ALL issues relating to the bond issue and club finances

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peterstorey said:
Your wages are increasing faster than your commercial revenue. Our commercial revenue is artificially skewed due to signing long-term front-ended deals to pay for a new stadium. That will be resolved soon and we'll probably go down the route of pre-season tours to Japan etc to take up the slack.
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No, they're not.

In the 2009/10 financial year our commercial revenue increased by c. £11.5m from c. £70m to c. £81.5m or an increase in % terms of 16.4%.

Staff costs (wages) increased by c. £8.5m in the 09/10 financial year from c. £123m to £131.5m or an increase in % terms of 6.9%.

In the first half of the 2010/11 financial year our commercial revenue increased by c. £12m from c. £38.5m to c. £50.5m or an increase in % terms of 31%.

Staff costs (wages) increased by £6m in the first half of the 10/11 financial year from c. £61m to c. £67m or an increase in % terms of 9.8%.


You'll have to wait until 2014 to rectify those commercial deals. By which time, we'll be over the hills and far away.
 
You're only looking at one advantageous year, I'd guess your wage costs have doubled over the last 5 years from the £85M in 2005/6 to c£170M 2010/11. Your commercial revenue hasn't grown at that rate from a lower base number.
 
Our wage bill is going down surely with players like Giggs, Scholes, VDS and Neville retiring...Hargreaves and Owen probably moving on and an apparent strategy of buying younger players, who will presumably be on smaller wages.

Has it even been confirmed Rooneys on 160K a week or is that still speculation?
 
kietotheworld said:
Inter Milan were in a similar situation to us in 2009, they had won the League for 3 seasons in a row (and been awarded the one before that) and their best player wanted to move to Spain, and they sold him. Inter sold Ibrahimovic, and brought in Eto'o, Lucio, Sneijder, Militio and more, and they went on to win the Treble, destroying the myth that it is impossible to replace a top quality player immediately.
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It's just the way we do things under Fergie, I suppose. We did it in 1995 when Ince, Hughes and Kanchelskis left and we didn't sign anyone. Even when we spent big on three players in 2007 (plus Tevez on loan), two of them were signed with an eye on the future. I'm just not sure it has much to do with the Glazers.

Another good example that matches Inter is Juventus in 2001 - they sold Zidane to Real, then bought Buffon, Nedved, Thuram and Salas in the same summer. It set them up nicely (well, the first three did) for championships and a CL final and a few very good years.

There are times I wish we were a bit more like that, admittedly, but that's the gaffer's way and it brought so much success. Sometimes he may be a little too loyal to players and possibly part of the problem is we have such a big squad, players will have to be let go for us to sign others (those who take up space in the 25 men list, that is).
 
Number7 said:
Our wage bill is going down surely with players like Giggs, Scholes, VDS and Neville retiring...Hargreaves and Owen probably moving on and an apparent strategy of buying younger players, who will presumably be on smaller wages.

Has it even been confirmed Rooneys on 160K a week or is that still speculation?
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O'Shea's on £80K a week (£4M/year), work it out from there.
 
GCHQ said:
No, they're not.

In the 2009/10 financial year our commercial revenue increased by c. £11.5m from c. £70m to c. £81.5m or an increase in % terms of 16.4%.

Staff costs (wages) increased by c. £8.5m in the 09/10 financial year from c. £123m to £131.5m or an increase in % terms of 6.9%.

In the first half of the 2010/11 financial year our commercial revenue increased by c. £12m from c. £38.5m to c. £50.5m or an increase in % terms of 31%.

Staff costs (wages) increased by £6m in the first half of the 10/11 financial year from c. £61m to c. £67m or an increase in % terms of 9.8%.


You'll have to wait until 2014 to rectify those commercial deals. By which time, we'll be over the hills and far away.
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This time last year we were announcing a fair few commercial partnership deals but this year it seems quite quiet on that front so I'd think that the rate of growth this year would be lower, wouldn't it?
 
Number7 said:
Well no, not by the club, but from what I can gather but it seems to get thrown about that Rooneys on 160k as if it's fact.
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Between the various media outlets, I've seen numbers between 160k to 250k. The truth of the matter is - no one really knows aside from the people directly involved. But when a number or a notion is talked about enough (Roy Keane ending Haaland's career, for instance), it because 'fact'.
 
peterstorey said:
You're only looking at one advantageous year, I'd guess your wage costs have doubled over the last 5 years from the £85M in 2005/6 to c£170M 2010/11. Your commercial revenue hasn't grown at that rate from a lower base number.
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I'm looking at the last two years actually, which covers the period following a significant investment in a London based commercial team in 2008.

How on earth have you projected c. £170m wage costs for 2010/11? Based on the growth in the first half of the year it will be c. £145m or even c. £140m based on the second quarter growth (I know it's strange that first quarter growth was higher than second, by about eight percentage points, but that's how it was).

Staff costs were £85m in 2005/06. So a 70% increase if you go with the c. £145m projection. 65% if you go with c. £140m.

Commercial revenue was £48m in 2005/06. A conservative projection for 2010/11 would be £100m based on the first half of the year (Gill has already confirmed that it will be over £100m). I think it's fair to say that it will actually be closer to £105m. So a 108% increase if you go with the conservative £100m projection or a 119% increase if you go with the £105m figure.

You really should stop guessing Peter.
 
Amir said:
Ever since the silly rumour of 80k a week wages was mentioned, there hasn't even been an announcement from the club he signed a new contract at all. Obviously it's nonsense.
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Maybe that was intentional by the club, i.e. to try to discredit those figures, if indeed they are accurate. It'd be a strange rumour to make up given just who the player is tbh.
 
Devil_forever said:
This time last year we were announcing a fair few commercial partnership deals but this year it seems quite quiet on that front so I'd think that the rate of growth this year would be lower, wouldn't it?
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Growth will more than likely be lower in 2011/12 (it would be bloody hard to match the 30%+ growth in 10/11!) but I'd still expect it to be double digit and to outstrip staff cost growth.

We'll see the full benefit of the DHL, Epson, Bharti Africa and Sirius deals in the 2011/12 financial year and I'm very hopeful that more deals will be announced over the next 3-6 months. ;)
 
Devil_forever said:
Maybe that was intentional by the club, i.e. to try to discredit those figures, if indeed they are accurate. It'd be a strange rumour to make up given just who the player is tbh.
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Looking at some of the rumours flying around over the years regarding Manchester United, nothing's strange anymore... Just look at the very recent Douglas Costa joke. Papers saying 80k a week are no more reliable than those saying we're signing 20 players.

I doubt United would avoid announcing a contract because of the media guessing a player's wages. I don't think such a thing ever happened, we're always well informed about the lengths of our players deals.
 
GCHQ said:
Growth will more than likely be lower in 2011/12 (it would be bloody hard to match the 30%+ growth in 10/11!) but I'd still expect it to be double digit and to outstrip staff cost growth.

We'll see the full benefit of the DHL, Epson, Bharti Africa and Sirius deals in the 2011/12 financial year and I'm very hopeful that more deals will be announced over the next 3-6 months. ;)
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Those deals were signed during the 2009-10 season weren't they? Wouldn't that mean that we would get the first full installment for the 2010-11 season and in turn see the maximum affect of those deals this year and not next?

@At your prediction followed by the ';)', you're going to have your hate brigade come along and announce that you're in fact David Gill. I mean you were right about the PIKs unlike a certain someone, so you've got to be Gill.
 
Amir said:
Looking at some of the rumours flying around over the years regarding Manchester United, nothing's strange anymore... Just look at the very recent Douglas Costa joke. Papers saying 80k a week are no more reliable than those saying we're signing 20 players.

I doubt United would avoid announcing a contract because of the media guessing a player's wages. I don't think such a thing ever happened, we're always well informed about the lengths of our players deals.
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Well they might if it meant that it prevented that particular story leaking from inflating the salaries of all the others renewing out of proportion because lets face it, regardless of loyalty, if the other players were to find out that O'Shea was earning anything like that, they'd certainly want a substantial hike.
 
Devil_forever said:
@At your prediction followed by the ';)', you're going to have your hate brigade come along and announce that you're in fact David Gill. I mean you were right about the PIKs unlike a certain someone, so you've got to be Gill.
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I think a lot of people actually do suspect GCHQ to be someone on the inside but personally we should just enjoy his insight rather than trying to 'out' him all the time...whoever he....or she......is.
 
Devil_forever said:
Those deals were signed during the 2009-10 season weren't they? Wouldn't that mean that we would get the first full installment for the 2010-11 season and in turn see the maximum affect of those deals this year and not next?
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They were signed during this season (10/11) so we'll see the full year run rate from those deals in the next financial year.

According to my records, there are only two existing sponsorship deals which expire this Summer (Kumho and Hi Seoul) so it's not like we'll be losing a number of existing partners and having to replace them with new ones. Those two deals might well have been extended or are going to be extended for all I know, especially as Park is still with the club, but I wouldn't imagine we'll have much difficulty in finding a new ''destination partner'' to replace Hi Seoul for instance.

There's been no ''reported'' information on the length of the deals with Audi and Smirnoff but Audi is a long-term partner (coming up to ten years now I think) and again, it's not like we'd have any difficulty in finding a new ''official car supplier'' even if Audi ended its sponsorship.

The real growth should come from further ''territory specific'' telecommunication deals, particularly in Asia. So I'm looking at the likes of Japan, South Korea, Singapore, Thailand etc.
 
Aaron said:
I think a lot of people actually do suspect GCHQ to be someone on the inside but personally we should just enjoy his insight rather than trying to 'out' him all the time...whoever he....or she......is.
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Well you ought to sort some of those answers out before you insert yourself up his/her/its rectum(s).
 
peterstorey said:
You're only looking at one advantageous year, I'd guess your wage costs have doubled over the last 5 years from the £85M in 2005/6 to c£170M 2010/11. Your commercial revenue hasn't grown at that rate from a lower base number.
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Well commercial has shot up in past couple of years - before that matchday income was still rising (now seems to have peaked) and in the future I expect there will be large gains from media, especially global TV rights and also possibly mobile/internet.

Increasing wage levels is a big issue for all top level clubs nowadays, we of course are one of the few clubs who manage to maintain a healthy wage/turnover ratio (as do you!) so there is still room for some growth for us - going forward I think that the FPP regs should have some effect on wage levels and slow the crazy wage inflation we have seen in the past few years.
So not too much to worry about really !
 
I'm assuming someone has actually downloaded the accounts from Companies House? It costs £1 to download as we have an account at my firm, anyone should be able to do it though.

The only thing is it won't include a detailed profit & loss account as that is not required on the public record.
 
peterstorey said:
I'm usually see my glass as half-full but I think the Chelsea/City inspired wage inflation is unsustainable (apart from being obscene)..
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It is obscene and it is unsustainable - which is why the FPP Regs are a good idea and hopefully have some impact. They could of course choose to ignore them completely and go head2head with UEFA - we shall see.
 
Seems the last few years everytime we've posted a loss we've just been told most of it is because of one off costs.

I expect the same excuses next year, and the year after.
 
peterstorey said:
Well you ought to sort some of those answers out before you insert yourself up his/her/its rectum(s).
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Your posts indicate you have vast experience of insertions into rectums - and inserting your head so far up you Gunner it sees grey sky seems to be your habit in the United forum
 
esmufc11 said:
Seems the last few years everytime we've posted a loss we've just been told most of it is because of one off costs.

I expect the same excuses next year, and the year after.
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that'd surely only ever be worthy of an excuse if our cash balance was falling as a result of these losses.
 
esmufc11 said:
Seems the last few years everytime we've posted a loss we've just been told most of it is because of one off costs.

I expect the same excuses next year, and the year after.
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You're thinking of the annual £35.3m goodwill amortisation charge, which is an irrelevant non-cash loss and will appear in the Profit & Loss account in every year until 2020.

There were no ''one-off'' costs in the previous two financial years. Red Football Limited's aggregate pre-tax profit for those two periods (07/08 and 08/09) was c. £27m (£48m profit in 08/09, £21m loss in 07/08).

The big fuss came when the 08/09 financial year results were released. That's when the likes of MUST were claiming the club ''would have lost loads of money without the sale of Ronaldo'' when in actual fact Red Football Ltd would have reported a profit without the sale of Ronaldo if the irrelevant £35.3m goodwill amortisation charge had been rightly excluded.

The same was true in the previous year, when the £21m ''accounting loss'' would have been a c. £14m profit without the irrelevant amortisation charge.

Mr. Goodwill Amortisation has an awful lot to answer for when it comes to people completely misunderstanding United's finances.
 
GHCQ said:
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Jeeeez! You have to be careful what you read these days!
 
DanH said:
that'd surely only ever be worthy of an excuse if our cash balance was falling as a result of these losses.
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Precisely, DanH.

The club's (and the parent company's) cash balance increased by £13.3m to £163.8m in a year when the parent company reported a pre-tax loss of £108.9m. Let's not forget that in the same year there was a £30m net cash expenditure on players so it's not like it was anything to do with a lack of spending or similar nonsense.

Will MUST or the media explain why the cash balance increased when at the same time the parent company reported a £100m+ loss? Of course they won't. Why not? Because from the media's point of view it wouldn't make for a good ''story'' and in MUST's case, it wouldn't sit well with their modus operandi of whipping up anger against the club's owners. And they have the cheek to accuse David Gill of lying and twisting facts? Don't make me laugh.
 
Ok so I don't understand accounting and all that and I'm not going to read through all 215 pages here to find out...but this goodwill amortisation thingy, is it being deducted due the fact that Red Football Limited paid over the market value for the club?
 
Stretch said:
Ok so I don't understand accounting and all that and I'm not going to read through all 215 pages here to find out...but this goodwill amortisation thingy, is it being deducted due the fact that Red Football Limited paid over the market value for the club?
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not sure how the accounting works in the UK but what you are thinking of there sounds like impairment.

GCHQ - how does goodwill work in the UK? In Australia, you used to have to amortise it over a 20 year period, but after we adopted the international standards, goodwill is static unless it is impaired...

is the 'goodwill' in the accounts some other kind of intangible asset that has limited life?

Also it's fairly rudimentary, but if you aren't financially literate then the best statement to look at if you get a hold of them is the 'Cash flow statement' which shows the actual ins and outs of real dollars.

Usually you focus on the operational cash flows, but since united have a fair amount of debt, i would look at net cash flows of operating and financing cash flows combined to get a good picture of whether or not the club is cash positive.
 
I'm sure GCHQ will explain this far better but my understanding of the goodwill charge is something along the lines of the club actually being physically worth something in the region of £xmillion (say £500million) in terms of physical assets when the Glazers bought it but they actually paid something in the region of £800million for the club (the amount it cost them to buy up all the shares).

This surplus is what makes up the "goodwill amortisation". It has already been paid but gets spread over 15 years or something on the accounts. Something like that anyway.
 
Chapster said:
not sure how the accounting works in the UK but what you are thinking of there sounds like impairment.

GCHQ - how does goodwill work in the UK? In Australia, you used to have to amortise it over a 20 year period, but after we adopted the international standards, goodwill is static unless it is impaired...

is the 'goodwill' in the accounts some other kind of intangible asset that has limited life?

Also it's fairly rudimentary, but if you aren't financially literate then the best statement to look at if you get a hold of them is the 'Cash flow statement' which shows the actual ins and outs of real dollars.

Usually you focus on the operational cash flows, but since united have a fair amount of debt, i would look at net cash flows of operating and financing cash flows combined to get a good picture of whether or not the club is cash positive.
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In accordance with UK GAAP, goodwill is amortized over its estimated useful life so long as that period is no longer than 20 years. Red Football Ltd's purchased goodwill has an estimated useful life of 15 years and is being amortized on a straight line basis over that period (c. £530m over 15 years, c. £35.3m annual charge). So yes, there is a limited life (15 years) and as such there's no requirement for an annual impairment review under UK GAAP.

As you say, the cash flow statement is what United fans should be looking at in order to gain a better understanding of United's finances.
 
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