ALL issues relating to the bond issue and club finances
- Thread starter sammsky1
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How much money will the Glazers have sucked out of the club by 2017???
I'm going to try and compile a list of how much money the Glazer family will have taken out of United that could have otherwise been spent on players and ticket reductions from 2005 to 2017.
5 years interest on £500m senior debt @ 5% £125m
7 years interest on £500m bid issue at 9% £315m
Bond issue arrangement costs £54m
PIK Loan repayment at a conservative estimate £200m
Glazers loans, management charges, etc £20m
Total £714m
Does anyone know the value of arrangement fees for the original debt issue (presuming this was loaded onto the club) and when the piks were refinanced?
I'm going to try and compile a list of how much money the Glazer family will have taken out of United that could have otherwise been spent on players and ticket reductions from 2005 to 2017.
5 years interest on £500m senior debt @ 5% £125m
7 years interest on £500m bid issue at 9% £315m
Bond issue arrangement costs £54m
PIK Loan repayment at a conservative estimate £200m
Glazers loans, management charges, etc £20m
Total £714m
Does anyone know the value of arrangement fees for the original debt issue (presuming this was loaded onto the club) and when the piks were refinanced?
More on the Red Knights..
Reds consortium gathers strength
Stuart Mathieson
February 02, 2010
Old Trafford
A 50-strong group wealthy United fans is rallying under the banner of 'the Red Knights' in a bid to buy the club from the Glazers.
Keith Harris, the chief executive of investment bank Seymour Pierce, has been approached to gather together a consortium with the cash clout to tempt the Reds' American owners to sell.
Harris has put together numerous bids for Premier League clubs and further meetings are taking place this week with the group of interested and, as yet unnamed, individuals who are seeking democratic control of the club for United supporters.
"Until the individuals want to come forward and go public we cannot name names," said Duncan Drasdo of the Manchester United Supporters Trust (MUST). "Things are still developing. It is moving forward, but it does take time to get things together.
"There are 50 heavyweight players who will make up the bulk of the consortium. They are all United fans and all very wealthy. They are from the City of London or businessmen in the North West and Manchester. Until it is all solid and ready to go we cannot name them.
"MUST's role is to support the Red Knights and grow the Trust."
The prosperous investors would provide the bulk of the potential £1bn that is likely to be needed to tempt the Glazers to give up their Old Trafford business.
The Florida-based family have consistently insisted the club is not for sale and that they are in it for the long haul. The Red Knights hope they will change their minds.
The Independent Manchester United Supporters Association (IMUSA) said it would welcome a buyout if at least 25 per cent of non-transferable shares are set aside for a trust; a democratically elected Fans' Forum is established with powers to influence decisions "that directly impinge upon fans" and ticket prices are revised.
Source Reds consortium gathers strength - Manchester Evening News
Sounds quite promising.
Reds consortium gathers strength
Stuart Mathieson
February 02, 2010
Old Trafford
A 50-strong group wealthy United fans is rallying under the banner of 'the Red Knights' in a bid to buy the club from the Glazers.
Keith Harris, the chief executive of investment bank Seymour Pierce, has been approached to gather together a consortium with the cash clout to tempt the Reds' American owners to sell.
Harris has put together numerous bids for Premier League clubs and further meetings are taking place this week with the group of interested and, as yet unnamed, individuals who are seeking democratic control of the club for United supporters.
"Until the individuals want to come forward and go public we cannot name names," said Duncan Drasdo of the Manchester United Supporters Trust (MUST). "Things are still developing. It is moving forward, but it does take time to get things together.
"There are 50 heavyweight players who will make up the bulk of the consortium. They are all United fans and all very wealthy. They are from the City of London or businessmen in the North West and Manchester. Until it is all solid and ready to go we cannot name them.
"MUST's role is to support the Red Knights and grow the Trust."
The prosperous investors would provide the bulk of the potential £1bn that is likely to be needed to tempt the Glazers to give up their Old Trafford business.
The Florida-based family have consistently insisted the club is not for sale and that they are in it for the long haul. The Red Knights hope they will change their minds.
The Independent Manchester United Supporters Association (IMUSA) said it would welcome a buyout if at least 25 per cent of non-transferable shares are set aside for a trust; a democratically elected Fans' Forum is established with powers to influence decisions "that directly impinge upon fans" and ticket prices are revised.
Source Reds consortium gathers strength - Manchester Evening News
Sounds quite promising.
If there is 50 odd 'Red Knights' and its going to take a good 1billion to buy the club. Thats 20 million per person (or 'Red Knight'). Call me cynical, but I just dont see that happening.
Everyone keeps saying that someone needs to come up with £1bn to £1.2bn+ to buy the club - but in theory someone just needs to buy out the Glazers and leave the £500m bond in place (as far as we know the bond cannot be repaid for at least 3 years anyway).
This means that £500m to £700m should be enough to pay off the Glazers - this would allow them to pay off their personal debts (the PIKs) and take a decent profit from the entire deal.
However, the Glazers at the moment maintain that they dont want to sell - although even if they did, they wouldnt say so because they obviously want as high a price as possible.
This means that £500m to £700m should be enough to pay off the Glazers - this would allow them to pay off their personal debts (the PIKs) and take a decent profit from the entire deal.
However, the Glazers at the moment maintain that they dont want to sell - although even if they did, they wouldnt say so because they obviously want as high a price as possible.
What happens to the debt, if in theory they do manage to buy out the Glazers?
In the scenario I have described, the bond stays as it is and will need to be serviced annually.
The Bond debt is easilly manageable with United's profit.
It's the other costs - the PIKs and the massage costs all over caused by being so hevially in debt
It's the other costs - the PIKs and the massage costs all over caused by being so hevially in debt
Getting 700 million is feasible.
It doesn't have to be equally split between the 50 'knights'
Bigger players like the Bet Fred man might see it as a worthwhile investment!
Either way, it's absolutely brilliant that someone (Keith Harris) with expertise, cpntacts and influence is trying!
It doesn't have to be equally split between the 50 'knights'
Bigger players like the Bet Fred man might see it as a worthwhile investment!
Either way, it's absolutely brilliant that someone (Keith Harris) with expertise, cpntacts and influence is trying!
Alternatively, the buyer could buy up the bonds too - they are trading below sale value at the moment - which would mean that they own the club and bonds and I'm sure that they could dissolve the bonds or at the very least you're looking at numbers on a spreadsheet rather than money changing hands.
That is the crux of the problem....football clubs are not investments, they are toys. Anyone expecting to make money and a decent ROI has no business buying a football club.
Hopefully it is the same for the Glazers and they will sell.
United without mega interest repayments makes a nice profit and is a worth while investment.
The Glazer cannot afford this club but are hanging on and its bleed money on interest payments
I'm pretty sure that the original arrangement fees were added to the debt back in 2005.
But I'm not sure about the first refinancing.
I don't agree. The interest payments on the bond debt is manageable at the moment, but come 2017, where are they going to find £500m for the bonds themselves?
Perhaps...
But I'd rather a 'Red Knight' consortium dealing with it than the Glazers.
Re-finance I guess
But I'd rather a 'Red Knight' consortium dealing with it than the Glazers.
Re-finance I guess
Just take out another one - over time the £500M debt will start to look smaller v increased club value and increased revenues.
There are several different scenario's, all of which — or almost all — are preferable to the current situation. Those of us who want to see a change of ownership understand, I hope, that we are going to have to compromise and adjust our views.
One example could be where the club is bought by a consortium of wealthy United supporters, and then the club could slowly pay them back, depending on its financial health, over time. In that scenario, the season ticket holders might be willing to pay a little more than they would like to, knowing that they are effectively buying a stake in the club at the same time. That would encourage fans to spend money because they would know that it is being used, firstly, to improve the health of the club, but also to slowly take the club back in to the hands of the fans.
That is, of course, just one suggestion, and I don't know how feasible it is. But the overall point is that there are many options that we should all be open to, because it is unlikely that anyone is going to come along and buy the Glazer's out and then hand the club back to the fans.
Even if the consortium of wealthy United fans wanted to remain in charge, that would be preferable to just one family, in my opinion, because fans groups would have a chance to influence a diverse group of people. And fifty people is preferable to two, as is the situation at Liverpool, because, as we have seen, two people with a 50% stake find themselves in perpetual stalemate when they disagree.
One example could be where the club is bought by a consortium of wealthy United supporters, and then the club could slowly pay them back, depending on its financial health, over time. In that scenario, the season ticket holders might be willing to pay a little more than they would like to, knowing that they are effectively buying a stake in the club at the same time. That would encourage fans to spend money because they would know that it is being used, firstly, to improve the health of the club, but also to slowly take the club back in to the hands of the fans.
That is, of course, just one suggestion, and I don't know how feasible it is. But the overall point is that there are many options that we should all be open to, because it is unlikely that anyone is going to come along and buy the Glazer's out and then hand the club back to the fans.
Even if the consortium of wealthy United fans wanted to remain in charge, that would be preferable to just one family, in my opinion, because fans groups would have a chance to influence a diverse group of people. And fifty people is preferable to two, as is the situation at Liverpool, because, as we have seen, two people with a 50% stake find themselves in perpetual stalemate when they disagree.
FT.com / Companies / Travel & Leisure - Manchester United bond issue falls flat
Manchester United bond issue falls flat
By Anousha Sakoui and Roger Blitz in London
Published: February 2 2010 23:39 | Last updated: February 2 2010 23:39
Manchester United may be in contention for another Premier League title, but its success on the pitch has worked little magic in the City. The club’s first bond issue, launched barely two weeks ago, has become one of the market’s worst performers this year.
While the club has secured the £500m ($798m) funding that it needs to refinance its bank debt, the paper losses suffered by investors could affect its ability to return to bond markets.
The bid price of Manchester United’s £250m of sterling denominated bonds has tumbled to just 93 per cent of their face value. For the $425m of dollar-denominated bonds the bid price has fallen to 94.5 per cent of face value.
Bankers and analysts said on Tuesday that the bonds had performed poorly because they had been priced too highly at launch. They also blamed the lack of a credit rating.
“For investors this is bad news because it means you have made losses if you are marking to market,” said Jonathan Moore, analyst at Evolution Securities.
Other recent issues that have fallen in price have not declined as much as Manchester United bonds. Other bonds, including those issued by Kerling, the Norwegian subsidiary of chemical group Ineos, have risen.
“In a benign credit market, Manchester United is one of the worst performing bonds since the beginning of 2009,” said Suki Mann, credit strategist at Société Générale.
One person with knowledge of the company’s financing said that, while it could issue more debt by increasing the size of the outstanding bond, the club was not expected to return to the market soon.
Manchester United is likely to wait until it has reduced its debts before raising fresh funds.
It will want to see how the team performs in this year’s Champions League competition before looking to raise more money that could be used to repay payment-in-kind notes – an instrument allowing borrowers to roll over cash interest payments – that were issued as part of its £790m buy-out in 2005.
The club declined to comment but people close to it said a return to the market was “not on the agenda” and that the club’s priority was to placate fans angered by the bond issue and plans by the Glazer family, United’s US-based owners, to start paying down the PIK loans with club proceeds.
Manchester United bond issue falls flat
By Anousha Sakoui and Roger Blitz in London
Published: February 2 2010 23:39 | Last updated: February 2 2010 23:39
Manchester United may be in contention for another Premier League title, but its success on the pitch has worked little magic in the City. The club’s first bond issue, launched barely two weeks ago, has become one of the market’s worst performers this year.
While the club has secured the £500m ($798m) funding that it needs to refinance its bank debt, the paper losses suffered by investors could affect its ability to return to bond markets.
The bid price of Manchester United’s £250m of sterling denominated bonds has tumbled to just 93 per cent of their face value. For the $425m of dollar-denominated bonds the bid price has fallen to 94.5 per cent of face value.
Bankers and analysts said on Tuesday that the bonds had performed poorly because they had been priced too highly at launch. They also blamed the lack of a credit rating.
“For investors this is bad news because it means you have made losses if you are marking to market,” said Jonathan Moore, analyst at Evolution Securities.
Other recent issues that have fallen in price have not declined as much as Manchester United bonds. Other bonds, including those issued by Kerling, the Norwegian subsidiary of chemical group Ineos, have risen.
“In a benign credit market, Manchester United is one of the worst performing bonds since the beginning of 2009,” said Suki Mann, credit strategist at Société Générale.
One person with knowledge of the company’s financing said that, while it could issue more debt by increasing the size of the outstanding bond, the club was not expected to return to the market soon.
Manchester United is likely to wait until it has reduced its debts before raising fresh funds.
It will want to see how the team performs in this year’s Champions League competition before looking to raise more money that could be used to repay payment-in-kind notes – an instrument allowing borrowers to roll over cash interest payments – that were issued as part of its £790m buy-out in 2005.
The club declined to comment but people close to it said a return to the market was “not on the agenda” and that the club’s priority was to placate fans angered by the bond issue and plans by the Glazer family, United’s US-based owners, to start paying down the PIK loans with club proceeds.
I'm suprised we havent heard any info about who bought these bonds.
Could be a good idea for MUST to spend the Phoenix Fund on these?
If the price stays low then could get a 10% return on the cash which I assume isn't earning much interest anyway. In some ways it is not so different from owning shares and getting dividends.
In effect the fans would be getting a rebate on their season ticket payments!
It is unlikely to happen for a variety of reasons - but to me it would make sense.
Could be a good idea for MUST to spend the Phoenix Fund on these?
If the price stays low then could get a 10% return on the cash which I assume isn't earning much interest anyway. In some ways it is not so different from owning shares and getting dividends.
In effect the fans would be getting a rebate on their season ticket payments!
It is unlikely to happen for a variety of reasons - but to me it would make sense.
Please sign the petition to get the glazer's out, it wont take you any longer than 3 minutes, there are over 31,000 members in the we want glazer out group yet there is only around 3,600 signatures to be sent to the pm's office, please everybody sign.
THANKS LUHG G&G
Petition to: believe the Government should urgently take action on behalf of all football supporters to prevent Manchester United Football Club (and other English football clubs) being destroyed by corporate greed. | Number10.gov.uk
THANKS LUHG G&G
Petition to: believe the Government should urgently take action on behalf of all football supporters to prevent Manchester United Football Club (and other English football clubs) being destroyed by corporate greed. | Number10.gov.uk
While the UK has just recently exited recession, it appears that football may just be entering it
--KPMG's Geoff Mesher
Link- Football's quandary: When a loan is the best way to avoid debt - CNN.com
This would be a great time for a strike!!!
Starve the bastards out!!!
--KPMG's Geoff Mesher
Link- Football's quandary: When a loan is the best way to avoid debt - CNN.com
This would be a great time for a strike!!!
Starve the bastards out!!!
If these have been bought out by the institution investors like we are led to believe then they are in it for the long term so I'm sure they wont be too bothered about the drop in price.
I like the must idea
If these have been bought out by the institution investors like we are led to believe then they are in it for the long term so I'm sure they wont be too bothered about the drop in price.
I like the must idea
True - they wont care about the market price as long as they get their annual payment and original back at the end.
I wonder if MUST have seriously looked at the possibility of buying the bonds. I can actually understand why they wouldnt have wanted to buy them straight from the club as it could be seen as helping the Glazers, however buying them in the open market would be different.
I think they would be wise to stay away from them, for PR's sake.
The Times are also running the story Manchester United bond issue suffers from lack of support | Manchester United - Times Online
I have to admit, I don't really understand bonds - If the returns are fixed, why does the value fluctuate, and drop like this? Purely because the investors think the club may default and not end up paying back what was agreed?
I was a bit baffled by that myself but kept schtum, to maintain my facade of actually having the vaguest clue about all this business stuff we all keep talking about.
Oh well, the secret's out now...
EDIT: Just occured to me, maybe the value fluctuates over the course of the bond duration, so your return is guaranteed after 'x' years but selling them at any point before that may earn you more/less money than you paid for them?
Pretty much yes. The city think there is a chance United will go under.
Assume Bond to be any Shares of a company. The difference being that in shares, dividends are not fixed, but in bonds interests are. apart from that they function under the same conditions of demand and supply determining the price(Gets slightly trickier once it approaches maturity time)
As a company, it doesn't make a difference what the prevailing prices of bonds are
MULTI-millionaire Fred Done is one of the mysterious Red Knights looking to potentially make a bid to buy United, it can be revealed.
MEN Sport is aware the Salford-born bookie, who until the start of this season was the Reds' official betting partner, has been approached by a legal 'Mr Fixit' to be part of the group of Manchester-based big hitters looking to replace the Glazers.
The lifelong United supporter has become increasingly disillusioned with the direction in which the club has been going under the controversial ownership of the Glazer family.
Just last month, he criticised the owners, telling MEN Sport: "From what I can see, the Glazers have not put any value on the club since taking over. When they finally cash in and sell up they will leave the club a poorer place than when they took over.
"If we are not careful we could end up like another Portsmouth, who look like they are headed for administration.
"Sponsorship will be the next thing to drop off. And don't tell me that United are too big to go bust. Just look at the Royal Bank of Scotland and AIG.
"I think both David Gill and Sir Alex Ferguson are being forced to work with their hands tied behind their backs. My criticism is entirely of the Glazers."
Self-made tycoon Done, who has been invited to talks with fellow interested parties, is the first of the 50-strong rich Reds interested in being part of a Barcelona-style management of United to be identified.
Barcelona style
Fans own the Spanish giants with a board of directors in control under a elected president.
Done, whose Warrington-based betting empire has 840 shops in the UK and is the biggest independent bookmakers in the world, will be having further hush-hush discussions next week.
Keep-fit fanatic Done, 66, who lives in Worsley, would not discuss in detail his involvement, merely saying: "I have always got United close to my heart."
The wealthy Red Knights are coming together in an attempt to provide the financial muscle that might tempt the Glazer family to sell United. It is likely to cost the would-be buyers over £1bn if they are to persuade the Americans to end their four-and-a-half year ownership of the Reds.
The group of rich businessmen has been galvanised into action following the recent announcement of United's figures and the launch of a bond issue, drawn up to help manage United's £716m debt, which is more than twice oversubscribed.
Experts in the City of London believe that points to United being in good financial shape.
But supporters have not been placated and want the once debt-free club to be owned by a Supporters' Trust but run by professionals.
Football finance expert Keith Harris, a United fan and CEO of investment bank Seymour Pierce, has been approached by the Red Knights as the move to buy out the Florida-based Glazers escalates.
He has said: "We don't know if the Glazers can be made to listen but there is serious intent on the part of people who have support in their hearts. The time feels right."
Harris, Done and the other Red Knights have been heartened by the fast-growing anti-Glazer green and gold scarf protest campaign backed by the Manchester United Supporters Trust (MUST).
MEN Sport is aware the Salford-born bookie, who until the start of this season was the Reds' official betting partner, has been approached by a legal 'Mr Fixit' to be part of the group of Manchester-based big hitters looking to replace the Glazers.
The lifelong United supporter has become increasingly disillusioned with the direction in which the club has been going under the controversial ownership of the Glazer family.
Just last month, he criticised the owners, telling MEN Sport: "From what I can see, the Glazers have not put any value on the club since taking over. When they finally cash in and sell up they will leave the club a poorer place than when they took over.
"If we are not careful we could end up like another Portsmouth, who look like they are headed for administration.
"Sponsorship will be the next thing to drop off. And don't tell me that United are too big to go bust. Just look at the Royal Bank of Scotland and AIG.
"I think both David Gill and Sir Alex Ferguson are being forced to work with their hands tied behind their backs. My criticism is entirely of the Glazers."
Self-made tycoon Done, who has been invited to talks with fellow interested parties, is the first of the 50-strong rich Reds interested in being part of a Barcelona-style management of United to be identified.
Barcelona style
Fans own the Spanish giants with a board of directors in control under a elected president.
Done, whose Warrington-based betting empire has 840 shops in the UK and is the biggest independent bookmakers in the world, will be having further hush-hush discussions next week.
Keep-fit fanatic Done, 66, who lives in Worsley, would not discuss in detail his involvement, merely saying: "I have always got United close to my heart."
The wealthy Red Knights are coming together in an attempt to provide the financial muscle that might tempt the Glazer family to sell United. It is likely to cost the would-be buyers over £1bn if they are to persuade the Americans to end their four-and-a-half year ownership of the Reds.
The group of rich businessmen has been galvanised into action following the recent announcement of United's figures and the launch of a bond issue, drawn up to help manage United's £716m debt, which is more than twice oversubscribed.
Experts in the City of London believe that points to United being in good financial shape.
But supporters have not been placated and want the once debt-free club to be owned by a Supporters' Trust but run by professionals.
Football finance expert Keith Harris, a United fan and CEO of investment bank Seymour Pierce, has been approached by the Red Knights as the move to buy out the Florida-based Glazers escalates.
He has said: "We don't know if the Glazers can be made to listen but there is serious intent on the part of people who have support in their hearts. The time feels right."
Harris, Done and the other Red Knights have been heartened by the fast-growing anti-Glazer green and gold scarf protest campaign backed by the Manchester United Supporters Trust (MUST).
But surely that is key? Hence why shares vary and bonds shouldn't?
Anyway, I think mjs020294 has confirmed what I thought - it's basically down to the chances of us going under and not being able to pay what we owe...
No. Not entirely. Quite a proportion of these bonds are owned by day traders. ie, people who have no intention of realising it at maturity. What it means is that the price of these bonds will increase and decrease as per sentiment just like a share. Purely so that these traders can make profit by either short selling or by being bullish.
EDIT: Found a simpler way of putting it. Assume the redemption value to be 120 pounds for a 100 pound Bond. As the time of maturity approaches, the bond will be traded at a higher price. Conversely, if the returns of these bonds are less attractive than a booming stock market/gold market(any other investment avenue), traders will exit with whatever they can get even at a lower price to invest in the other market.
Hope this clears it.
Fred Done's spokesman denied he was involved on BBC NW tonight but Tony Livesey said the Red Knights are meeting tonight. There are 40 of them and they have raised £1billion and hope to buy the Club by the end of season.
Sorry if this is posted elsewhere.
Sorry if this is posted elsewhere.
BBC confirmed the Red Knights already have £1 billion?
Goddamn this just might work.
Goddamn this just might work.
Thats what they said. I have searched the net to try and find a written quote but there is nothing in writing. But Tony Livesey is a respected sports reporter on BBC NW and he wouldent say anything unsubstantiated.
£1 billion ? holy shit
THis would be incredible!
BBC have been wrong before on this, no need to get carried away.
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