ALL issues relating to the bond issue and club finances

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THe thing that gets me from certain elements, is this call for the club to 'engage'. As if spouting half-truths, twisted facts and distorted analysis somehow makes you entitled to be 'engaged with' by the club.

I've heard Gill interviewed on TV and the radio a number of times over the financial situation of the club. You rarely, if ever, hear any other 'chairman' or similar do so about the finances of their club. Certainly not to the degree and detail Gill often has to go into on a regular basis, two or three times a year.

The whole 'refusing to engage' is another smoke screen just because the club doesn't indulge those who deliberately mislead. Why add credence to their argument by engaging with them?
 
When a football club signs a player, is their signing fee entered into the accounts over the length of the players contract? So say a club signs a player for £10million over 4 years it would go in the annual accounts as £2.5million? That's how I've always understood it anyway but I'm confused as to how clubs evaluate the value of say, youth players, when declaring assets. Hernandez was signed for £6million, if we sold him now we'd get maybe £35million, so how is he valued?
 
Aaron said:
The whole 'refusing to engage' is another smoke screen just because the club doesn't indulge those who deliberately mislead. Why add credence to their argument by engaging with them?
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Some pretty strong words there that are pretty hard to back up (and totally unrelated to the current discussion in the thread).
 
Number7 said:
When a football club signs a player, is their signing fee entered into the accounts over the length of the players contract? So say a club signs a player for £10million over 4 years it would go in the annual accounts as £2.5million? That's how I've always understood it anyway but I'm confused as to how clubs evaluate the value of say, youth players, when declaring assets. Hernandez was signed for £6million, if we sold him now we'd get maybe £35million, so how is he valued?
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You were right in the first part. All fees for renegotiations are capitalised and amortised over the length of the contract too.

The 2nd half is why football accounts can be very volatile due to player trading.
 
Number7 said:
When a football club signs a player, is their signing fee entered into the accounts over the length of the players contract? So say a club signs a player for £10million over 4 years it would go in the annual accounts as £2.5million? That's how I've always understood it anyway but I'm confused as to how clubs evaluate the value of say, youth players, when declaring assets. Hernandez was signed for £6million, if we sold him now we'd get maybe £35million, so how is he valued?
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Football clubs can't value players as an asset - they are, however, an expense on acquisition (usually amortised over four years as you suggest)
 
datura said:
You were right in the first part. All fees for renegotiations are capitalised and amortised over the length of the contract too.

The 2nd half is why football accounts can be very volatile due to player trading.
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I'm convinced this is what confuses people. They see a loss of say £70million and see it as £70million leaving the bank account, when in reality it can be accounting losses, adjustments, depreciation etc.

So with the spread of cost of players over the length of their contract, clubs like City will still be paying off the purchases of this, and last year in 3/4 years time, which would surely not help their ffp cause?
 
peterstorey said:
Football clubs can't value players as an asset - they are, however, an expense on acquisition (usually amortised over four years as you suggest)
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So they effectively hold the licence for the player and not the player himself and any assigned value is of the licence - so the value of their contract fee?
 
Number7 said:
I'm convinced this is what confuses people. They see a loss of say £70million and see it as £70million leaving the bank account, when in reality it can be accounting losses, adjustments, depreciation etc.

So with the spread of cost of players over the length of their contract, clubs like City will still be paying off the purchases of this, and last year in 3/4 years time, which would surely not help their ffp cause?
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I don't think the FFP take in account transfers pre the FFP period hence why Chelsea etc are buying now.
 
DanH said:
must be due to dates/accounting practises as unless I'm mistaken the bond coupons are around 8.25%/annum?

Unless it's something to do with the tranche of the bonds that the club own themselves, in which case it should still be disregarded as essentially they'd be paying that portion of the interest to themselves?
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You don't mean taking money out of the club do you? :nervous:
 
ciderman9000000 said:
But if the PLC would have taken a 25% dividend and paid 25% tax then, as the statistics above suggest they might have, from an EBITDA of £110m that's a total of £55m leaving the club, as opposed to the projected £47m under Glazer ownership.
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Not quite Cider. You'd still need to deduct net player trading (amortisation minus profit on player sales) and depreciation of fixed assets from that EBITDA figure in order to form a correct comparison between the PLC and the Glazers ownership. So say, pre-tax profit of £75m with £37.5m leaving the club in tax and dividends. Although, as I argued with my cash outflow comparison last year, I think in reality revenue and profit under the PLC would have currently been c. £20m lower than it is under the Glazers. So whilst the tax and dividend outflow under the PLC would have fallen to c. £27.5m (50% of £55m pre-tax profit), the club would have also been generating £20m less cash. In which case, in the current year we'd have been impacted negatively to the tune of £47.5m under the PLC model compared to £47m under the Glazers ownership.

Whichever way you want to look at it, the actual negative impact of the Glazers ownership to the club itself has been tiny in purely financial terms compared to what would most likely have occured had the PLC remained in place over the last six years. And for what it's worth, when you consider how much happier Fergie has been under the Glazers private ownership structure, particularly with regards to transfers and with Magnier and McManus removed from the scene, I'd be perfectly willing to state that on balance the Glazers takeover has had a positive impact on Manchester United Football Club. Could we have had a better outcome? Yes. Has it been the disaster that so many predicted back in 2005? No, nothing like it. We've done bloody well and we're all set up to continue to do so.
 
datura said:
I don't think the FFP take in account transfers pre the FFP period hence why Chelsea etc are buying now.
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FFP does take into account the amortisation from transfers that took place pre-FFP period. It's the wages agreed on player contracts before June 2010 that can be excluded in the first two monitoring periods for the financial year ending 2012.

Taken from Uefa's FFP document:

2. For the purpose of the first two monitoring periods, i.e. monitoring periods assessed in the seasons 2013/14 and 2014/15, the following additional transitional factor is to be considered by the Club Financial Control Panel:

Players under contract before 1 June 2010

If a licensee reports an aggregate break-even deficit that exceeds the
acceptable deviation and it fulfils both conditions described below then this
would be taken into account in a favourable way.

i) It reports a positive trend in the annual break-even results (proving it has
implemented a concrete strategy for future compliance); and

ii) It proves that the aggregate break-even deficit is only due to the annual
break-even deficit of the reporting period ending in 2012 which in turn is
due to contracts with players undertaken prior to 1 June 2010 (for the
avoidance of doubt, all renegotiations on contracts undertaken after such
date would not be taken into account).

This means that a licensee that reports an aggregate break-even deficit that
exceeds the acceptable deviation but that satisfies both conditions described
under i) and ii) above should in principle not be sanctioned.
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Number7 said:
I'm convinced this is what confuses people. They see a loss of say £70million and see it as £70million leaving the bank account, when in reality it can be accounting losses, adjustments, depreciation etc.

So with the spread of cost of players over the length of their contract, clubs like City will still be paying off the purchases of this, and last year in 3/4 years time, which would surely not help their ffp cause?
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Yup, that's pretty much it really. I've read through quite a lot of that thread on RAWK and the very fact that I've seen no mention of the impact of the irrelevant £35m annual goodwill amortisation charge on our financial results tells me all I need to know about their ''analysis'' of our financial situation. There's also absolutely no acknowledgement of the exceptional financing costs incurred in August 2006 and January 2010 or indeed the significant reduction in net debt and the vast improvement in the club's net debt/EBITDA multiple since 2005.

It comes as little surprise though when you consider the British media's, frankly ludicrously inaccurate reporting of our financials over the last six years, together with the deliberate and unfortunately successful attempts of some of United's own ''supporters'' to mislead their fellow fans. On the bright side, it does make our ongoing success even more enjoyable. :)
 
Sad to see money that could be, and should be, contributing to the UKs public sector (which is Mancs major employer and facing major cuts) going to Florida...
 
It's a fair point Cider, and the reason there should be no tax relief on debt acquired through leveraged buy-outs.
 
more qatar bollocks in the papers today.

Also on the twitter is another proposal..a bit more interesting. Glazers planning on taking united public on HK exchange.

HK reds, any rumblings of this? Cal?
 
VoetbalWizard said:
more qatar bollocks in the papers today.

Also on the twitter is another proposal..a bit more interesting. Glazers planning on taking united public on HK exchange.

HK reds, any rumblings of this? Cal?
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not clued up on economics, what would that mean?

someone could buy us with enough shares?
 
gulli_G said:
not clued up on economics, what would that mean?

someone could buy us with enough shares?
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It just means that a certain % of our equity would be up for the public to buy. Just like how we were a public company before hand. Except in this case, Glazers would most probably retain >50% of the shares to maintain a controlling interest in United.

However, HK Exchange seems like an odd choice.
 
The American owners of Manchester United are looking at floating the football club in Asia. The Glazer family have held talks with several investment banks on a scheme to list the Premier League champions on the Hong Kong stock exchange.

The deal would mark a shock return to the public markets for the club six years after the Glazers took it private in a blaze of controversy.

Bankers have told the Florida-based tycoons that the listing could value the club at £1.7 billion — more than double the £790m the Glazers paid for it in 2005.

A recent flurry of floats on the Hong Kong stock exchange by upmarket consumer goods companies such as the luggage firm Samsonite, has prompted the family to consider a listing.

Thanks to the international power of United’s brand, and the strength of its following in Asia, advisers believe the club could attract a higher price for its shares in Hong Kong than in London.

Sources close to the discussions insisted the plans were at an early stage and may still come to nothing.

However, the Glazers are believed to be keeping an eye on the imminent $16 billion (£10 billion) flotation of Prada. The luxury fashion house will begin drumming up investor interest on Monday. If Prada’s shares perform well, the Glazers are expected to show more interest in the plan.

Since the Glazers bought the club, Alex Ferguson, the manager, has led United to a 19th league title, making it the most successful team in the history of English football.

It is also one of the best supported clubs in the world, and the third wealthiest, after Spain’s Real Madrid and Barcelona. In 2010, a list of the 10 most valuable sports brands compiled by Forbes magazine ranked Manchester United second only to the New York Yankees.

Last year, the club’s annual revenue of £286m and operating profit of £91m were the highest in the Premier League. However, United was pushed into a £79m loss by interest payments on the debts the Glazer family have piled on to the club — debts that have made the family unpopular with many fans.

Speculation that the Glazers are preparing to sell the club began last year when the family refinanced some of United’s loans.

In a second refinancing, high interest loans were repaid with cash from unknown sources, fuelling rumours the Glazers were laying the groundwork for a sale.

It is understood that a float is the only exit the family is willing to consider. They have ruled out a sale to another private investor such as the Qatari royal family, which made a tentative takeover approach last year.

“They have been inundated with proposals. At the moment they are just listening. If Prada goes well, then things could change quickly,” said one source familiar with the situation.

News that the family is considering an exit may encourage the Red Knights, a consortium of wealthy United fans, to revive their plans for buying the club.

Last year, the Knights began assembling a bid, but their ambitious attempts were put on ice when they realised their valuation of the club fell well short of the Glazers’.

Jim O’Neill, chairman of Goldman Sachs Asset Management, led the plan. Other backers included Tony Fernandes, founder of the Air Asia budget airline, and Peter Lim, the Singaporean billionaire who also attempted to buy Liverpool football club last summer.

Sources say representatives of the Knights have toured the Middle East in recent weeks trying to attract further financial backing so they can improve their offer.
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And what exactly would this mean? :confused:
 
Ole's_toe_poke said:
And what exactly would this mean? :confused:
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Cash. Lots of it. If they floated 49% of the shares at a value of £1.7 billion the Glazers would make back their entire investment in buying Man Utd and still maintain a controlling stake in the club.
 
Wonder how much of that we'll see invested in the club?

They could buy the bonds up and take the dividends from the bonds each year back across the pond.
 
If the club sells shares then dividends need to paid out, as in the PLC days.
 
charleysurf said:
If the club sells shares then dividends need to paid out, as in the PLC days.
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not necessarily. apple hasn't paid a dividend since dogs years and google hasn't paid a dividend ever.

Some companies don't pay dividends, and choose to instead reinvest that money to grow shareholder value.

Just because united go back public doesn't mean we have to pay a dividend. It all depends on our strategy and what shareholders expect.
 
Thought this epic post was worth posting here - too good to be wasted in the random thread it came from!

Ferguson said:
Because it is unfalsifiable.

There is nothing in the world that could happen that would prove that the anti-Glazer fears were unfounded. Even if we ended up lowering ticket prices, expanded Old Trafford and paid off all the loans or sold the club to a rich Arab to take it debt free. It doesn't matter. Whatever happens it won't change a thing. United could win European Cups for the next ten years, and the Glazers would still be evil.

When something is unfalsifiable, there is no point discussing it. If your position cannot be proved wrong by facts, then all discussion is meaningless because it's simply a naked prejudice. That's why I don't bother responding most of the time to those debates about finances because what's the point.

Proverbs 26:4 "Do not answer a fool according to his folly, or you shall be exactly like him."

My position was always falsifiable. If the Glazers stopped investing in players and began taking everything of value out of the club just to resell it after a short time like Gordon Gekko, then they would have proved themselves to be exactly what the protesters said they were. If they had brought in cheerleaders or built a pirate ship in Old Trafford or attempted MLS style idiocy, then the burning of American flags in front of Old Trafford would have been justified. None of these things has happened, so the anti-Glazer rhetoric remains unpersuasive to me. Okay, they raised ticket prices, but a United season ticket is still less than Arsenal. 950 pounds for 19 Premier League matches in Old Trafford doesn't seem bad at all to me. I spend that much on a year's cable tv which I wouldn't otherwise have if it weren't for watching United, and I'm sitting at home watching the matches dreaming of visiting Old Trafford.

If I were to hazard a guess as to the root of the difference I'd say that for many of the British working class, capitalism is evil, profit through risking capital is evil, therefore American capitalists who buy a football club that represents working class dreams must be by definition the embodiment of all that is evil.

A Russian who secured billions through corruption on the other hand is just a guy who made good who can now play sugar daddy to our club. Arab sheiks are just winners of life's lottery who can now spread the wealth. But investors who run the club for a profit are wicked exploiters who simply steal value created by and rightfully belonging to others (cf. Karl Marx - the labor theory of value has long since been discarded by economists by the way). Someone has to risk their money for the fans to keep turning up at the gate. The fans may pay the player's salaries, but they could just as easily spend their money on something else without the vision of the capitalist to promote and grow the club and without the players who are able to capture the imagination. Thomas Edison would be nothing without the people who buy his light bulbs, but it took some business acumen for Edison to turn GE into a business that could provide light to millions.

The few Englishmen who defend the Glazers on here seem to me to be those who work in finance or business, and thus who do not shudder at mortgaging in order to try to grow an investment. Fred the Red has told me more than once in the past that football is not a business or the free market. That may be so in one sense, but in another sense it is obviously big business (a global business if you were out here in Korea with me, sitting in the official Manchester United Bar/Cafe in Seoul), so it is NOT not a business or not affected by the market either, even though some imagine a world in which ticket prices are a right and those who have always gone to matches will be able to always go without any change. There will always be a market, either the club profits from higher ticket prices or the fans will by re-selling them to the highest bidder and keeping the profits to themselves.
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VoetbalWizard said:
not necessarily. apple hasn't paid a dividend since dogs years and google hasn't paid a dividend ever.

Some companies don't pay dividends, and choose to instead reinvest that money to grow shareholder value.

Just because united go back public doesn't mean we have to pay a dividend. It all depends on our strategy and what shareholders expect.
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We can't promise anything like the growth that Apple can though. I don't see why anyone would buy United shares without a dividend being promised.
 
charleysurf said:
We can't promise anything like the growth that Apple can though. I don't see why anyone would buy United shares without a dividend being promised.
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Capital appreciation. Without going into too many details, a share price will automatically include the value of unpaid dividends until they're paid off.

However, I would be very surprised if United got that level of valuation considering they're a loss making enterprise.
 
Falsifiability?

Of course it is possible to conduct a falsifiable test. We could argue that perhaps ticket prices would have only increased by X% without the Glazers, or that success would not have been diminished without the Glazers, or that spending would not have decreased without the Glazers, and so on - and it would be possible to construct a fictional set of data that shows that the above statements are true or false.

Yes, it is falsifiable. No, it probably isn't very practical nor easy since we have little transparency over all the internal finances of the whole group-wide company. No, it is probably not going to satisfy all the anti-Glazer supporters because everyone has a different level of financial knowledge and tolerance towards the Glazers. But to say it's not falsifiable is beyond the mark - it is unfalsifiable. Just not the easiest thing to consider.

Found this one odd:

There is nothing in the world that could happen that would prove that the anti-Glazer fears were unfounded. Even if we ended up lowering ticket prices, expanded Old Trafford and paid off all the loans or sold the club to a rich Arab to take it debt free. It doesn't matter. Whatever happens it won't change a thing. United could win European Cups for the next ten years, and the Glazers would still be evil.
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I don't think so, really... If the Glazers were a perfect fit to the Manchester United fans as a whole, they wouldn't be considered evil. I mean, the debt is one of the main gripes for some fans, so if they paid that off, that would go a huge way to appeasing these fans. It is a really weird thing to say that it is impossible for the Glazers to not be considered evil - if they had done exactly as the PLC had run the club, for example, I think fans would be smart enough to acknowledge that nothing has changed.
 
You have missed the point completely - this isnt a bloody mathematic theory thread!

The point is that there are certain elements within our fanbase who will never accept the Glazers regardless of what progress is made off the pitch - they made their decision back in 2005 and are not open to reconsidering it. You can construct whatever tests you want, but they arent interested and will continue to move the goalposts to suit their own agenda.

Of course, not everyone is in the category - thankfully there are many more rational fans who are willing to look at the facts and decide for themselves.
 
Rood said:
You have missed the point completely - this isnt a bloody mathematic theory thread!
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So why bring falsifiability to the table?

Rood said:
The point is that there are certain elements within our fanbase who will never accept the Glazers regardless of what progress is made off the pitch - they made their decision back in 2005 and are not open to reconsidering it. They will continue to move the goalposts to suit their own agenda.
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Interesting thoughts. If the Glazers paid back all the debt, slashed ticket prices to PLC levels, got rid of the ACS, and were much more open with the fans, then I would think that most anti-Glazer fans would reverse their thoughts.

I think even the most rabid anti-Glazer fan has a set of conditions upon which he would think it is acceptable, understanding perhaps that it would involve "compensation" of some sort for them being there in the first place.

And for that reason, it is definitely falsifiable - it is just that it is not practical to test because we all know this is less likely to happen than me winning the lottery.

It is akin to saying, "if this dinosaur died in a slightly different position, Italian would be the dominant language in the world today" - definitely falsifiable, but good luck showing it.

Essentially, all the quote is saying is that some anti-Glazer fans are unreasonable, with a dash of scientific colour (and, oddly enough, a Bible quote).

I think we all know what are the key gripes of the anti-Glazer fans - and if all those were reversed and they were "compensated" for their "misery", they would be more than happy to endorse the Glazers again. Fat chance of these policies being reversed in the first place, of course...
 
Rood said:
Thought this epic post was worth posting here - too good to be wasted in the random thread it came from!
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Terrible post, I thought. No debt, decent ticket prices and 10 European Cups and the Glazers would be worshipped, no doubt at that.

Plus anyone who spends £950 a year on cable TV can't be trusted.
 
Rood said:
Thought this epic post was worth posting here - too good to be wasted in the random thread it came from!
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I didn't think it was a very good post at all. It fell into the same theme of painting anyone who is not an advcate of the Glazers as some kind of quasi-religious fanatic. I do not appreciate the idea that all who are anti-Glazer are emotive and hysterical about it. I do not like the Glazers model of ownership whereby bank loans are there to be paid off by the supporters. I don't think they are "evil" though. I also don't think that Abramovich is "just a guy who made good", I haven't read anyone stating they'd prefer someone of his background and style of ownership or that of the sheiks. It is simply discrediting people's opinions by putting words in their mouths that were never there (just as the funny little skit about cheerleaders and pirate ships was doing retrospectively).

That old chestnut about our ticket prices still being "less than Arsenal" is indicative of someone who does not understand the tradition of local support and the concept of regional differences. North west average salary: £27000. London average salary: £38000. Price of cinema ticket in Manchester: £8.60, London: £14. Average price of a pint of beer: Manchester: £2.80, London £3.30. Average house price: North West: £158,434 South East: £274,326. Of course Arsenal are going to be more expensive! Nevermind the fact that Arsenal's season tickets are the highest in the league and that they also include 7 cup games in the price (compared to our quoted prices which do not include the average of 8 Champions League and FA Cup games that our ST holders are obliged to buy since the Glazers introduced the ACS). Comparing United's season ticket prices to the those of a notoriously expensive club in a notoriously expensive city 200 miles from Manchester is about as relavant as comparing it to the cost of an undefined cable TV package somewhere in the world.

"If I were to hazard a guess as to the root of the difference I'd say that for many of the British working class, capitalism is evil, profit through risking capital is evil, therefore American capitalists who buy a football club that represents working class dreams must be by definition the embodiment of all that is evil."

Hazarding a guess is as good a description as I can come up with for that flight of fantasy. The same goes for the idea that local "working class" fans want ticket prices to remain the same for perpetuity so that they can tout them to the higher class of people who can afford to pay more. Perhaps the reason that some of those who post on here that work in finance are unworried about the Glazers is because people who work in finance not only have an understanding of the technicalities of their business model but as they are in finance, earn a salary that means they are untroubled by the rise in ticket prices and the comitment to paying for games you may not be able to attend with a credit card that they most likely already have.

I've no problem with people trying to make money from the game or from the club. Had someone bought the club with their own money, not loans, then increased the commercial revenue, sponsorship deals etc, opened theme cafes in every city in the world and taken a slice of the profits out of the club, that would have been fine by me, as it was the inevitable outcome of being a PLC. However, the way the club was purchased with borrowed money and the buisness plan that those loans were to be paid off in part by large increases in ticket prices with schemes such as the ACS brought in to guarantee income figures to the banks that is the reason I am against the Glazers and that model being used in football. Nothing to do with concepts of evil and bible quotes. If the Glazers froze prices for several years until the fell in line with others in the region, paid off the loans and bonds out of their own funds and scrapped the obligatory ACS, then I'd not have a problem with them any longer. I expect most would feel the same.
 
Quote:
Originally Posted by Ferguson View Post


'If I were to hazard a guess as to the root of the difference I'd say that for many of the British working class, capitalism is evil, profit through risking capital is evil, therefore American capitalists who buy a football club that represents working class dreams must be by definition the embodiment of all that is evil.

A Russian who secured billions through corruption on the other hand is just a guy who made good who can now play sugar daddy to our club. Arab sheiks are just winners of life's lottery who can now spread the wealth. But investors who run the club for a profit are wicked exploiters who simply steal value created by and rightfully belonging to others (cf. Karl Marx - the labor theory of value has long since been discarded by economists by the way). Someone has to risk their money for the fans to keep turning up at the gate. The fans may pay the player's salaries, but they could just as easily spend their money on something else without the vision of the capitalist to promote and grow the club and without the players who are able to capture the imagination. Thomas Edison would be nothing without the people who buy his light bulbs, but it took some business acumen for Edison to turn GE into a business that could provide light to millions.'


Couldn't be as simple as the former putting money into a club, and the latter taking it out, now, could it?

Thomas Edison my arse.
 
decorativeed said:
That old chestnut about our ticket prices still being "less than Arsenal" is indicative of someone who does not understand the tradition of local support and the concept of regional differences ...
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Forget about comparing our ticket prices to Arsenal (or Chelsea, Spurs etc) who all charge a lot more than us - compare them to Liverpool or Newcastle and you will find that they are still reasonable.
I think it is fair enough for people to say that all Premier League tickets are too expensive, but that is a general problem not one specific to our club - worth noting that our own ticket prices have barely gone up at all in the last 3 years.

Anyway for me ticket prices are quite a specific subject which I prefer to seperate from the general financial discussion - I even made a thread for it!
https://www.redcafe.net/f6/ticket-prices-thread-330330/
 
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