazers personal debts..
The new bond means that the debt is now suddenly Manchester Uniteds to pay...
So in fact, this doestn alleviate any problems for United.. It alleviates the problem for the Glazers... they now dont owe a penny for owning United.....
They now have got United 100% for free. They havent had to pay a penny..
Those are Glazers personal debts..
The new bond means that the debt is now suddenly Manchester Uniteds to pay...
So in fact, this doestn alleviate any problems for United.. It alleviates the problem for the Glazers... they now dont owe a penny for owning United.....
They now have got United 100% for free. They havent had to pay a penny..
hope some cash rich consortium or some very wealthy arab buys us...the only way out...
Ot the old cnut dies tomorrow and leaves United to the supporters in his will..
I dont hold my breath though.
What people haven't cottoned onto yet?
I defy you to find one person who thinks this bond issue would clear our debts and lead to us having shit loads to spend Fred. The good thing about the last couple of weeks is that the general supporter has become a lot more clued up about the situation
No but many believe that it will stave off trouble and all will be rosy again...
Many believe that once the PIK loans are paid off, then all will go back to the way it was before all this came out in the papers..
the times report stated that the interest paid last year amount to 41 million (vs the 45 million interest payment with the bonds). According to reports in the media published yesterday, last year the club paid 68 million in interests and not 41.
Maybe someone could explain this?
Maybe someone could explain this?
The interest in capitalized on the PIK loans (ie. They didn't pay it, and it got added on)
the bond issue is a good thing considering the circumstances - and no it does not mean that we wont have debt anymore or that we ll have much more money to spend.
It s just stopped the financial situation from getting out of hand, at least in the short term
It s just stopped the financial situation from getting out of hand, at least in the short term
This whole bond issue is like paying off a credit card bill with another credit card...
So interest related to PIK's will only affect the P&L foR the time being but not the cashFloW
That is basically my view as well.
A few things that I don't like have come out of the bond prospectus but the big picture is that the midterm future of the club is secure and much clearer than it has been for the past few years.
As mentioned already, the difference is the annual interest that rolls up on the PIK loan. This does not appear in the accounts as shown in the bond prospectus as the PIKs are, in theory, the Glazers' personal debt.
this is a point that concerns me. The glazers personal debts are being wiped out and replaced by bonds which are issued by the club itself. So as it stands now, if the shit hits the fan, it is the club that is directly responsible rather than the damn glazers.
That was by main ray of light at the moment - that despite everything, most of this debt belonged to the glazers (even if it was secured against the club) and at the end of the day, it was them who was ultimately responsible for repaying it, even if that did mean screwing over the club.
If this issue goes through we will be £500m in debt instead of £1b.
At least the club will be longer be at risk from the Glazers personal debt.
In the main the bond issue has a positive thing because the prospectus has swayed the fence sitters towards the anti-glazer movement.
Heads have been pulled from the sand.
At least the club will be longer be at risk from the Glazers personal debt.
In the main the bond issue has a positive thing because the prospectus has swayed the fence sitters towards the anti-glazer movement.
Heads have been pulled from the sand.
The level of club debt will reduce.
We owe £500m in senior debt anyway, it's just being swapped for bonds.
The Glazers are basically using club funds to clear their personal debts (piks).
How will Uefa view this in terms of the proposed debt guidelines?
Technically the club will be no longer in debt to the banks, but instead pays dividends to bond holders.
Does that still count as debt or is it just an expense in the same vein as player wages, upkeep costs etc?
Technically the club will be no longer in debt to the banks, but instead pays dividends to bond holders.
Does that still count as debt or is it just an expense in the same vein as player wages, upkeep costs etc?
There was a report somewhere in the press this morning and its stated that UEFA plans to consider any interest payment as part of the expenses i.e.if we make an operating profit of lets' say 10 million and we pay 30 million in interests, for UEFA we ve made 20 million in losses.
Am I right in thinking that the senior debt is being disposed of, and replaced by a bond.
That bond wiill then allow the Glazers to withdraw up to £127 miillion a year in order to clear off the PIK loans quciker than what they would have been if the senior debt was still in place.
Instead of paying interest on the senior debt and the PIKs increasing, the money that was spent on the senior debt will effectively get rid of hte PIK loans,
Once those PIK loans are cleared, the only money the Glazers owe is the money to be repaid in the bond which I believe is in 2017.
Oh and not forgetting the 8% that the bond entitles investors to each year.
So cash wise, United are not going to be any better off. There wont be more money to spend. All it means is hte money is going to actually wipe out some of the debts as opposed to merely stopping them growing bigger.
Have I got that right ?
You've got to cut the PIKS off at the pass before they slaughter you.
It wont matter virtually all football clubs make a loss.
They cant stick profit targets in its unrealistic.
Were we making a loss prior to the Glazers hijacking us?
No!
Yes a bond and a £75m facility for working capital.
It's one payment of £127m not pa.
The current senior debt covenants do not allow the glazers to pay off the pik debts using club generated funds. The bond issue does.
The piks will be paid from the profit generated from the club. In other words the Glazers will be using £202m of the clubs cash to pay off their personal debts. Once this bond issue goes through they will have £127m of that available immediately which the prospectus provides for.
Thats how I see it
No we were one of the exceptions to the rule.
Look at all the teams who play in the champions league.
How many of them do you think turn a profit?
The questions are: Can you pay the PIKS off in bits? What is the early redemption fee? Will you attack them before July when they hit £230M (and the rate goes to 16.25%).
This might be a stupid question so pardon my ignorance, finance is not my strong point sadly:
What difference does it make whether the loans being payed back are Glazers personal loans (PIKS) or the clubs loans? I mean as long as the Glazers own United 100% then where is the difference?
I'd think that if the the shit hits the fan, then we will be the ones with the risk instead of them.
But if the Glazers are to believed that they are in it for the long run, does it make a difference having loans connected to the club instead of them personally? Will the loans be given at a better interest or worse etc? The way I think about it is that United will be the ones paying for the loans whether they are personal PIKS or loans connected to the club.
Imperialinn, I'd like you to answer these. You've explained stuff earlier in this thread in a understandable manner.
What difference does it make whether the loans being payed back are Glazers personal loans (PIKS) or the clubs loans? I mean as long as the Glazers own United 100% then where is the difference?
I'd think that if the the shit hits the fan, then we will be the ones with the risk instead of them.
But if the Glazers are to believed that they are in it for the long run, does it make a difference having loans connected to the club instead of them personally? Will the loans be given at a better interest or worse etc? The way I think about it is that United will be the ones paying for the loans whether they are personal PIKS or loans connected to the club.
Imperialinn, I'd like you to answer these. You've explained stuff earlier in this thread in a understandable manner.
This is the report I referred to earlier on:
Shocking losses among football clubs prompts Uefa action to rein in excessive spending
Half of all European professional football clubs are running at a loss, with more than 20 per cent recording "huge" deficits in the last year despite the game generating record revenues, The Daily Telegraph can disclose.
By Paul Kelso, Chief Sports Reporter
Published: 7:00AM GMT 22 Jan 2010
Shocking debts among football clubs prompts Uefa action to rein in excessive spending
Something to say: Uefa general secretary Gianni Infantino outlines the European football governing body's plan to rein in debt Photo: REUTERS
The shocking figures, compiled by Uefa and due to be published next month, reveal the full scale of the financial excesses in club football across the continent.
Speaking exclusively to The Daily Telegraph, Uefa's general secretary Gianni Infantino, said the financial plight of clubs in England and across Europe demonstrated the need for new regulations.
Uefa, fearing a spiral of wage inflation across the continent, is pressing ahead with new rules requiring clubs to live within their means rather than relying on wealthy owners or bank debt to underwrite player wages and transfer fees.
The intention is to prevent a repeat of the difficulties being felt at Portsmouth and West Ham, as well as limit the ability of benefactors such as Sheikh Mansour bin Zayed al-Nahyan at Manchester City to fast-track success with short-term spending that the club's revenues could not otherwise sustain.
Uefa president Michel Platini's "financial fair play" initiative will require clubs competing in European competition to break even or turn a profit, relying only on what they earn from football revenues.
Clubs repeatedly making a loss over a three-year cycle could be barred from the Europa League and Champions League.
The new rules, which will be welcomed by those concerned at the financial extremes of the Premier League, will be published in the summer and introduced from the 2012-13 season.
They will not limit the amount of debt that clubs can carry, but interest payments will have to be covered by income. Clubs will be able to record losses as a result of long-term football investment such as stadium improvements and youth academies.
Short-term spending, such as the £170 million lavished on transfers by City in the last year, will have to be funded from club earnings, and heavily-leveraged models such as that imposed on Manchester United by the Glazer family will be imperilled. United's holding company has regularly recorded losses as a result of interest on its £716 million debt burden, though last season the £80 million transfer of Ronaldo contributed to a £6.4 million profit.
The implications for English football are serious. In the 2007-08 season 14 of the 20 Premier League clubs made a loss, including Manchester United, Chelsea and Liverpool. Major European clubs including Inter Milan, AC Milan and Real Madrid will also be affected.
Infantino said: "What we are doing, with the support of all the stakeholders in the game including the major professional clubs, is to try and improve the long-term stability of European club football by encouraging clubs to live within the revenues that they generate," he said.
"We are concerned, and many of the clubs and owners are concerned, about the sustainability of the game. We survey more than 650 clubs all over Europe, and found that 50 per cent of those clubs are making losses every year, and 20 per cent of them are making huge losses, spending 120 per cent of their revenue every year."
Infantino said the primary reason for the losses is wage and transfer inflation driven by clubs relying on owner finance or debt.
"Around one third of the clubs are spending 70 per cent or more of their revenues on wages. Revenues across European football grew by 10 per cent last year, but the salaries of players and coaches have gone up by around 18 per cent.
"It is clear that if we continue like this it will end up with a spiral of inflation, so we need to bring a more rational and reasonable approach to this crazy game."
Uefa's proposals have been backed by the influential European Club Association, but there remain misgivings in the English top flight.
Premier League chief executive Richard Scudamore said earlier this week that he opposed any limit on the ability of benefactors such as Sheikh Mansour to invest freely.
He argued that requiring clubs to break even would mean the big clubs would always dominate.
Infantino disagreed, but said Premier League clubs had nothing to fear. "Our intention is not to make all clubs equal with the same money to spend. What we see now is that the rich owners already go to the big clubs because they make more money.
"We want a healthier environment which will allow smaller clubs to invest in their infrastructure and be able to compete with the bigger clubs, knowing that they can only spend what they earn."
How will the rules work?
What are the new regulations?
From the 2012-13 season, clubs will have to consistently break even – spending only what they earn – if they want to compete in European competition.
Does that mean they can’t have debts?
No, but the debt has to be affordable. If the interest on the debt means that the club or its holding company make a loss, they would fall foul of the rules. Clubs will still be able to borrow to fund new stadiums and youth academies.
What about wealthy owners?
It will be harder for them to subsidise transfer spending and player wages from their own pocket.
Which English clubs will be affected?
Chelsea and Manchester City, as they both need their owners to pay the players. Manchester United will be hit if their debts stay high. In fact, the whole Premier League could be hit: 14 of the 20 clubs made a loss in 2008.
Shocking losses among football clubs prompts Uefa action to rein in excessive spending - Telegraph
Shocking losses among football clubs prompts Uefa action to rein in excessive spending
Half of all European professional football clubs are running at a loss, with more than 20 per cent recording "huge" deficits in the last year despite the game generating record revenues, The Daily Telegraph can disclose.
By Paul Kelso, Chief Sports Reporter
Published: 7:00AM GMT 22 Jan 2010
Shocking debts among football clubs prompts Uefa action to rein in excessive spending
Something to say: Uefa general secretary Gianni Infantino outlines the European football governing body's plan to rein in debt Photo: REUTERS
The shocking figures, compiled by Uefa and due to be published next month, reveal the full scale of the financial excesses in club football across the continent.
Speaking exclusively to The Daily Telegraph, Uefa's general secretary Gianni Infantino, said the financial plight of clubs in England and across Europe demonstrated the need for new regulations.
Uefa, fearing a spiral of wage inflation across the continent, is pressing ahead with new rules requiring clubs to live within their means rather than relying on wealthy owners or bank debt to underwrite player wages and transfer fees.
The intention is to prevent a repeat of the difficulties being felt at Portsmouth and West Ham, as well as limit the ability of benefactors such as Sheikh Mansour bin Zayed al-Nahyan at Manchester City to fast-track success with short-term spending that the club's revenues could not otherwise sustain.
Uefa president Michel Platini's "financial fair play" initiative will require clubs competing in European competition to break even or turn a profit, relying only on what they earn from football revenues.
Clubs repeatedly making a loss over a three-year cycle could be barred from the Europa League and Champions League.
The new rules, which will be welcomed by those concerned at the financial extremes of the Premier League, will be published in the summer and introduced from the 2012-13 season.
They will not limit the amount of debt that clubs can carry, but interest payments will have to be covered by income. Clubs will be able to record losses as a result of long-term football investment such as stadium improvements and youth academies.
Short-term spending, such as the £170 million lavished on transfers by City in the last year, will have to be funded from club earnings, and heavily-leveraged models such as that imposed on Manchester United by the Glazer family will be imperilled. United's holding company has regularly recorded losses as a result of interest on its £716 million debt burden, though last season the £80 million transfer of Ronaldo contributed to a £6.4 million profit.
The implications for English football are serious. In the 2007-08 season 14 of the 20 Premier League clubs made a loss, including Manchester United, Chelsea and Liverpool. Major European clubs including Inter Milan, AC Milan and Real Madrid will also be affected.
Infantino said: "What we are doing, with the support of all the stakeholders in the game including the major professional clubs, is to try and improve the long-term stability of European club football by encouraging clubs to live within the revenues that they generate," he said.
"We are concerned, and many of the clubs and owners are concerned, about the sustainability of the game. We survey more than 650 clubs all over Europe, and found that 50 per cent of those clubs are making losses every year, and 20 per cent of them are making huge losses, spending 120 per cent of their revenue every year."
Infantino said the primary reason for the losses is wage and transfer inflation driven by clubs relying on owner finance or debt.
"Around one third of the clubs are spending 70 per cent or more of their revenues on wages. Revenues across European football grew by 10 per cent last year, but the salaries of players and coaches have gone up by around 18 per cent.
"It is clear that if we continue like this it will end up with a spiral of inflation, so we need to bring a more rational and reasonable approach to this crazy game."
Uefa's proposals have been backed by the influential European Club Association, but there remain misgivings in the English top flight.
Premier League chief executive Richard Scudamore said earlier this week that he opposed any limit on the ability of benefactors such as Sheikh Mansour to invest freely.
He argued that requiring clubs to break even would mean the big clubs would always dominate.
Infantino disagreed, but said Premier League clubs had nothing to fear. "Our intention is not to make all clubs equal with the same money to spend. What we see now is that the rich owners already go to the big clubs because they make more money.
"We want a healthier environment which will allow smaller clubs to invest in their infrastructure and be able to compete with the bigger clubs, knowing that they can only spend what they earn."
How will the rules work?
What are the new regulations?
From the 2012-13 season, clubs will have to consistently break even – spending only what they earn – if they want to compete in European competition.
Does that mean they can’t have debts?
No, but the debt has to be affordable. If the interest on the debt means that the club or its holding company make a loss, they would fall foul of the rules. Clubs will still be able to borrow to fund new stadiums and youth academies.
What about wealthy owners?
It will be harder for them to subsidise transfer spending and player wages from their own pocket.
Which English clubs will be affected?
Chelsea and Manchester City, as they both need their owners to pay the players. Manchester United will be hit if their debts stay high. In fact, the whole Premier League could be hit: 14 of the 20 clubs made a loss in 2008.
Shocking losses among football clubs prompts Uefa action to rein in excessive spending - Telegraph
BTW I think that according to the new rules the "wealthy owners" can still subsidize their club by being a bit more creative ie instead of donating the money directly, they can use other firms they own to "sponsor" the club
Or like Chelsea they can issue more shares.
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