Indeed, let's hope the Hull-match was a sign of things to come!
ALL issues relating to the bond issue and club finances
- Thread starter sammsky1
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Indeed, let's hope the Hull-match was a sign of things to come!
Doesn't make any difference to united though does it as they are all sold.
Taken its time for a lot of United fans to finally take notice.
I still remember the original anti Glazer stance, the fans who protested against the sale of the club.
Those fans have protested through out the entire duration of the Glazer ownership.
I remember being in pubs before games and hearing the "crazy" guy preaching how the Glazers would bring this club to its knees. I also recall how the vast majority would ignore him, preferring to discuss who we should buy next to partner Rooney.
In all honesty we should have all wore black arm bands the day we sold our "soccer team".
I think so many of us are guilty of taking United and our success for granted, forgetting how important this club is and has been to so many people through out its history.
Goldman's Jim O'Neill says Manchester United has too much debt, he's usually right
Goldman Sachs' chief economist Jim O'Neill knows all about dropping bricks. They are what he's built his career on. Which makes it all the more peculiar that the one he dropped about Manchester United's debt levels should have struck his employer so painfully.
By By Jonathan Russell
Published: 5:30AM GMT 26 Jan 2010
Jim O'Neill, Goldman Sachs' star economist and a lifelong Manchester United fan, has declared his opposition to the club's recent bond issue ? despite the investment bank making millions in fees from the fund raising.
Jim O'Neill, Goldman Sachs' star economist and a lifelong Manchester United fan, has declared his opposition to the club's recent bond issue ? despite the investment bank making millions in fees from the fund raising.
When Mr O'Neill was appointed in 2001 to, arguably, the most influential economist's job in the private sector – head of economic research at Goldman Sachs – he knew he needed to come up with something to define his career.
"Goldman Sachs quite rightly puts an enormous amount of importance on this job," he said at that time. "I thought, 'Oh, my God, I've got to put my own imprint on this department for the future.'"
What he came up with was the acronym BRIC to describe the shifting balance of global economic power from the West towards Brazil, Russia, India and China. Since then the word has entered common parlance, and Mr O'Neill has entered the global conference circuit as one of the most sought after economic commentators on the planet.
Goldman Sachs' offices in London and New York receive up to eight invitations a day for Mr O'Neill to attend conferences and seminars on the developing global economy, and in particular the BRIC countries. In a stroke, the acronym BRIC catapulted Mr O'Neill from a well respected, possibly even the world's leading, commentator on foreign exchange to the man of the moment on global economics.
The irony is that before he had invented the term BRIC, Mr O'Neill had only been to one of the four countries, China. For those that know the man this is something that should come as no surprise.
Mr O'Neill grew up in Gatley in Manchester, the son of a postman. More keen on football than the classroom, he turned down a place at private school purely because it didn't play the game. Instead he went to Burnage Comprehensive, where the alumni include Liam and Noel Gallagher of the band Oasis. From there he went to Sheffield University to study geography and economics. He dropped the geography, concentrated on playing football and going to the pub, but still shone at economics.
It was also during these years that he developed a love for Manchester United, eventually becoming a non-executive director and investor in the club, prior to the takeover by the Glazer family in 2005. It is hard to imagine someone better placed to comment on the club's debt levels.
All Goldman Sachs had to say about Mr O'Neill's comments that Manchester United was taking on too much debt with its £500m bond issue, a bond that Goldman helped sell, was that the views were his own.
Just so, but what is also true, and surely won't have escaped Goldman's or Manchester United's notice, is that Mr O'Neill view's are normally right.
Goldman's Jim O'Neill says Manchester United has too much debt, he's usually right - Telegraph
Goldman Sachs' chief economist Jim O'Neill knows all about dropping bricks. They are what he's built his career on. Which makes it all the more peculiar that the one he dropped about Manchester United's debt levels should have struck his employer so painfully.
By By Jonathan Russell
Published: 5:30AM GMT 26 Jan 2010
Jim O'Neill, Goldman Sachs' star economist and a lifelong Manchester United fan, has declared his opposition to the club's recent bond issue ? despite the investment bank making millions in fees from the fund raising.
Jim O'Neill, Goldman Sachs' star economist and a lifelong Manchester United fan, has declared his opposition to the club's recent bond issue ? despite the investment bank making millions in fees from the fund raising.
When Mr O'Neill was appointed in 2001 to, arguably, the most influential economist's job in the private sector – head of economic research at Goldman Sachs – he knew he needed to come up with something to define his career.
"Goldman Sachs quite rightly puts an enormous amount of importance on this job," he said at that time. "I thought, 'Oh, my God, I've got to put my own imprint on this department for the future.'"
What he came up with was the acronym BRIC to describe the shifting balance of global economic power from the West towards Brazil, Russia, India and China. Since then the word has entered common parlance, and Mr O'Neill has entered the global conference circuit as one of the most sought after economic commentators on the planet.
Goldman Sachs' offices in London and New York receive up to eight invitations a day for Mr O'Neill to attend conferences and seminars on the developing global economy, and in particular the BRIC countries. In a stroke, the acronym BRIC catapulted Mr O'Neill from a well respected, possibly even the world's leading, commentator on foreign exchange to the man of the moment on global economics.
The irony is that before he had invented the term BRIC, Mr O'Neill had only been to one of the four countries, China. For those that know the man this is something that should come as no surprise.
Mr O'Neill grew up in Gatley in Manchester, the son of a postman. More keen on football than the classroom, he turned down a place at private school purely because it didn't play the game. Instead he went to Burnage Comprehensive, where the alumni include Liam and Noel Gallagher of the band Oasis. From there he went to Sheffield University to study geography and economics. He dropped the geography, concentrated on playing football and going to the pub, but still shone at economics.
It was also during these years that he developed a love for Manchester United, eventually becoming a non-executive director and investor in the club, prior to the takeover by the Glazer family in 2005. It is hard to imagine someone better placed to comment on the club's debt levels.
All Goldman Sachs had to say about Mr O'Neill's comments that Manchester United was taking on too much debt with its £500m bond issue, a bond that Goldman helped sell, was that the views were his own.
Just so, but what is also true, and surely won't have escaped Goldman's or Manchester United's notice, is that Mr O'Neill view's are normally right.
Goldman's Jim O'Neill says Manchester United has too much debt, he's usually right - Telegraph
Manchester United fans should buy the club, says hedge fund star Paul Marshall
Paul Marshall, co-founder of hedge fund Marshall Wace and a Manchester United fan, says its time for supporters to combine forces to return the club to the community - debt free.
By Paul Marshall
Published: 6:00AM GMT 26 Jan 2010
The Glazer family may not think so, but it is remarkable what an easy ride they are being given in the British press. Headlines such as "Football's first family" and "Malcolm Glazer tackles Man Utd's debt pile" are enough to drive Manchester United fans to apoplexy.
It was the Glazers who created Manchester United's debt pile in the first place and it is Malcolm Glazer and his children who are risking the future of one of Britain's greatest sporting institutions.
The Glazers have taken a company which in 2005 was debt free – one of the most healthy balance sheets in world football – and turned it into a business over £500m in hock. They have saddled the company with debt close to twice the annual turnover and over five times the underlying profits.
If the so-called payment in kind (PIK) debt in Red Football Joint Venture Limited – one of the Glazer's cascade of holding companies – is included, the debt goes up to around £700m.
A good rule of thumb in finance is that debt anywhere above five times underlying profits should be treated as "junk". Manchester United's current bond issue is junk. On that basis, the debts of the Glazer holding companies are beyond junk.
The heart of the problem of course is that the Glazers were unwilling, or unable, to commit enough equity to Manchester United. Back in 2005, when Glazer was being persuaded into buying shares from the Irish, he reached a point where the takeover seemed beyond him. In autumn 2004 the club rejected his first offer on the grounds that the proposed £500m debt burden would be excessive. To quote chief executive David Gill at the time: "We've seen many examples of debt in football over the years and the difficulties it causes. We know what that means and we think that is inappropriate for this business."
Then along came a smooth investment banker with his PIK note wheeze, enabling the Glazers to redefine the meaning of "debt". The PIK notes had a right to convert into shares and so could be classified as equity, not debt. It was this novel feature, apparently, which enabled the board to change its mind and approve the bid. The one small catch was that interest on the PIK notes would roll up at circa 20pc. These notes were of course great for the three hedge funds – Perry Capital, Och Ziff and Citadel – who extended the money. Great for the investment bankers, but a disaster for Manchester United, and a disaster, actually, for the Glazers.
The directors of a company have a legal obligation not only to ensure that a takeover is in the best interests of the shareholders but also in the interests of the ongoing concern. It is known the board did indeed consider this dimension; indeed this was why they rejected the first offer. Given what has subsequently transpired they must rue the day they finally relented.
Since 2005, Manchester United's finances have gone from disastrous to worse. In July 2006, the Glazers reimbursed half the PIK notes, paying an undisclosed premium to the hedge funds for the privilege. But the restructuring ratcheted the debt up to £660m. Four years on, despite unprecedented success on the field (something that no one could have factored in at the time of the leveraged buyout), the consolidated debt has expanded to £699m.
Debt has acted like a leech on the club, sucking money out of the football budget to feed the Glazers and their bankers. It has been estimated that between 2005-9 Red Football Joint Venture Limited has spent at least £260m servicing its debt. Manchester United Plc has debt service costs of over £40m per annum – money that could otherwise be available for players.
Supporters of the Glazers argue that they have been successful in boosting the club's revenues (through ticket hikes and higher media revenues). However, this improvement has been almost entirely absorbed by higher operating costs, which have risen by £50m between 2007 and 2009. We are not given a breakdown of the club's operating costs, but we are told about the number of employees. The striking feature is that the number of players on the club payroll has actually fallen in the past three years from 63 to 62. The big change is "administration and other", where the headcount is up 50pc to 243. Word has it that the man who devised the PIK notes now heads a team of 45 people in London solely to deal with the club's finances. Is this true? These are 45 people we would not need if the club were not up to its neck in debt.
Worse, the one documented contribution of the finance team has been a £35m loss on derivative positions taken out against the risk of rising interest rates. Leaving aside the apparent incompetence behind these losses, such hedging is only necessary because of the scale of the debt.
Manchester United's future is deeply worrying. Following last week's bond issue, the club will face consolidated annual interest charges of £60m (£40m on the bond issue plus £20m on the remaining PIKs). In addition, as The Telegraph pointed out last week, the Glazers could be entitled to take a further £140m out of the club by way of dividends to service the debt in their holding company. With interest payments only just covered by profits Manchester United will never realistically be able to pay off the debt. And with the imminent retirement of Sir Alex Ferguson, we are close to a tipping point where declining fortunes on the field could lead to a loss of revenue which could cause the debt burden to spiral out of control.
So what is to be done? It is time for the club's supporters to combine forces to return the club to where it belongs. Football clubs are communities. Manchester United's community famously extends well beyond Manchester, although Manchester is at its heart and core. The best form of ownership for a football club, as Barcelona has proven, is its community, not a single tycoon. It is time Manchester United's global community came together to create a structure of common debt-free ownership.
Sir Alex Ferguson has, by all accounts, been given freedom by the Glazers to run the football side of the club as he sees fit. He has avoided any comment on the club's ownership status. But he has a wider legacy to think about. If the finances are not healthy, that will eventually have dire and long-term repercussions on the pitch.
Paul Marshall is co-founder of hedge fund Marshall Wace. He writes in a personal capacity and is a Manchester United supporter
Manchester United fans should buy the club, says hedge fund star Paul Marshall - Telegraph
Paul Marshall, co-founder of hedge fund Marshall Wace and a Manchester United fan, says its time for supporters to combine forces to return the club to the community - debt free.
By Paul Marshall
Published: 6:00AM GMT 26 Jan 2010
The Glazer family may not think so, but it is remarkable what an easy ride they are being given in the British press. Headlines such as "Football's first family" and "Malcolm Glazer tackles Man Utd's debt pile" are enough to drive Manchester United fans to apoplexy.
It was the Glazers who created Manchester United's debt pile in the first place and it is Malcolm Glazer and his children who are risking the future of one of Britain's greatest sporting institutions.
The Glazers have taken a company which in 2005 was debt free – one of the most healthy balance sheets in world football – and turned it into a business over £500m in hock. They have saddled the company with debt close to twice the annual turnover and over five times the underlying profits.
If the so-called payment in kind (PIK) debt in Red Football Joint Venture Limited – one of the Glazer's cascade of holding companies – is included, the debt goes up to around £700m.
A good rule of thumb in finance is that debt anywhere above five times underlying profits should be treated as "junk". Manchester United's current bond issue is junk. On that basis, the debts of the Glazer holding companies are beyond junk.
The heart of the problem of course is that the Glazers were unwilling, or unable, to commit enough equity to Manchester United. Back in 2005, when Glazer was being persuaded into buying shares from the Irish, he reached a point where the takeover seemed beyond him. In autumn 2004 the club rejected his first offer on the grounds that the proposed £500m debt burden would be excessive. To quote chief executive David Gill at the time: "We've seen many examples of debt in football over the years and the difficulties it causes. We know what that means and we think that is inappropriate for this business."
Then along came a smooth investment banker with his PIK note wheeze, enabling the Glazers to redefine the meaning of "debt". The PIK notes had a right to convert into shares and so could be classified as equity, not debt. It was this novel feature, apparently, which enabled the board to change its mind and approve the bid. The one small catch was that interest on the PIK notes would roll up at circa 20pc. These notes were of course great for the three hedge funds – Perry Capital, Och Ziff and Citadel – who extended the money. Great for the investment bankers, but a disaster for Manchester United, and a disaster, actually, for the Glazers.
The directors of a company have a legal obligation not only to ensure that a takeover is in the best interests of the shareholders but also in the interests of the ongoing concern. It is known the board did indeed consider this dimension; indeed this was why they rejected the first offer. Given what has subsequently transpired they must rue the day they finally relented.
Since 2005, Manchester United's finances have gone from disastrous to worse. In July 2006, the Glazers reimbursed half the PIK notes, paying an undisclosed premium to the hedge funds for the privilege. But the restructuring ratcheted the debt up to £660m. Four years on, despite unprecedented success on the field (something that no one could have factored in at the time of the leveraged buyout), the consolidated debt has expanded to £699m.
Debt has acted like a leech on the club, sucking money out of the football budget to feed the Glazers and their bankers. It has been estimated that between 2005-9 Red Football Joint Venture Limited has spent at least £260m servicing its debt. Manchester United Plc has debt service costs of over £40m per annum – money that could otherwise be available for players.
Supporters of the Glazers argue that they have been successful in boosting the club's revenues (through ticket hikes and higher media revenues). However, this improvement has been almost entirely absorbed by higher operating costs, which have risen by £50m between 2007 and 2009. We are not given a breakdown of the club's operating costs, but we are told about the number of employees. The striking feature is that the number of players on the club payroll has actually fallen in the past three years from 63 to 62. The big change is "administration and other", where the headcount is up 50pc to 243. Word has it that the man who devised the PIK notes now heads a team of 45 people in London solely to deal with the club's finances. Is this true? These are 45 people we would not need if the club were not up to its neck in debt.
Worse, the one documented contribution of the finance team has been a £35m loss on derivative positions taken out against the risk of rising interest rates. Leaving aside the apparent incompetence behind these losses, such hedging is only necessary because of the scale of the debt.
Manchester United's future is deeply worrying. Following last week's bond issue, the club will face consolidated annual interest charges of £60m (£40m on the bond issue plus £20m on the remaining PIKs). In addition, as The Telegraph pointed out last week, the Glazers could be entitled to take a further £140m out of the club by way of dividends to service the debt in their holding company. With interest payments only just covered by profits Manchester United will never realistically be able to pay off the debt. And with the imminent retirement of Sir Alex Ferguson, we are close to a tipping point where declining fortunes on the field could lead to a loss of revenue which could cause the debt burden to spiral out of control.
So what is to be done? It is time for the club's supporters to combine forces to return the club to where it belongs. Football clubs are communities. Manchester United's community famously extends well beyond Manchester, although Manchester is at its heart and core. The best form of ownership for a football club, as Barcelona has proven, is its community, not a single tycoon. It is time Manchester United's global community came together to create a structure of common debt-free ownership.
Sir Alex Ferguson has, by all accounts, been given freedom by the Glazers to run the football side of the club as he sees fit. He has avoided any comment on the club's ownership status. But he has a wider legacy to think about. If the finances are not healthy, that will eventually have dire and long-term repercussions on the pitch.
Paul Marshall is co-founder of hedge fund Marshall Wace. He writes in a personal capacity and is a Manchester United supporter
Manchester United fans should buy the club, says hedge fund star Paul Marshall - Telegraph
I think this Green & Gold is about 1 of 10 things United need to do - to even force United's hand....
I am also critical about some elements of the United fan structure who seem to be operating at a level where they wish to destroy the club and then build it, without having an idea of where their approach is bringing the club in the first place.
I am also critical about some elements of the United fan structure who seem to be operating at a level where they wish to destroy the club and then build it, without having an idea of where their approach is bringing the club in the first place.
Some interesting statements made today in the press. I think there's a lot going on behind the scenes at the moment.
£50m increase in operating costs? Funny how that isn't widely reported.
They will have a market and as I had previously suggested if the price starts falling in value, which they should if they are actually junk status, The United fans group should be buying them with the money collected. This will have two effects, one is that the coupons will yield over 10% and the second is that if the Glazers default then the bond holders can seize the assets secured on the bond. i.e. Old Trafford will belong to the fans.
The United fans group don't even have a bucket to piss in - or am I wrong?
You are bang on at least with the strategy
Pretty sure they have a bucket. Unless you were speaking metaphorically.
Its all very small scale. Now if some big shots turned up and put a proper structure and organisation then a lot more money and help would be forthcoming. A lot of corporate big guns claim to be United fans. I am sure they have made enough money. If they could now be persuaded to give up some time for the wider community. Someone like Sir Roy Garderner who was a former director would be ideal.
I'm no expert on these bonds but in the event of a default would it not be the underwriters that take control of the club not the individual bond holders?
The problem is finding a united fan with $1b to burn.
I think we would struggle to find a consortium willing to stump up that price let alone an individual fans.
I am not talking about a single fan stumping up the money. I am talking about voluntary leadership by corporate big gun. The money would come from the world wide united fan base.
The mancityfans.net Football Forum. • View topic - The Prem in Debt - Great Gallery!
Spotted this before haha.
Spotted this before haha.
Surely a corporate big gun would want control?
What precedent is there for this happening?
It seems a pipe dream to me.
I really cann't see a corporate big gun come in and wrestle the club away from the Glazers and then give control over to the fans...
The club is very much against the wall on this one...
I hate to say it - but things will have to get alot worse before United fans even get into a situation where they can take things forward.
McManus & Magnier have alot to answer for in this...
The club is very much against the wall on this one...
I hate to say it - but things will have to get alot worse before United fans even get into a situation where they can take things forward.
McManus & Magnier have alot to answer for in this...
Are you suggesting that they sold up to spite Ferguson? I've heard others say this but I don't know how much credence to give it. One regular at my local was saying at the time that the Rock of Gibraltar fiasco was going to come back and haunt us. I thought he was talking through his arse at the time but maybe he wasn't so daft.
I agree - If there was suitable leadership from people from the business community, who knows what could happen. If they structured something where people could buy in stakes for a bid to the Glazers... you just never know.
It would obviously require a few substantial investments.
Didn't the scouse fans set-up something which allowed fans to borrow 5 or 6 grand to buy in to a bid? I'd do it!
It would obviously require a few substantial investments.
Didn't the scouse fans set-up something which allowed fans to borrow 5 or 6 grand to buy in to a bid? I'd do it!
The Glazers are sole proprietors, so no one will be wrestling the club from their grasp. They want to make a profit on the deal so the asking price would be over one billion (their original 260 million plus the debts).
I just can't see the fans coming up with one billion quid, not even close. Even if 100,000 fans stepped up with cash, which is unlikely, they would need to average £10,000 each
At a push, I reckon you could get 10k fans donated 5 grand = 50 million
It's highly likely that any such venture would be able to raise £1b, it's a complete fantasy.
The only way we could go down that road would be if united were to fail and the price fly down to something more realistic.
Proven businesses quite often struggle to raise bank finance so what makes people think they will start lending to a fan based venture.
A consortium would seem the sensible way forward, and looking at MUST's strategy over the past season or so,and the people they've been getting involved with, I assume that's the route they are pursuing.
A consortium of United fans would also have fewer problems with allowing other fans to get involved. One scenario would be for a consortium to buy 95% of the club with MUST raising the rest. But with a deal in place that would allow MUST over time to increase their stake.
I don't think Magnier has a spiteful bone in his body, McManus either, but they didn't have a care in the world for the club as well, and not once did they listen to what the fans wanted at the time....
All they were interested in was making money - which they did and I doubt they've given Utd an interest since..
I'd like to see pressure (within the law) on both of these 2 - which would be another avenue of pressure on the Glazers...
We had a consortium of types five years ago. The major shareholders decided to take the money and run because the club was over priced. Its highly unlikely those multi-millionaire shareholders will return, so now we are really struggling for serious investors.
We need some seriously rich United fans that have no interest in making money off their investment. I just can't see any consortium or group of fans coming up with one billion.
Has this been posted?
Man Utd blows £55m on bond - Times Online
forced to pay £15m in fees and expenses to investment bankers and lawyers.
.
.
The fecking vampires of the modern World. Kraft payed out something like 250 million to these cnuts in the Cadbury take over.
Agreed. Also, why have the Prem and the FA allowed this to happen? I have a horrible feeling we are going to go the way of Leeds.
I've heard that a lot of fans are going to boycott all official merchandise and others are not going to renew their season tickets if the price goes up. The question is - is this a good thing or not? If Club profits go down, the debt will spiral up even further and there will be no chance of the Glazers finding a buyer. On the other hand, if we keep handing over our cash we will only be helping the Glazers make more money. 
That takeover was part funded by RBS as well.
Ripping apart a British institution using our own tax payers money.
My mate works for a broking firm (yeah the devil) and he had this to say on the issue
Don’t think it’s a bad idea… if these PIK notes you just released fail (and as we just sold some at 4 points lower than where they were issued im guessing this could well be the case, PIK notes can be paid in equity/assets or anything that has the same “value” so the movement of the bonds will affect your share price) or you do not invest the £500mio appropriately glazier is going to have to sell a fair share of his stock.. so basically the fans could potentially pick up shares for cheap after malcom and co. carry on f****ng it up. Or... glazier would sell his assets (in this case probably players) to re coup… basically, its not a bad idea in theory, but you will have to test glaziers “love of the club” as he comes across the sort of person that would sell the likes of rooney to make back the cash
Don’t think it’s a bad idea… if these PIK notes you just released fail (and as we just sold some at 4 points lower than where they were issued im guessing this could well be the case, PIK notes can be paid in equity/assets or anything that has the same “value” so the movement of the bonds will affect your share price) or you do not invest the £500mio appropriately glazier is going to have to sell a fair share of his stock.. so basically the fans could potentially pick up shares for cheap after malcom and co. carry on f****ng it up. Or... glazier would sell his assets (in this case probably players) to re coup… basically, its not a bad idea in theory, but you will have to test glaziers “love of the club” as he comes across the sort of person that would sell the likes of rooney to make back the cash
Who does your mate work for a pawnbroker?
So let's test the water here
If the club goes up for sale to the fans, I reckon I'm good for £2k.
Who's with me?
If the club goes up for sale to the fans, I reckon I'm good for £2k.
Who's with me?
I honestly would prefer to spend £2k on my children... However If push came to shove - i'd have no problem backing United and its fans with a sound business plan behind them
I also have decided I will not be renewing my Season ticket. Shag that. I'd prefer my money to go to the Football team instead of lining the Glazers.
find another 999,999 people and you could be in business...
What price the bonds trade at will actually be a good indicator of what 'the market' thinks about the club's financial reputation.
If the financial rep of the club was as bad as you seem to suggest then I doubt they would have been able to raise £500m from the bond market - although I am yet to hear who exactly has bought these bonds.
It depends on your perspective - as someone else has already pointed out, this could present an interesting opportunity so we need to monitor the situation.
I think the banks were pushing it pretty hard since they wanted the senior debt off their books. If the bonds trade at a discount you could start buying them back - after you've paid off the PIKS of course.
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