ALL issues relating to the bond issue and club finances

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It's certainly a good thing FFP is here, let's hope it works.

Football should be considered a charity, not a business. It seems almost impossible to turn a decent profit, nearly every club is seduced by the prospect of improvement to invest more than they make.

Yes, United have made a profit and are one of the healthiest clubs in the world, but that only means we make a bit more than we spend. I believe I saw a chart of average profits for EPL clubs over the last few years and it was only us and Arsenal making a decent profit, and maybe 1 or 2 other teams making a tiny profit, and everyone else was spending more than they make.

We have everything a team could want, we own our own stadium and it's one of the biggest, and we can fill it. If we lowered prices we might even be able to fill a much larger stadium, though who knows if those people who were priced out would come back. We have tons of fans around the world who buy our shirts and send money to the team through cable tv payments for channels that buy EPL rights. And yet we make a small profit on our huge net income. Other teams that have to run their club like a business must look at us and think, "Jeez, it would take a miracle get to United's level of income, and even then we'd have to sell a Ronaldo to be in the black, what hope is there for any of us?"
 
Comsmit said:
That's harsh and a little petty. I'm guessing you are looking at the barmy deal with FFF as a guide or benchmark. This was only agreed as recently as early 2011.

The deal with Nike was a game changer and has been more than worth it over the 10 years since. It resulted in Nike money being pumped into football at grass-roots level and set the standard for all future merchandising deals. United effectively put Nike in control of their global operations regarding licensing, merchadising and retail. This is managed by Manchester United Merchandising Ltd. (MUML).

Let's be honest £23.3million a season since 2002 is not to be scoffed at. It's still among the top earning deals among the European elite. Also factor in that through MUML, any net profits made after licensing and sponsorship payments are shared equally between the club and Nike, and you can see the benefits.

This deal has given the club huge revenue over 10+ years, while cementing the relationship with Nike. United's global reach and appeal make it the trophy asset on their portfolio and any future deal will be staggering due in part to the initial agreement in 2002. I'm not sure you are giving them their due credit?
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Good post.
 
Denis' cuff said:
It's of little relevance what I would do - what is relevant is that we have been handicapped in terms of available funds.

I have heard all the arguments of how we shouldn't "spunk money all over the place" which is really missing the point. We are pouring a shit load of money down the gurgler, that would otherwise be available funds for players of the very highest quality, so that the Glazers can own the most valuable sporting institution in the world.
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This reminds me of a scene in Friends. When Ross can't work out what to do about his failing marriage to Emily.

Joey : you want my advice?
Ross : yes please.
Joey : you won't like it.
Ross : any advice will do at this point.
Joey : you shouldn't have got married.
Ross : that's not advice.
Joey : told you you wouldn't like it.

We are where we are. Might as well debate what we should do from here, not speculate about what might have been.
 
Will Absolute said:
It's not a big deal if the IPO never goes through. It just means the Glazers are trying to sell shares in an economic downturn and asking for too much money.

The club's economic strength is unassailable. It's quite possible that after a very poor football season we'll still make close to £100M in profits this year. Debt interest payments are £35M per year and falling.

With the new TV deal kicking in, and the relentless increase in commercial revenues, I wouldn't be surprised to see £140M/£150M yearly profit figures, with debt payments of less than £25M, in a couple of years.
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Definately agree with you. It really isn't the right time to make an IPO right now with the market being in a state of turmoil. This can always be done in the future when valuations will be much more favorable although you can understand why the Glazers would want the extra financing, to reduce the interest payments as soon as possible.

The reason Morgan Stanley quit is probably because they disagree with the valuation of the IPO or simply don't think they will make enough money from the listing. Not meeting the valuations is the most probable scenario if we did push through a listing within the next 6 months.

The new TV deal kicking in will only help to drive up the value of the club and if they smartly hold off until the market picks up again, then the Glazers could stand to make alot more money than if they pushed through an IPO right now.
 
Manchester United Files Registration Statement for Proposed Initial Public Offering of Class A Ordinary Shares

MANCHESTER, England, Jul 03, 2012 (BUSINESS WIRE) -- Manchester United today announced that it has filed a registration statement on Form F-1 with the U.S. Securities and Exchange Commission in connection with the proposed initial public offering of its Class A Ordinary Shares. Manchester United intends to apply to list its Class A Ordinary Shares on the New York Stock Exchange. The number of Class A Ordinary Shares to be offered and the price range for the proposed offering have not yet been determined.

The book-running managers for the proposed offering are Jefferies, Credit Suisse Securities (USA) LLC, J.P. Morgan, BofA Merrill Lynch and Deutsche Bank Securities.

A registration statement relating to these securities has been filed with the U.S. Securities and Exchange Commission but has not yet become effective. These securities may not be sold nor may offers to buy be accepted prior to the time the registration statement becomes effective.

When available, copies of the preliminary prospectus related to the offering may be obtained from (i) Jefferies & Company, Inc., Attention: Equity Syndicate Prospectus Department, 520 Madison Avenue, 12th Floor, New York, NY 10022, or by telephone at 877-547-6340, or by email at Prospectus_Department@Jefferies.com, (ii) Credit Suisse Securities (USA) LLC, Attention: Prospectus Department, One Madison Avenue, New York, New York, 10010, or by telephone at *** (800) 221-1037, or by email at newyork.prospectus@credit-suisse.com, (iii) J.P. Morgan Securities LLC, c/o Broadridge Financial Solutions, 1155 Long Island Avenue, Edgewood, NY 11717 or by calling toll-free 866-803-9204, (iv) BofA Merrill Lynch, 222 Broadway, 7th Floor, New York, NY 10038 Attn: Prospectus Department, Email: dg.prospectus_requests@baml.com, or (v) Deutsche Bank Securities Inc. (Prospectus Group, 60 Wall Street, New York, New York, *** (800) 503-4611 or prospectus.cpdg@db.com ).

This press release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of, these securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.

In the United Kingdom, this announcement is only directed at, and any investment or investment activity to which this announcement relates is only available to, and will be engaged in only with, investment professionals falling within Article 19(5), or high net worth entities falling within Article 49(2), of the Financial Services and Markets Act (Financial Promotion) Order 2005 or other persons to whom such investment or investment activity may lawfully be made available (together "relevant persons"). Persons who are not relevant persons should not take any action on the basis of this announcement and should not act or rely on it.

SOURCE: Manchester United
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Dina Bass ‏@dinabass
#MUFC want to sell $100 million worth of shares. Jefferies, Credit Suiise and JP Morgan are the bankers among others.
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^works for Bloomberg

We're gonna be rich again!
 
Not if it turns out like the Facebook one.

Just 100m$, that's a bit low from the predicted amount. Also that Dina says that we'll use the amount to lower the debt which is good news.
 
^I was only joking with the 'we're gonna be rich again' comment...

But even a $100mil, if they can sell them, and if they use them to pay down debt, would reduce debt by 25%, right?
 
“@tariqpanja: The $100 million figure is 'placeholder'. Club would more than likely revise that figure when it knows what the market interest is.”
 
The $100 million figure is 'placeholder'. Club would more than likely revise that figure when it knows what the market interest is.
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I'm guessing that $100 million figure would be raised significantly when/if the shares come to market. Prospectus out soon
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Tariq Panja
Seems like the figure will be raised if the market interest is high.
 
KM said:
Is their a possibility of any legal ramifications arising out of this?
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I'm sure we have a couple of experts on here who can answer this, but I'm thinking the Glazers have thought this through.

The fools know how to make money...that much everyone has to admit.
 
Prelim prospectus:
Use of proceeds

"We intend to use all of our net proceeds from this offering to reduce our indebtedness by exercising our option to redeem £ million in aggregate principal amount of our 83/8% US dollar senior secured notes due 2017 at a redemption price equal to 108.375% of the principal amount of such notes and £ million in aggregate principal amount of our 83/4% pound sterling senior secured notes due 2017 at a redemption price equal to 108.750% of the principal amount of such notes, plus, in each case, accrued and unpaid interest to the date of such redemption."
 
Neutral said:
I'm sure we have a couple of experts on here who can answer this, but I'm thinking the Glazers have thought this through.

The fools know how to make money...that much everyone has to admit.
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Could still be chancing their arm though. The iPO could be a failure. They were chancing their arm in going for United in the first place, but got lucky.

Such a bad time to go for an IPO. I just don't get this, unless they are really desperate.
 
@DarrenArsenal1
MUFC, i wonder if non UK revenues from thier brand will be taken offshore (Caymans) thereby becoming tax exempt........ so example ....If DHL sign a deal with MUFC for £20m, £10m could be applied to UK business (and taxed) and £10m to Cayman Entity due to brand generation
 
Will Absolute said:
Hard to believe they'd go to all that trouble and expense for $100M. Something very odd about that.
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I'd imagine it will work out to more than that, although I haven't really much of an idea how this would work.
 
Will Absolute said:
Hard to believe they'd go to all that trouble and expense for $100M. Something very odd about that.
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Tariq Panja the financial expert says that the amount will be substantially highter than this.
 
Like Tariq Panja from Bloomberg says...$100mil or so will sell for sure...if they see a lot of interest, they'll up the offering.

This is a win-win as far as I'm concerned. They can't lie about how they plan to use the money, so at the very least we'll reduce our debt by just about 20-25%

Current debt according to the papers filed today £423mil.

EDIT: 423mil not just 423 quid :lol:
 
Neutral said:
Like Tariq Panja from Bloomberg says...$100mil or so will sell for sure...if they see a lot of interest, they'll up the offering.

This is a win-win as far as I'm concerned. They can't lie about how they plan to use the money, so at the very least we'll reduce our debt by just about 20-25%

Current debt according to the papers filed today £423.
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423 notes? feck it, like do a whip round for them.

But I don't get your optimism. The market may just laugh at this offer and things get very embarrassing.
If we can exchange debt for equity then it's a good thing. But the timing for an IPO just seems bad to me.
 
Reading the risk section is gloomy.
Recently approved UEFA restrictions could negatively affect our business.

As the primary governing body of European football, UEFA continually evaluates the dynamics in the football industry and considers changes to the regulatory framework governing European football clubs. As an example, UEFA recently approved certain financial monitoring rules on clubs participating in the Champions League and Europa League competitions, known as the financial fair play initiative. The rules, among other things, may result in withholding of prize money, transfer bans and ultimately disqualification from European competitions for clubs whose costs and capital expenditures on players exceed their revenue over a three year period. These rules are intended to discourage clubs from continually operating at a loss. However, the implementation of the financial fair play rules, and in particular the potential punishment for non-compliance, remains uncertain. There is a risk that application of the financial fair play initiative could have a material adverse effect on the performance of our first team and our business, results of operations, financial condition and cash flow.
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Risk Related to Our Indebtedness

Our indebtedness could adversely affect our financial health and competitive position.

As of March 31, 2012, we had total indebtedness of £423.3 million. Our indebtedness increases the risk that we may be unable to generate cash sufficient to pay amounts due in respect of our indebtedness. It could also have effects on our business. For example, it could:

•
limit our ability to pay dividends;

•
increase our vulnerability to general adverse economic and industry conditions;

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•
require us to dedicate a material portion of our cash flow from operations to make payments on our indebtedness, thereby reducing the availability of our cash flow to fund the hiring and retention of players and coaching staff, working capital, capital expenditures and other general corporate purposes;

•
limit our flexibility in planning for, or reacting to, changes in our business and the football industry;

•
affect our ability to compete for players and coaching staff; and

•
limit our ability to borrow additional funds.

In addition, our existing revolving credit facility and the indenture governing our senior secured notes contain, and any agreements evidencing or governing other future indebtedness may contain, certain restrictive covenants that will limit our ability to engage in certain activities that are in our long-term best interests (see " — Our indebtedness may restrict our ability to pursue our business strategies" below). We have not previously breached and are not in breach of any of the covenants under either of these facilities, however our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our indebtedness.

To service our indebtedness, we require cash, and our ability to generate cash is subject to many factors beyond our control.

Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to the performance and popularity of our first team as well as general economic, financial, competitive, regulatory and other factors that are beyond our control.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us in an amount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness on or before maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. Failure to refinance our indebtedness on terms we believe to be acceptable could have a material adverse effect on our business, financial condition, results of operations and cash flow.

Our indebtedness may restrict our ability to pursue our business strategies.

The indenture governing our senior secured notes and our revolving credit facility limit our ability, among other things, to:

•
incur additional indebtedness;

•
pay dividends or make other distributions or repurchase or redeem our shares;

•
make investments;

•
sell assets, including capital stock of restricted subsidiaries;

•
enter into agreements restricting our subsidiaries' ability to pay dividends;

•
consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

•
enter into sale and leaseback transactions;

•
enter into transactions with our affiliates; and

•
incur liens.

Our ability to comply with these covenants and restrictions may be affected by events beyond our control. If we breach any of these covenants or restrictions, we could be in default under our senior secured notes and our revolving credit facility. This would permit the lending banks under our revolving credit facility to take certain actions, including declaring all amounts that we have borrowed under our revolving credit facility and other indebtedness to be due and payable, together with accrued and unpaid interest. This would also result in an event of default under the indenture governing our senior secured notes. Furthermore, lending banks could refuse to extend further credit under the revolving credit facility. If the debt under our revolving credit facility, our senior secured notes or any other material financing arrangement that we enter into were

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to be accelerated, our assets, in particular liquid assets, may be insufficient to repay our indebtedness. The occurrence of any of these events could have a material adverse effect on our business, financial condition and results of operations.

Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

We are subject to interest rate risk in connection with borrowings under our revolving credit facility, which bears interest at variable rates. Interest rate changes will not affect the market value of any debt incurred under such facility, but could impact the amount of our interest payments, and accordingly, our future earnings and cash flow, assuming other factors are held constant. As of March 31, 2012, we had no variable rate indebtedness. In addition, we currently enter into interest rate swaps that involve the exchange of floating for fixed rate interest payments in order to reduce interest rate volatility. However, we cannot assure you that such hedging activities will be effective in fully mitigating our interest rate risk.
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GCHQ said:
So they're not really fools at all then?
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I never thought they were fools. Just saying even those who hate them, have to admit they know $$$$

But local fans seem to resent them a lot more than someone like myself(overseas plastic...only been to watch United 11 times, never an away game).
 
@andersred
Few bits and pieces on #MUFC IPO. Size of offer is NOT yet set. Will depend on demand for shares.
 
“@andersred: My gut feeling skimming #MUFC filing is that they realise the club can't compete with £423m of debt. Hence need to raise equity.”
 
#ManUnited says debt could reduce "availability of our cash flow to fund the hiring and retention of players and coaching staff"
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What you say about that GCHQ?
 
RobHarris
#ManUnited says debt could reduce "availability of our cash flow to fund the hiring and retention of players and coaching staff"

Not that we didn't already know that..
 
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