Aye, every media outlet gets things wrong from time to time. The BBC are a lot more reliable than others though.
I'm starting to believe that the Red Knights could pull this off. The thought of Glazer's cancer being removed forever is
ALL issues relating to the bond issue and club finances
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Aye, every media outlet gets things wrong from time to time. The BBC are a lot more reliable than others though.
I'm starting to believe that the Red Knights could pull this off. The thought of Glazer's cancer being removed forever is
I'm starting to believe that the Red Knights could pull this off. The thought of Glazer's cancer being removed forever is
Tell me about it.
But there's two parts to this fight - the carrot and the stick. We need both to get the Glazers out.
The Glazers have absolutely no intentions of selling United, none! They have been trimming expenses at the Buccaneers for a couple of years, and all the coaches are out of contract after next season. Chances are they will sell the Bucs and pay United's debts down.
Yep
And as much as it will hurt the matchgoers, and not being one, it's easy for me to say, if a bid is made by the 'Red Knights' and then rejected, than the fans will probably have to try and force his hand by not going to the game
Don't really see any other way of showing that we are serious in wanting the Glazers out
Well we don't know that for sure. But yes, I think the chances are they would prefer to sell the Buccs than United.
Which is why, as I say, to get them to sell, you need both the carrot and the stick.
A boycott, as mentioned by Ed, is obviously a very very big stick.
It would have absolutely zero impact on the Glazers and be devastating for United. They could asset strip United and get all of their original investment back and walk away leaving an empty shell.
That would be Tony Livesey, ex-editor of the Sunday Sport?
Hopefully he's more reliable these days...
No, they couldn't. Doing so would absolutely be illegal while there is so much debt to be repaid. So, their only hope of making any money out of this, if a mass boycott were to be threatened or even happen, would be to sell the club. Any other action would either be illegal or would result in them walking away with absolutely nothing.
And given that we all know what they are here for, I'm fairly sure I can predict what they would prefer.
Glazers have made united an operational efficient machine. If you check the financial statement from 2005 onwards our EBITA (earnings before interest, tax and amortization) is close to 50 million pounds. Thus united should be valued at 7.5 EBITA multiples (approx industry standard). Thus 375 million pound should be enough to buy out the glazers. Anything more is daylight robbery. United will still be liable for the 500 million pound bond debt.
Now the question is with Glazer out can united still be as operational efficient and pay off the debt holders. Personally I don't think so. The Glazers made sure they made united efficient so has to squeeze out as much out of it. The debt has led to operational discipline. Google LBO (leverage buy out ) and EBITA multiple if this doesn’t make any sense.
Now the question is with Glazer out can united still be as operational efficient and pay off the debt holders. Personally I don't think so. The Glazers made sure they made united efficient so has to squeeze out as much out of it. The debt has led to operational discipline. Google LBO (leverage buy out ) and EBITA multiple if this doesn’t make any sense.
United aren't a listed company so there isn't much that is out of bounds. The Glazers have provisions in the bond issue to be able to take substantial sums out of the club.
It doesnt make any sense because your figures are wrong. You are probably missing the huge amount of ammortisation that is written off every year. In fact even I often forget this, it really skews our bottom line figures massively.
EBITA for 2008 = £95m
EBITA for 2009 = £160m
Now if we use your multiple of 7.5 then
CURRENT VALUE = £160m x 7.5 = £1.2billion
Which funnily enough is exactly the number which is often mentioned as the amount that would be required to convince the Glazers to sell up.
Sure, but that's completely different from being able to effectively remove all ability to pay off any of the debt, simply to increase your own wealth. Who are the courts going to look favorably on if it can be shown that there were substantial assets sold for the Glazer's to profit from, leaving the club in a position of not being able to pay back any of the debt? As it is, I'm not even sure if all of the assets would amount to the size of the debt, so any substantial asset stripping would be looked upon as fraudulent.
That's the beauty of a boycott, because it would substantially reduce the Glazer's ability to pay down the debt, which would mean that they have one of two choices. Either they sell the club and make a profit, or they will be required to sell assets to pay down the debt, which would only further exacerbate the problems, meaning that, once that is over, there would be nothing left for them to sell and the company would be worth next to nothing, anyway.
I'll give them one thing, they're not stupid. The club has to pay off the debt or it will be placed in to administration. And the owners could even be investigated for gross negligence. They'd rather take a few hundred million than nothing. Of that I'm quite sure.
There is $220 million available in cash right now. They could have their money out over a couple of years and leave United with a lease on Carrington and OT and a much smaller squad. That is the beauty of the Bonds, they can do as they please without interference of the banks. The wording on the Bond issues allows them to legally 'pay themselves' all their money back over the net five years.
Its interesting (
) reading how easy it is to out smart multi-billionares that own two major sports teams and several other businesses.To honest we need a serious big hitter to force the jewish gnomes to sell the club, and hope they in turn have good intentions. The club is to big an investment to be a play thing however rich the buyer so we must assume the interested party will be looking to make a profit. Think we needs a rich arab or chinese billionaire to force the glazers into selling buy either a)making an offer, or b)squeezing the glazers other business interests.
There is $220 million available in cash right now. They could have their money out over a couple of years and leave United with a lease on Carrington and OT and a much smaller squad. That is the beauty of the Bonds, they can do as they please without interference of the banks. The wording on the Bond issues allows them to legally 'pay themselves' all their money back over the net five years.
Its interesting (
Nobody has said that the banks could interfere. What I am suggesting is that it is illegal to profit substantially from a company, while knowing that said company then won't be able to service its debt.
If the fans disappeared, substantially reducing future revenues, are you suggesting that the Glazer's could take any amount of money out of the club that they wished to, leaving it with no ability to repay even a fraction of the debt, and that nothing could be done about it?
You are avoiding the point that they can only do certain things — like take money out of the club — as long as the business can still meet its requirements. Doing anything else — and particularly taking a massive amount of money — would be seen as fraudulent.
There is $220 million available in cash right now. They could have their money out over a couple of years and leave United with a lease on Carrington and OT and a much smaller squad. That is the beauty of the Bonds, they can do as they please without interference of the banks. The wording on the Bond issues allows them to legally 'pay themselves' all their money back over the net five years.
Its interesting (
As far as I understand, the bonds are secured on the ground so it cannot be sold and leased back. Carrington is a different story.
any red knights posting here btw?
The bond issued by United has proved unpopular with fans because of controversial provisions contained in the prospectus.
These include the possibility of United's Old Trafford stadium and Carrington training ground being sold and then leased back to the club, as well as authorising the transfer of funds from United's reserves to the club's parent company, Red Football Joint Venture Ltd.
Manchester United bond issue falls flat - Telegraph
Do you believe everything you read in the papers?
There has been a lot of stuff reported even in the respected press that is wrong - these guys are journalists not forensic accountants - plus half the time they are getting all their info from the 'financial experts' over at MUST anyway.
The bonds are secured on the ground.
I have read that bit and it is slightly contradictory as the second line says:
'The indenture governing the Notes will limit our ability to sell or transfer ... our training ground facilities and our stadium'
Havent got time to look now but I am not sure if the actual indenture is included in the prospectus.
The way I interperate it is that the bonds are secured on the ground but, with the bond holders consent, the ground can be sold and leased back. This may be a provision put in there for worst case scenario of not being able to pay back the bonds when they become due in 2017.
In this case the Glazers are not able to sell the ground, pocket the cash and run off into the hills as mjs020294 suggested.
However, I could be wrong as without further info, the situation is not 100% clear.
I guess that is the problem here - even though these are detailed financial statements with a lot of hard info - some of it is still open to interpretation.
'The indenture governing the Notes will limit our ability to sell or transfer ... our training ground facilities and our stadium'
Havent got time to look now but I am not sure if the actual indenture is included in the prospectus.
The way I interperate it is that the bonds are secured on the ground but, with the bond holders consent, the ground can be sold and leased back. This may be a provision put in there for worst case scenario of not being able to pay back the bonds when they become due in 2017.
In this case the Glazers are not able to sell the ground, pocket the cash and run off into the hills as mjs020294 suggested.
However, I could be wrong as without further info, the situation is not 100% clear.
I guess that is the problem here - even though these are detailed financial statements with a lot of hard info - some of it is still open to interpretation.
That is still wrong.
There are four different figures given for 2009 EBITDA in the prospectus (I assume you meant EBITDA rather than EBITA which would be about £9m less):
EBITDA Year Ended 30/06/09: £91.3m
EBITDA Year Ended 30/09/09: £98.7m
Adjusted EBITDA 30/06/09: £94.1m
Adjusted EBITDA 30/09/09: £100.8m
Where are your figures from? Not sure if we are comparing the same thing?
Firstly I do mean EBITA as that is the measure put forward by the previous poster.
To calculate those figues - I am using Page F27 from the bond prospectus: Consolidated P&L for Red Football Limited.
That shows 'Profit before Interest and Tax' of:
2008: £24m
2009: £90m
Then if you go into the detail of the operating expenses (page F38) you see a massive amortisation of goodwill and players registrations of around £70m for both years. So I added that back to come to the figures I gave above:
2008 EBITA: £94m
2009 EBITA: £160m
This from WWITT in the newbies explains what interest rate we were paying before the bond issue. Unfortunately he seems to have been banned since sending this - bit strange as he seemed to be the helpful type.
"Red Football Limited entered into a fixed for floating interest rate swap at some point in the 2007/08 financial year. The effect of this hedging arrangment was to fix LIBOR paid by Red Football Limited at just over 5% and for RF Limited to receive six month LIBOR on a notional amount of £450m. The additional premiums payable to the senior debt holders (the banks) range from between 2.125%-5% on four separate term loans. As a result, the interest rate paid on the £512m bank loans averages out 8.22%. The amount of interest paid on those bank loans in the 2008/09 financial year was £42.1M.
The main point here is that the interest rate swap mentioned in the accounts only refers to what LIBOR is paid and does not include the additional premiums as per the terms of the loans.
Red Football Limited had a £35m liability (loss essentially) at September 30 2009 on this interest rate swap because of the change in the market-market value of the derivative since it's implementation back in the 2007/08 period.
That change in value took place when interest rates fell to historic lows on the back of the worst financial crisis in living memory. If we go back in time to the 2007/08 financial year, there was very little speculation at the time that interest rates would drop that siginifcantly and so Red Football Limited took out the fixed for floating interest rate swap in order to protect itself against interest rate rises in the future."
Basically they took a bet on interest rates going up and then they fell to historic lows so the club lost money - this is actually one of the biggest negatives to come out of the bond issue.
Yes I think £150m is correct so probably rolls up to £220m before the bond issue and now £150m again as £70m of cash reserves will go to pay some off.
It's been for a lot longer than that.
I think people exaggerate how much difference there is between being a Plc and a limited company when it comes to corporate legal obligations. Not so long ago one Mod was even claiming that a Limited Company didn't need to register its accounts!
However this is absolutely right.
Its been less than a year. I live in Tampa and the Bucs CFO and Glazers stooge in the organization is a neighbor.
Some interesting news around Tampa. The Bucs have not been doing very well recently and the economy has effected tickets sales, and waiting lists. Apparently people that are not renewing their club seats ($375 a game) are being contacted by the club and they are reducing the prices by 26%. The Glazers are hurting right now.
The differences are immense TBH.
Slightly over a year when I heard it was being touted about. From a very good source in the states.
Hadn't heard about the ticket reductions. There was a story about them having to buy their own tickets though to avoid some NFL regulation. Not sure how accurate that was though.
There is a huge difference - the fact that you don't understand that says a lot.
Your figures include the profit from player sales but then excludes the amortised cost of buying the players in the first place. The club treats players purchases and sales as a capital item and therefore correctly excludes both from their EBITDA figures.
They give these figures on page 10. The depreciation and amortisation figures are also given on that page so you can take off the depreciation to get an EBITA of £82m for 2009 and £72m for 2008.
Yes that makes sense - cheers for that.
I do still get the feeling that the massive amount of amortisation put through the accounts every year is a bit of a tax fiddle.
So going back to the original point of trying to value the club using the following earnings figures:
2009 EBITDA £91m
2009 EBITA £82m
and then using the 7.5 multiple as given previously (I have no idea if this is the right multiple) we get a valuation range of around £600m to £700m.
So anything on top of that is mostly about a premium for the brand value.
From what I have read the new bond issue is secured against Old Trafford.
The piks are secured against the shares of Red Football Ltd.
We easily have sufficient asset value to cover the debt.
There is $220 million available in cash right now. They could have their money out over a couple of years and leave United with a lease on Carrington and OT and a much smaller squad. That is the beauty of the Bonds, they can do as they please without interference of the banks. The wording on the Bond issues allows them to legally 'pay themselves' all their money back over the net five years.
Its interesting (
A few points here:
We had cash reserves of £116m pre-bond issue.
I reckon we probably have about £45m post bond issue and a £75m loan facility.
Carrington is going nowhere - it's to be sold inter-group.
If anyone bought United Carrington would form part of the deal.
Gill talked about a long term lease and a 'peppercorn rental' meaning it would be of no use to the Glazers on it's own and this jig is purely for tax and cash management purposes.
The bond actually says that money can be transfered from Red Football Ltd to the holding company to clear it's indebtness - the piks.
The Glazers cannot pay themselves a dividend until the group figures start realising a profit
Plc's are subject to a whole host of corporate governance guidelines if they want to remain listed on the stock exchange. The rules and filing laws are less strict on private companies, however only small and medium sized private companies may file abbreviated accounts.
If the stadium value covers that part of the debt, then I'd agree that the Glazer's can sell pretty much anything else and profit from it. I don't know how much certain assets are worth, but my point was that it is illegal to profit from asset stripping a company, leaving it with no ability to meet its obligations.
According to the prospectus, if either the stadium or training ground were sold, for example, it would be necessary to lease them back to the club for continued use.
So I have to wonder, apart from the playing staff and other minor assets such as the buildings in and around Old Trafford, what exactly is there that the Glazer's could profit from?
Yes, I probably phrased that badly. I meant in terms of the differences for a company of United's size. The differences are not as big as have been made out on here.
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