ALL issues relating to the bond issue and club finances

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Livvie said:
Every United supporter (and potential MUFC share purchaser) should get a copy of the Sunday Times today

The Sunday Times July 29, 2012 at 7:06 am

Michael Moritz is a top Silicon Valley investor — and a Manchester United fan. He offers an alternative reading of its float prospectus

WE recently changed our corporate name from Red Football LLC to Manchester United Ltd because we thought the former might be considered un-American and confuse prospective purchasers of our shares with the former Soviet Union’s national team.

Our business is a globally recognised brand and we estimate 10% of the world’s population follow our football team. For our entire 2011 fiscal year our revenue was $513m (£326m) — roughly equivalent to the revenue Google generates every five days.

Our club is being listed in New York because legal and regulatory restrictions are more favourable to people who place enormous amounts of debt on companies than in other venues we have considered — such as London, Singapore and Hong Kong.

We have more than $1 billion of debt due within the next 220 weeks that we have no means of repaying. All the assets of the club have been mortgaged against these debts, including our training ground and even our interest in a small freight warehouse.

Since July 2008, we have paid $792m in interest and other finance costs which is more than Sir Alex Ferguson, our distinguished manager, has paid for all the players he has purchased during the past 20 years.

Because we are so desperate to raise money, our corporate tax rate will rise from the 27% levied in the UK to the 35% required in America.

Our legal structure ensures the Glazer family, our main shareholder, will maintain absolute control over the company after the offering. Between 2001 and 2009 our club paid the Glazers a total of $25m in fees and gave them a $15m loan.

Our executive co-chairman, Avram Glazer, was previously the chief executive of Zapata Corp, a fish-oil producer, that once attempted to become an internet company by changing its name to Zap.com. Zapata was bought in 2009 by Philip Falcone of Harbinger Capital who, last month, was charged with securities fraud by the Securities and Exchange Commission.

Our business model is to help the Glazer family, our controlling shareholder, stay one step ahead of the banks. We employ a variety of approaches to achieve this including:

¦ Raising ticket prices. Between 2005 and 2011 we were able to raise the average ticket price by almost 6% a year, which was almost double the rate of inflation in the UK during the same period.

¦ Increasing sponsorship revenue. Guests of our corporate sponsors, such as Nike, DHL, Aon or Turkish Airlines, will soon be able to view our players’ private training sessions. We used to conduct these activities in strict privacy.

¦ Boosting merchandise sales. Our new team shirts (which differ for home and away games) sell for $85. We sell many other branded products including car air fresheners, short nighties for women, four-poster bed canopies and a special men’s fragrance — Eau de Sport.

The competition for player and management talent in the Premier League is intense and our rival owners includes Russian oligarchs, Middle Eastern sovereigns, Indian chicken farmers and American hedge fund managers. Some of these have access to cash — which, unless this offering is successful, we do not.

Fortunately we don’t have to comply with the same reporting obligations as other public companies because our business qualifies in America under the newly passed Jobs Act as an “emerging growth company”. We emerged 134 years ago and in the past nine months our growth was 6%. The word “company” does apply to our club — although in a limited manner.

Old Trafford, our home ground, is called “The Theatre of Dreams”. Prospective purchasers of our stock will understand why.

¦ Michael Moritz is chairman of Sequoia Capital
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Please don't take this as a dig at you livvie because its not, but its no wonder those dickheads want us to read this because its a massive load of horseshit.

first of all, our debt is nearly half his proclaimed value.
Philip Falcone has absolutely no relation to Manchester United so why the feck is he even in the story apart from fear mongering.
When DHL are paying 10 million a year for a bloody training kit they can shit on David Gills desk for all I care. If they want to watch training they can watch it.
Those chicken farmers have destroyed a club, and United do have existing cash in hand.
 
mariachi-19 said:
Please don't take this as a dig at you livvie because its not, but its no wonder those dickheads want us to read this because its a massive load of horseshit.
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No problem. :)

It's there for debate.
 
mariachi-19 said:
Please don't take this as a dig at you livvie because its not, but its no wonder those dickheads want us to read this because its a massive load of horseshit.

first of all, our debt is nearly half his proclaimed value.
Philip Falcone has absolutely no relation to Manchester United so why the feck is he even in the story apart from fear mongering.
When DHL are paying 10 million a year for a bloody training kit they can shit on David Gills desk for all I care. If they want to watch training they can watch it.
Those chicken farmers have destroyed a club, and United do have existing cash in hand.
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Servicing the debt is costing 250,000 a day, or £90mil a year according to the daily mail. He says we owe 1 billion in the next 220 weeks, which is 4.23 years. If that 250,000 a day number is right then those 220 weeks would cost 380 million, if he's adding that to the principle of £420 million it makes £800 million due.

Which is pretty close to a billion, though so big there's no need to exaggerate. Perhaps there are other fees or costs included in push it up that high.

Do we have to pay off the principle in less than 5 years? I don't recall reading about that little detail.
 
gooDevil said:
Servicing the debt is costing 250,000 a day, or £90mil a year according to the daily mail. He says we owe 1 billion in the next 220 weeks, which is 4.23 years. If that 250,000 a day number is right then those 220 weeks would cost 380 million, if he's adding that to the principle of £420 million it makes £800 million due.

Which is pretty close to a billion, though so big there's no need to exaggerate. Perhaps there are other fees or costs included in push it up that high.

Do we have to pay off the principle in less than 5 years? I don't recall reading about that little detail.
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Firstly, he says a billion USD and not a billion pounds.
And secondly, we arent paying 90m a year in interest. Its a bit over half of that.

The bond matures in 2017, but there's plenty of time to raise some money/launch the IPO.

We have more than $1 billion of debt due within the next 220 weeks that we have no means of repaying. All the assets of the club have been mortgaged against these debts, including our training ground and even our interest in a small freight warehouse.
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is just fear mongering.

Remember a few years back when the debt was going to 'spiral out of control'?
Its all a load of bs.
 
I hate MUST. The interest of the fans they supposedly represent went out the window years ago.
 
prateik said:
Firstly, he says a billion USD and not a billion pounds.
And secondly, we arent paying 90m a year in interest. Its a bit over half of that.

The bond matures in 2017, but there's plenty of time to raise some money/launch the IPO.


is just fear mongering.

Remember a few years back when the debt was going to 'spiral out of control'?
Its all a load of bs.
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Right, sorry about that. But that means you only need £50 mil a year in interest over 4.2 years added to the principle to get a billion dollars or £636 million.

I do remember some pretty grim articles based on the interest being more expensive than we could afford. But since then the Glazers paid off the most expensive part of the debt with that bond, which has made things more manageable. Yet without the remarkable Ronaldo sale I believe we'd have turned a loss over the last several years.

But having gotten through that with maybe a bit of luck I'd agree that it seems United will be able to pay it's debt.
 
We dont need luck. We are perfectly fine. Debt was unnecessary and there is nothing good about it. But we have managed it and we'll continue to do so.

Pretending the Glazers dont know what they are doing serves no purpose.

Isnt the IPO launch back on? I read about that a couple of days back.
 
prateik said:
We dont need luck. We are perfectly fine. Debt was unnecessary and there is nothing good about it. But we have managed it and we'll continue to do so.
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'We don't need luck' is a pretty unimaginative statement, assuming football will always be as popular as it is now. Maybe the owners of speedway or greyhound stadiums thought the same. Or in modern television terms think wrestling, showjumping, or snooker, all top 10 viewing in their day.

You're right that 'debt was unnecessary and there is nothing good about it' of course, but I may add that it is also a gamble. A gamble that increasingly looks like it might come off, fair enough, especially if interest rates remain at their all-time record lows, but still a gamble, and not one taken in any shape or form for the benefit of the club.
 
711 said:
'We don't need luck' is a pretty unimaginative statement, assuming football will always be as popular as it is now. Maybe the owners of speedway or greyhound stadiums thought the same. Or in modern television terms think wrestling, showjumping, or snooker, all top 10 viewing in their day.
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Are you seriously comparing the popularity and the global reach of football to that?
 
You have to have a pretty wild imagination to think it'll get that bad that soon.
It simply wont. You can debate it all you want, its a hypothetical scenario and it'll be a waste of time.
I stand by my point. We dont need any luck. We can and will manage the debt.
 
Pexbo said:
I hate MUST. The interest of the fans they supposedly represent went out the window years ago.
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Mmm really? Hate is a strong word to use in my opinion. Granted the people who run the show in MUST are mainly self-righteous buffoons, but they are still United supporters at the end of the debate....just like you.

Now I don't hate the Glazer family....but I can wholly understand why a United supporter may use that particular verb with reference to them.

Perspective?
 
peterstorey said:
That's a very weak argument - mostly as in Man Utd's case it's a recipe for less tax revenue, higher consumer prices and enrichment of the new owners.
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Unfortunately tax policy is not made on a case by case basis. From an economic standpoint it's a pretty strong argument. As far as "less tax revenue" is concerned, you are wrong. Every £1 of interest paid by United gives them tax relief but also generates a tax liability for whosoever receives the interest. The effect is tax revenue neutral - the tax liability is simply passed to the lender.
 
ravelston said:
Unfortunately tax policy is not made on a case by case basis. From an economic standpoint it's a pretty strong argument. As far as "less tax revenue" is concerned, you are wrong. Every £1 of interest paid by United gives them tax relief but also generates a tax liability for whosoever receives the interest. The effect is tax revenue neutral - the tax liability is simply passed to the lender.
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We've been through this before: the interest largely disappeared into non-UK hedge funds and no revenue finds it way to the UK exchequer.
 
peterstorey said:
We've been through this before: the interest largely disappeared into non-UK hedge funds and no revenue finds it way to the UK exchequer.
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Rubbish. The interest is paid to the holders of publicly traded bonds and, I would assume, United takes care of it's legal obligation to withhold the tax due on the payments.

[Edit. Prior to the bonds the interest on the Senior debt was paid to a consortium of banks and, again, was taxable in the UK.]
 
711 said:
Your only point seems to be that increased commercial revenue has been able to meet the Glazers' interest payments, less a paltry £140m, so their takeover's quite ok really.

Pre-Glazer United had the the best marketing in the league, and it is reasonable to expect that they would have moved with the times and also increased it substantially, and importantly then spent the majority of that increase on the team and the ground as they did before. And not waste it (and more) on interest payments.
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My only point was to agree with someone who observed that anyone semi-competent could have done what the Glazers did with Commercial. However, quoting myself,

United's Commercial revenue was £46.26m in 1999, £46.57m in 2001, £46.19m in 2003 and £42.49m in 2005. If we adjust 2005 to 12 months (the accounts are for an 11 month year) we get an estimated £46.35m for the full year. All the other years between 1999 and 2005 were below £46m, some of them considerably so. It's hard to think of a better definition of "no growth". The amazing thing is that, during this time span, we switched from Sharp to Vodafone and from Umbro to Nike - without generating any overall growth in Commercial revenue. Now it's possible that these guys might suddenly have got religion or (more likely) got fired, but I really doubt if they'd have managed to generate the growth we've seen since 2005 without a lot of help.
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This puts the debate over referring to United as Man Utd to bed I guess.
 
I guess tonight is the defining night of the Glazer takeover.

Successful IPO and I imagine they'll clear most of the debt and control Manchester United for as long as they want to with little financial risk, having spent a ridiculously low amount of their own cash on it.

Edit: apparently they have ammended their application the the SEC and won't be using the majority of the capital to pay down the debt.. fecking Glazers. :mad:
 
Andy Green ‏@andersred
Net interest saving for #MUFC from this is.... £4.2m per year. #glazernomics

1m Andy Green ‏@andersred
#MUFC to only repay £73m of total £425m debt. #chickenshit

1m Andy Green ‏@andersred
Quote from prospectus "We [United] will not receive any proceeds from the sale of the Class A ordinary shares by the selling shareholder."
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2m Andy Green ‏@andersred
Complete U-turn from Glazers. Personally taking half #MUFC IPO proceeds. http://www.sec.gov/Archives/edgar/data/1549107/000104746912007537/a2210287zf-1a.htm …
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fecking twats.
 
This has been a massive day for news. Absolutely massive.

BUT. If we have 100 million upfront from the Chevrolet deal and pay back 73 million of the debts with this we could concievably lose about 40% of debt.
 
2 thoughts:

1. This is an over-valued stock, with no dividends or voting rights. AND it now appears to not be in the best interest of the club.

That makes it bad for investors and fans (who might have invested to support us - I was going to). So why is anyone going to be buying?

2. If they raise $300m in cash and only pay down the debt by $100m (or so) - where does that other $200m go? Can they really use our shares to immediately and transparently take investors money? If so, back to question 1?!?!?
 
Twigginater said:
This has been a massive day for news. Absolutely massive.

BUT. If we have 100 million upfront from the Chevrolet deal and pay back 73 million of the debts with this we could concievably lose about 40% of debt.
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Why not just pay off the whole debt?
 
KM said:
fecking twats.
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If this is true they will receive a backlash of epic proportions from the investors They are no fools. The reason the prospect looked good was if they wiped out the depths, otherwise not.

I really really want to see if this is correct. Sounds totally crazy.
 
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