The Swiss Ramble is a good site. The guy's a doctrinaire anti-Glazerite but provides a lot of interesting info.
ALL issues relating to the bond issue and club finances
- Thread starter sammsky1
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Can you explain this?
Glazer was allowed to claim £££millions in tax relief against the loans he used to buy the company. The tax relief on loans was intended to encourage investment in plant, machinery and workers not to be used for artificial leverage. Osbourne in opposition suggested abolishing such relief (which would have sent Man Utd and others to the wall) - he was smartly smacked around the head and dissuaded from such socialist nonsense by his betters in the party.
Tax relief on interest payments doesn't impact the Exchequer negatively. Although United's tax bill is decreased, there is a corresponding increase in the tax liabilities of those receiving the interest payments. From the Exchequer's viewpoint, there would only be a change in receipts if the lenders had a different marginal tax rate to United's. The same applies to the amortisation of the issue discounts - while it reduces United's tax liabilities over a number of years, it is taxable income in the year of the issue for the banks involved (from a present value perspective, the Exchequer is actually better off as a result).
Unless the lenders were foreign. Or had clever tax-avoidance positions of their own, which I'm told is hardly uncommon.
Of course it impacts the exchequer negatively which is one of the reasons the why the US has declining tax revenues. You think the Glazers or hedge funds paid UK tax on that money? Like feck they did.
It's nothing to do with the Glazers. For the senior debt and the bonds, the interest payments are subject to withholding tax at the source - which means that tax is paid in the UK - and the issue costs represent income earned in the UK for the issuing banks and are also taxed in the UK. The PIKs were more complex. The issue costs were taxable as UK income, but I've no idea how the notional interest is handled from a tax perspective - so there you may be correct.
I don't understand what you're saying here. Neither Man Utd plc nor Red football incurred or paid any tax for the interest payment of senior debt or the bonds. Tax may have been withheld and offset/paid indirectly by the issuing banks as part of their corporate profits but that's another story.
The taxman has lost hard on this. If we were paying dividends it would be profits that were first hit with corporation tax, then dividends tax.
Payments to foreign entities are typically subject to withholding - i.e. the interest would be paid net of taxes (which go to the Exchequer). Payments to domestic entities are taxable in the usual way. The point is that every pound of tax relief United gets as a result of the interest (or issue cost) payments is balanced by a pound of taxable income received by another entity - on which taxes are paid in the UK. It's what you would expect - the system is intended to be neutral in terms of it's treatment of factors of production. So, just as wages and salaries are a deductible expense from the point of view of the payer but taxable for the recipient, so the payments associated with the raising of capital are deductible to the payer but taxable to the recipient.
As previously noted, the taxman doesn't lose - United's reduction in taxable profits is balanced by the lenders' (issuers') gain. As far as dividends are concerned - a) tax rates on dividends are lower than on interest payments and b) the UK's tax treaty with the US means that the UK does not tax dividends paid to residents of the US (i.e. the Glazers). The taxman is doing better the way things are.
That witholding will be balanced out in their tax overall treatment. In any event it's a tax on the bank's profits which is quite separate from the tax being avoided on Man Utd profits.
It's not separate. Every pound that United avoid tax on (by paying interest or issue costs) adds a pound to the banks' taxable profits. The two are inextricably linked.
You can't have a principle where profits are only taxed once as they pass through entities. If I make cardboard box I will be taxed on any profit on it, ifyou paint it in Campbell's livery and resell it you get taxed as well. Or in the case of a domestic loan I get no tax relief on my mortgage and the bank pays tax on any profit.
That's a bad example for a couple of reasons. Firstly, it has nothing to do with the neutrality of the tax system which is really what we are discussing. But beyond that, it doesn't prove the point you are trying to make. Say you spend one pound on materials and two pounds on labour to make the box, and that you sell it to me for four pounds. You will pay tax on your one pound profit. If I spend a pound on paint and a pound on labour, my total cost is now six pounds. If I sell the box for six pounds I have made no profit and pay no tax - I am not taxed again on the profit you made. If I sell the box for eight pounds, I have made two pounds profit on which I pay tax. At each stage tax is only levied on any additional profit that has been made, not on the entire profit made during the productive process. Profits are, in fact, only taxed once.
Analogies often blur rather than illuminate but this one in your expanded example clearly sets out now that since box 1 (Man Utd) pays no tax and the profit on box 2 is offset by bank expenses there's a net loss to HMRC. As for tax neutrality I think the leveraged buy out drives a coach and horses through the principle, avoiding due tax at source and dissipating it through intermediaries.
The expanded example has nothing to do with the United situation - it was simply a response to your, somewhat erroneous, general example. As I've said repeatedly, and obviously without making any impression, every dollar offset by United is a dollar added to the taxable income of the bank. There is no direct loss to the Exchequer. And, again, the LBO simply transfers tax liabilities to the providers of the capital. It does not "dissipate them through intermediaries". I'm sure that nothing I can say will persuade you, so I guess I'll quit at this point. Pity, I hate to waste a "teachable moment".
Relentless, sickening Glazer-stooge.
For arguments sake the only way there would be a "loss to the exchequer" would be if the US Investment Banks claimed Double Taxation on any interest income received from Manchester United. Having said that I don't think it would make much sense for them to do that since the US corporate tax rate at its highest bracket is 30% of all assessable income which is higher compared to the UK rate of around 20% if I remember correctly.
I usually take in interest in the accounting anorak stuff in this thread but the tax stuff even bores me to death 
The difference in CL TV money from going out at group stage and getting to the final is really a much smaller difference than most people (myself included) would expect.
I have read that your previous year's league position has a greater bearing on income than progress in the CL itself. I've a feeling that after Liverpool won it we still got more dosh after the payout.
From the Swiss Ramble blog:
OK, in the case of the English clubs in the Champions League, the allocation works as follows:
(a) Half depends on the position that the club finished in the previous season’s Premier League with the team finishing first receiving 40%, the team finishing second 30%, third 20% and fourth 10%.
(b) Half depends on the progress in the current season’s Champions League, which is based on the number of games played, starting from the group stages.
In other words, success has a direct impact on the amount of money received. Qualifying for the Champions League in fourth place is obviously beneficial, but that team would not receive as much as the teams finishing above it based on the above algorithm.
(a) Half depends on the position that the club finished in the previous season’s Premier League with the team finishing first receiving 40%, the team finishing second 30%, third 20% and fourth 10%.
(b) Half depends on the progress in the current season’s Champions League, which is based on the number of games played, starting from the group stages.
In other words, success has a direct impact on the amount of money received. Qualifying for the Champions League in fourth place is obviously beneficial, but that team would not receive as much as the teams finishing above it based on the above algorithm.
Ah yes, algorithms.
I knew that.
I knew that.
I usually take in interest in the accounting anorak stuff in this thread but the tax stuff even bores me to death
A bridge too far - strictly for the CPA's in our midst. The Cafe discussion equivalent of the ugly kid about whom people say 'only his mother could love him'
I think you'll find that the next two paragraphs suggest that, if the beneficial owner of the notes is outside the UK tax jurisdiction, taxes will be withheld.
What has a discussion of the tax system got to do with the Glazers?
Sorry, got carried away.
By Mark OgdenLast Updated: 7:55AM BST 08/05/2012
Manchester United are facing a shortfall of at least £20 million if they end the season without a trophy for the first time since 2005.
Manchester United's elimination at the group stage of the Champions League and reduction in earnings from next season’s competition should they fail to win the Premier League on the final day of this campaign ensure that quarterly accounts due to be published this month will reflect the true cost of the club’s most disappointing season under their American owners, the Glazer family.
With neighbours Manchester City on the brink of securing the club’s first league title since 1968, United’s attempts to close the gap on their Abu Dhabi-backed rivals are set to be compromised by the huge reduction in prize money due to be deposited into the Old Trafford accounts in comparison to earnings from the 2010-11 campaign.
The inability of the Glazers to successfully launch a £600 million partial flotation of the club on the Singapore Stock Exchange, combined with annual interest payments in excess of £40 million – comparable to a £30 million signing and his wages – on United’s £439 million debt, hint at further difficulties for manager Sir Alex Ferguson as he attempts to lure at least three new players to Old Trafford to strengthen his squad this summer.
Having banked £45 million in prize money from Uefa last season after reaching the Champions League final against Barcelona at Wembley, United’s failure to progress to the knockout stages of this year’s competition is expected to cost around £17 million as a result of lost television revenue and gate receipts.
Finishing as Premier League runners-up to City will make little difference to United’s domestic earnings, with only a £750,000 downturn anticipated from a second-place finish.
But United will suffer an anticipated £5 million reduction in Champions League earnings next season if City win the league because of Uefa’s complex distribution formula. Under the scheme the Premier League champions receive 40 per cent of England’s television market share and the runners-up 30 per cent. The third-place team receive 20 per cent and the fourth 10 per cent.
United’s fourth-round exit in the FA Cup will also prove detrimental to finances, particularly as Old Trafford did not benefit from hosting an FA Cup tie this season. Twelve months ago, United staged three sell-out televised home ties en route to the semi-final defeat against City.
A silver lining to the Glazers’ cloud can be found in the absence of bonus payments this season, while Blackburn will not receive a £2 million one-off bonus as part of Phil Jones’s transfer to United last summer if City go on to win the title.
Ferguson, who claimed at the weekend that City’s financial muscle had made the transfer market “insane”, will be handed money to spend by the Glazers, who have sanctioned a season-ticket price freeze, this summer.
But having spent almost £50 million on Jones, David de Gea and Ashley Young last year, United are unlikely to invest a similarly high figure during this close season.
One senior figure at a leading Premier League club claimed privately last week that United had earned the condescending tag of ‘nomoney.com’ within boardrooms because of their reluctance, or inability, to compete at the top end of the transfer market in recent seasons.
Last summer, United were convinced they would secure a deal for Arsenal’s Samir Nasri until City made their move and offered the Frenchman a £170,000-a-week pay deal at the Etihad Stadium, a figure way beyond United’s package.
Twelve months on United are likely to be beaten by City again in the race for Lille’s Eden Hazard, forcing the club to redouble their efforts to drape a heavy cloak of secrecy over their transfer targets, simply to avoid being gazumped by City.
In a world of agents aiming to strike the best deal for themselves and their clients, such a strategy relies on the goodwill of those involved, another challenge for United.
Despite the likelihood of the Premier League trophy leaving Old Trafford for the Etihad later this week, however, United captain Patrice Evra insists it would be foolish to claim that this season will spark a decline on the red half of Manchester.
“I know that if we don’t win the league, a lot of people will say this is the end of the empire and ask how we will survive,” Evra said. “It’s never easy to find a solution immediately, but it’s not over yet. We’re not dead.
“It hurts me a lot to think we were eight points clear and allowed City to get back in the title race, but we can’t hide from that.
“I still believe we can win this title, but in order to maintain that hope we have to give ourselves the chance to believe. I’ve seen a lot of things in football, so why not another surprise?”
Manchester United are facing a shortfall of at least £20 million if they end the season without a trophy for the first time since 2005.
Manchester United's elimination at the group stage of the Champions League and reduction in earnings from next season’s competition should they fail to win the Premier League on the final day of this campaign ensure that quarterly accounts due to be published this month will reflect the true cost of the club’s most disappointing season under their American owners, the Glazer family.
With neighbours Manchester City on the brink of securing the club’s first league title since 1968, United’s attempts to close the gap on their Abu Dhabi-backed rivals are set to be compromised by the huge reduction in prize money due to be deposited into the Old Trafford accounts in comparison to earnings from the 2010-11 campaign.
The inability of the Glazers to successfully launch a £600 million partial flotation of the club on the Singapore Stock Exchange, combined with annual interest payments in excess of £40 million – comparable to a £30 million signing and his wages – on United’s £439 million debt, hint at further difficulties for manager Sir Alex Ferguson as he attempts to lure at least three new players to Old Trafford to strengthen his squad this summer.
Having banked £45 million in prize money from Uefa last season after reaching the Champions League final against Barcelona at Wembley, United’s failure to progress to the knockout stages of this year’s competition is expected to cost around £17 million as a result of lost television revenue and gate receipts.
Finishing as Premier League runners-up to City will make little difference to United’s domestic earnings, with only a £750,000 downturn anticipated from a second-place finish.
But United will suffer an anticipated £5 million reduction in Champions League earnings next season if City win the league because of Uefa’s complex distribution formula. Under the scheme the Premier League champions receive 40 per cent of England’s television market share and the runners-up 30 per cent. The third-place team receive 20 per cent and the fourth 10 per cent.
United’s fourth-round exit in the FA Cup will also prove detrimental to finances, particularly as Old Trafford did not benefit from hosting an FA Cup tie this season. Twelve months ago, United staged three sell-out televised home ties en route to the semi-final defeat against City.
A silver lining to the Glazers’ cloud can be found in the absence of bonus payments this season, while Blackburn will not receive a £2 million one-off bonus as part of Phil Jones’s transfer to United last summer if City go on to win the title.
Ferguson, who claimed at the weekend that City’s financial muscle had made the transfer market “insane”, will be handed money to spend by the Glazers, who have sanctioned a season-ticket price freeze, this summer.
But having spent almost £50 million on Jones, David de Gea and Ashley Young last year, United are unlikely to invest a similarly high figure during this close season.
One senior figure at a leading Premier League club claimed privately last week that United had earned the condescending tag of ‘nomoney.com’ within boardrooms because of their reluctance, or inability, to compete at the top end of the transfer market in recent seasons.
Last summer, United were convinced they would secure a deal for Arsenal’s Samir Nasri until City made their move and offered the Frenchman a £170,000-a-week pay deal at the Etihad Stadium, a figure way beyond United’s package.
Twelve months on United are likely to be beaten by City again in the race for Lille’s Eden Hazard, forcing the club to redouble their efforts to drape a heavy cloak of secrecy over their transfer targets, simply to avoid being gazumped by City.
In a world of agents aiming to strike the best deal for themselves and their clients, such a strategy relies on the goodwill of those involved, another challenge for United.
Despite the likelihood of the Premier League trophy leaving Old Trafford for the Etihad later this week, however, United captain Patrice Evra insists it would be foolish to claim that this season will spark a decline on the red half of Manchester.
“I know that if we don’t win the league, a lot of people will say this is the end of the empire and ask how we will survive,” Evra said. “It’s never easy to find a solution immediately, but it’s not over yet. We’re not dead.
“It hurts me a lot to think we were eight points clear and allowed City to get back in the title race, but we can’t hide from that.
“I still believe we can win this title, but in order to maintain that hope we have to give ourselves the chance to believe. I’ve seen a lot of things in football, so why not another surprise?”
Depressing reading. Especially:
The Glazers have really got their work cut out for them at the moment, as this article makes quite clear.
It really is quite ridiculous when you think about it. The biggest club in the land; the most supporters; the highest revenue generation; the most successful. And yet we cannot compete for top players, and are known as nomoney.com.
The Glazers have really got their work cut out for them at the moment, as this article makes quite clear.
It really is quite ridiculous when you think about it. The biggest club in the land; the most supporters; the highest revenue generation; the most successful. And yet we cannot compete for top players, and are known as nomoney.com.
Are these boardroom wankers 11 years old?
and all because the profits are helping a wealthy American family (who we'd never heard of) to become even wealthier at our expense and is hindering the team's success.
Is this our debt? Or does anybody really know?
All the "United are fecked" and "End of the Empire" stuff comes roaring out once United miss out on trophies.
This thread began at the start of 2010 and since then has been consistently debating whether the financial situation at the club could facilitate our demise. In that time we have won plenty. And yet the thread is 232 pages long. So you cant really say it only flares up when we miss out on trophies.
Exactly - so why are you worried now all of a sudden?
Anyway I think it is more about the journos rather than posters on here coming out with their 'end of an empire' bollocks - hopefully most of our fans know better by now.
The impact of one season without a trophy will not be that significant to our summer transfer budget - we will still have plenty to spend and the squad is strong anyway, just needs a couple of additions to take us to the next level.
I am not worried about it "now all of a sudden" Rood. I joined Shareholders United when it was a bastion against McManus and Magnier, before Id even heard of Glazer. Ive been worried about it from the beginning and have posted about it periodically in that time.
Empire is the right choice of word. It conveys the solidity of our foundation as well as the extent of our reach etc. You cant topple an empire overnight. Say some parasitical monarch type figure turns up and decides to start skimming money of the top for himself, rather than running the Empire in a way that is conducive to expansion or stability. That doesnt mean the empire collapses straight away, the foundations that have been laid by previous administrations are too strong, the momentum is already there. Your top general, Commander Alexus Fergusondus, is still in place, doing what he has always done. So things carry on, seemingly as normal, for quite some time, while the tyrant diverts money out of infrastructure projects and other things into his own pockets. Meanwhile, other empires are using this time that you are treading water (at the top) to build up their own power. And then suddenly it catches up with you.]
Ive got carried away with my analogy there, and am being slightly facetious - but only slightly. I am making a serious point. Just because we have won things since the Glazers came, doesnt mean they are responsible for it. We have won things in spite of them, not because of them. And sooner or later the money they are sucking out of the club WILL hurt us.
Admittedly I thought it would be more detrimental to us quicker than this. I admit that it has been a long time and we have remained near the top, I can see why some people no longer regard it as a problem, I think that is probably a fair enough conclusion to reach faced with the facts. That is their/your reading of them and it is fine. But I believe it is more testament to the strength of the position we were in, and the quality, more than anything else, of SAF. That is what is keeping this show on the road. It is tragic, really, because his unbelievable quality as a manager is papering over what is happening behind the scenes, allowing it to go on for longer than it would otherwise go on for.
The question is - when he goes - will our inability to compete for top players (Modric, Nasri, Hazard, whoever else) be mirrored by an inability to get the best manager? Time will tell on that one. But if we dont pay top dollar we wont get the best, and without the best manager OR the best players, we wont be challenging at the top. And you can say it is in the Glazers' interests to see us succeed all you like, but there is no certainty they will be able to afford to invest what is needed, even if they want to.
I agree with you about the squad in the moment though. It is pretty good. It has potential, so as long as it develops well, as hoped, and we get a couple of additions (theyll need to be good ones though, and therefore probably expensive ones) we will be competitive for now. But again, that for me is down to SAF. I dont think anyone else managing our squad would have got them this far. And I think him managing City, this title would have been over by March.
Empire is the right choice of word. It conveys the solidity of our foundation as well as the extent of our reach etc. You cant topple an empire overnight. Say some parasitical monarch type figure turns up and decides to start skimming money of the top for himself, rather than running the Empire in a way that is conducive to expansion or stability. That doesnt mean the empire collapses straight away, the foundations that have been laid by previous administrations are too strong, the momentum is already there. Your top general, Commander Alexus Fergusondus, is still in place, doing what he has always done. So things carry on, seemingly as normal, for quite some time, while the tyrant diverts money out of infrastructure projects and other things into his own pockets. Meanwhile, other empires are using this time that you are treading water (at the top) to build up their own power. And then suddenly it catches up with you.]
Ive got carried away with my analogy there, and am being slightly facetious - but only slightly. I am making a serious point. Just because we have won things since the Glazers came, doesnt mean they are responsible for it. We have won things in spite of them, not because of them. And sooner or later the money they are sucking out of the club WILL hurt us.
Admittedly I thought it would be more detrimental to us quicker than this. I admit that it has been a long time and we have remained near the top, I can see why some people no longer regard it as a problem, I think that is probably a fair enough conclusion to reach faced with the facts. That is their/your reading of them and it is fine. But I believe it is more testament to the strength of the position we were in, and the quality, more than anything else, of SAF. That is what is keeping this show on the road. It is tragic, really, because his unbelievable quality as a manager is papering over what is happening behind the scenes, allowing it to go on for longer than it would otherwise go on for.
The question is - when he goes - will our inability to compete for top players (Modric, Nasri, Hazard, whoever else) be mirrored by an inability to get the best manager? Time will tell on that one. But if we dont pay top dollar we wont get the best, and without the best manager OR the best players, we wont be challenging at the top. And you can say it is in the Glazers' interests to see us succeed all you like, but there is no certainty they will be able to afford to invest what is needed, even if they want to.
I agree with you about the squad in the moment though. It is pretty good. It has potential, so as long as it develops well, as hoped, and we get a couple of additions (theyll need to be good ones though, and therefore probably expensive ones) we will be competitive for now. But again, that for me is down to SAF. I dont think anyone else managing our squad would have got them this far. And I think him managing City, this title would have been over by March.
Talk about bad fecking luck, out of all those Arab billionaires fecking skint Glasers had to come and buy the best football club in the world.
Silly article. Making it sound like we lose £5m if we dont win the league. What teams, besides Barcelona and Liverpool, can with some credibility budget with winning the league every season?
So, do they call us nomoney.com in the boardrooms at Blackburn, Villa and Atletico as well?
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