GBP 177mn in FY14E and GBP 194mn FY15E. Still an expensive buy at current valuations.
ALL issues relating to the bond issue and club finances
- Thread starter sammsky1
- Start date
- Status
GBP 177mn in FY14E and GBP 194mn FY15E. Still an expensive buy at current valuations.
Don't get me wrong, I don't blame them for doing it. If I had pulled off the heist that they have managed I'd be looking to cash in too. Just feel a little disgruntled that they've managed to do it, thats all.
Bit of clarity on this as he has the wrong end of the stick there. It really isn't big news.
A registration statement is not the same thing as an offering of shares - they MAY sell UP TO $391m (current market rate) of shares within the next 12 months or they may not (note that that is their entire holding of A shares but doesn't include the improved voting rights B shares). This is just the very preliminary announcement that would allow them to do so but definitely doesn't oblige them to do so.
Also - The Glazers selling their shares is a GOOD thing.Whether you like their ownership of our club or not, a larger free float (more shares in public hands as opposed to any of the glazer's hands) just means there are more shares available to buy on any given day. Increased potential for trading volumes to go up is only a good thing and makes us a more attractive investment. (Remember that they wouldn't have even been allowed to list on the main market in London with such a tiny free float in the first place).
Either way - it doesn't take any money in or out of the club so it is irrelevant.
The actual news in the F-3 is our registering a potential sale of $400m new shares/debt securities. Again pretty common - doesn't mean we will actually do an issue etc.
But the interesting thing is that often a shareholder wishing to sell a large portion of equity in a company will 'piggy back' on an issue of new shares - the selling shareholder only has to pay for the commission to the bookrunners on the shares that they sell (6% ish in the US) and doesn't have to pay for legal advice/accountancy/other expenses of the bankers/printing etc.
Tl;dr: None story really. It just gives the option to the glazers/the club to sell/issue shares if they so wish in the next 12 months. But, if the glazers want to realise a portion of their investment it is LIKELY to be in conjunction with a new share isssue by the club .... to pay down debt one would conclude.
When do you reckon could we see double digits in debt, so below £100m? Or to be more exact, at which point does the debt stops to matter? Is 2016/17 realistic?
The wage increase over the last five years is frightening IMHO. £180,5m
The debt doesn't matter now really.
For those interested:
http://ir.manutd.com/phoenix.zhtml?c=133303&p=irol-irhome
There you can listen to a replay of the conference call and listen to Woodward! It's the first time I've heard him speak, almost started to believe he did not exist
http://ir.manutd.com/phoenix.zhtml?c=133303&p=irol-irhome
There you can listen to a replay of the conference call and listen to Woodward! It's the first time I've heard him speak, almost started to believe he did not exist
How could that possibly be true?
We converted half our debt to bank debt at 2% per year, and the other half is at 8%. Roughly, 2% of £200m is 4m, and 8% of £200m is 16m, which gives a total of £20m.
£22m one off charges for refinancing. Refinancing saves us £10m/year. So £39m ish.
No great comp done here mate, just very basic napkin math based on full year figures.
Can anyone tell me, with a reasonable degree of accuracy, how much money has been paid to service the loans taken out by the Glazers since they initiated their leveraged buyout of Manchester United?
Edit:
David Conn states United have spent "£680m in charges since 2005 takeover." Staggering that these fecking parasites can suck that much out of our club. I don't care how many tyre manufacturers or airlines we whore ourselves out to, that is a fecking disgrace.
Edit:
David Conn states United have spent "£680m in charges since 2005 takeover." Staggering that these fecking parasites can suck that much out of our club. I don't care how many tyre manufacturers or airlines we whore ourselves out to, that is a fecking disgrace.
David Conn's figure (which is the andersred version of reality) doesn't reflect the amount that has been "sucked out of our club". That is a significantly smaller figure. And it makes no recognition that a substantial part of the costs need to be offset by the increased revenues generated by our supercharged "whoring" under the Glazers and by the tax benefits that have been generated by the financing operations themselves. The actual net cost to to club, which is what I assume you mean by "money sucked out of the club" is impossible to determine objectively.
Your posts are a godsend to those of us who don't understand this stuff.
Thanks a lot.
What does that even mean? IF?
Ahh, yes. There was no communication whatsoever from them regarding those bonds at all.
It's not that easy - without being an expert there could be tax-issues, shareholder-issues etc as to why United would prefer to get the money paid out over say 10 years rather than getting all (or a majority) up front
Conn states that the £680m represents interest paid on the loans. Staggering. Increased revenues also come from increased ticket prices don't they? Yes, I do mean the net cost to the club and you say that can't be determined objectively? So take an educated guess.
Interest is the cost of debt. At the moment we're paying interest of about £20m per year.
All these refinancing charges which we keep incurring are a pain, but they're not an on-going expense. I don't see how you can claim that the cost of our debt is more than £20m/year.
I don't think the £70m figure, which is a composite of all kinds of different stuff, is a good baseline to use. Ultimately, assuming no refinancing in the near future, the on-going cost of maintaining our debt is the interest we pay.
As far as I could see when I skim read this morning, the only exceptional/unique item in our interest repayments was the refinancing cost involved in the Conversion of all our sterling bonds and some of the us denominated notes. Didn't see any mention of other deferred refinancing costs, though that's not to say it doesn't exist.
Tend to get very little Info on the breakdown pre annual report, just the headline stuff. But our cost of servicing our debt last year was £71m. The detail of how that is broken down I don't know (haven't read or wasn't disclosed).
A bit north of 460m on debt related stuff (interest, refinancing costs, and loan repayments).
The club has paid out 470m on debt related stuff (interest paid is 384m plus net financing costs of 86m). A small amount of that total relates to non-LBO debt (ie the Alderley Loan), hence the reduction.
I
It's not as simple as that. Ignoring the difficult calculation of where we would be with and without the glazers, (borderline impossible to be accurate on that one) the fact is we weren't a charity pre glazers.
Had we had the same revenue increase without any debt repayments we would all be screaming blue murder as £50m+ (certainly based on this year's figures) every year left the club in dividends.
Very difficult to put an absolute value on the cost of the takeover. And regardless of the hike in ticket prices over the last few years, considering we are In the top 3 clubs in world football, I'd say the prices were reasonably competitive (5th most expensive in the league I think)
It's not as simple as that. Ignoring the difficult calculation of where we would be with and without the glazers, (borderline impossible to be accurate on that one) the fact is we weren't a charity pre glazers.
Had we had the same revenue increase without any debt repayments we would all be screaming blue murder as £50m+ (certainly based on this year's figures) every year left the club in dividends.
Very difficult to put an absolute value on the cost of the takeover. And regardless of the hike in ticket prices over the last few years, considering we are In the top 3 clubs in world football, I'd say the prices were reasonably competitive (5th most expensive in the league I think)
To add to that, I think the club's debt and the repayments are also cause the club to pay very little taxes. So you'd have to take those into account as well.
Do Barcelona or Real Madrid ever pay any dividends at all? Do the German clubs?
One thing I've never quite understood is why the Glazers don't look to pay off more of the debt quicker? Is it simply due to penalties for repaying early? Just cause although I understand that it can be good to use debt financing with equity financing, ours seems very high and you'd think it would be better for the Glazers to take a dividend and pay some tax, rather than pay a load of interest to people completely external to themselves?
Plus am sure that would free up more cash for transfers/wages and maybe reducing ticket prices without reducing their current level of return, which would surely get more fans on-board or at least less opposed.
Plus am sure that would free up more cash for transfers/wages and maybe reducing ticket prices without reducing their current level of return, which would surely get more fans on-board or at least less opposed.
There must be a reason for it. I think it works out better now the debt is refinanced that it would be paying it off. I'm sure there are happy mediums of paying off X amount makes it slightly more economical, so we may well pay off certain amounts.
They could do but they don't have to. The club have managed to sell all the season tickets over summer, I have forgotten the last time that happened but it means people are willing to stump up over £700 and potentially another £300 for cup games so there's no need for them to drop prices.
Yeah that's what I though, I remember reading that ideally you have a mix of both debt and capital as debt lets you save on tax, I would just have thought that our debt is too high to really be getting the best balance but as you say there must be a reason.
True but that was an example, my point was rather that rather than paying x amount on interest to someone else, they might be able to take a bigger cut for themselves and build some goodwill from the fans either from increased transfer funds which might also benefit the club through success and marketability, or reducing tickets a little bit. But as I said above, I'm sure there's a reason for it, it just doesn't seem like the best balance to me.
Have you got any evidence that backs up that these kind of dividends would possibly be taken?
I was under the impression that total dividend payments 1991 - 2005 were somewhere in the region of £60m total?
Well it is all relative - Dividends are not decided as a fixed sum but are relative to the performance of the business. I have no idea what our financials were in those years but I would suggest revenues of sub £100m for the majority of them. We are a much bigger proposition now, hence whilst the yield may stay the same, you are getting £50m now whereas previously you were getting £10m - they are the equivalent return on your investment just they are benchmarked against two very different valuations of the business.
The other thing to consider is that if a company made a whopping great big profit like say a mining company. They would likely return a considerable sum to shareholders, of course, but the remainder would be reinvested in the business.
What do you think would happen if we didn't have any debt? Where would this extra money be going every year? Develop the south stand? Another player every summer? I'd say it was likely that a greater proportion of our profits would be distributed than say your average trading company on the basis that there is a limit to what the money can actually be spent on... We can only get so big with a stadium. We can only have 25 players in the squad. There is a limit. So surplus money every year is going to go on - reducing ticket prices/bonus games? I think not....
All well and good, but how are the football clubs in other countries run then? Do Real and Barcelona pay dividends to their supporters? Do the likes of Bayern and Dortmund?
What on earth could we superficially have spent 680m pounds on though? Really? Build a 400k stadium? Re-build the entire Trafford area? Build a training complex for 56 other English clubs? The money went out to keep the club in business. Yeah it sucks but what else can you honestly do to change that?
Well I'd say we would certainly be investing more heavily in the squad. The likes of Rooney, Ferdinand and Veron each cost a similar amount to our yearly EBITDA for those seasons (a figure which is £108m now) and were all record signings. If our transfers previously accounted for the majority of our yearly gross profit, they now account for a small minority. I certainly believe we'd be in the market for £40-45m+ players, as history would suggest us breaking transfer records quite regularly. Bear in mind transfer records club by club: Berbatov £31m / Ozil £42.5m / Torres £50m / Aguero £40m / Carroll £35m. Obviously despite historically being the front runner in spending capacity and willingness to throw "value" out of the window to get the right player, nowadays several teams have (often foolishly) had the capacity to outspend. This isn't necessarily a good or bad thing (our success indicates maybe the former), but the talk of value was certainly quite an alien concept a decade ago.
Likewise our stadium investment (minus the purchasing of a few bits of land) has clearly dwindled in the last 7-8 years.
I totally agree that dividends would have naturally risen, but if we go on the principle that dividends would continue to rise at a similar proportion of turnover, we also have to go on the principle that stadium investment and player investment would rise along the same parallel (which would mean the latter two would increase hugely).
As far as I am aware - you cannot buy shares in RM and barca. It is not a company in that respect - you can just pay for membership. Then as a member you have 1 vote over how the club is run. there is no such thing as dividends as no one owns a share of the club.
Not too sure about the German clubs - I know Bayern have Adidas and Audi (maybe a few more) Bavarian companies that own a bit of the club but certainly not all of it. There is the 51% fan ownership rule in German football as well.
Bayern aren't a plc but Dortmund are listed. No idea if they have ever paid dividends or not, but i'd imagine not over the last 10 years with their financial restructuring.
Yeah, all good points. Interesting couple of years ahead as the debt falls. We will be running out of excuses not to spend...
I would imagine that the owners' strategy will continue, as it is working immensely for them.
They will continue to spend modestly in relation to our rivals provided we are successful; will only invest in the stadium or any other facilities if they see a fiscal reward for doing so and will price tickets at a level where demand = supply (ie the highest possible price without empty seats). The Glazer's will never be like the owners of Spurs, reinvesting almost every single £ for the benefit of the club. For instance by the time they were aware that Gareth Bale would be sold for £86m, they had made over £100m available to the manager, who promptly spent it.
I remember arguing a few years ago with regards to our net spend and several people said that it was unfair to judge because the Ronaldo transfer skewed everything. Spurs have proven that receiving a large fee for a World Class player does not skew anything. If you sell a player for £80m, this entirely should be available to the manager to fill the huge gap left by such a player.
The only situation that would be horrible, but objectively interesting, would be if United started to falter. If the lack of investment proportionate to profit started to have an effect on the pitch then I'd imagine they'd have to reach into their pockets. It'd take a 5th place finish and missing out on the CL for that to happen though.
If you are successful then why would you spend anymore? Spending for the sake of it seems a bit pointless.
Spurs have to reinvest to try and reach the CL, they are run as a business just like us - dont be under any illusions that they have some kind of sugardaddy in charge.
The best team at the moment is Bayern Munich and I doubt they have spent much more than us on their squad.
Spurs are a spectacularly bad example for you to choose. Over the last three years they've made a net gain of £31 million on their transfer dealings. Over the same period our net spend has been £108 million.
Bayern Munich are a great example. A team that was run far too prudently as they were quite successful because of their size. Three years ago they seemed to make a clear decision: lets spend big where necessary to be the best, rather than be frugal and just be quite successful. Since then they've spent around £150m on Gotze, Alcantara, Martinez, Shaquiri, Mandzukic, Neuer and Boatang (around £40m per season net).
Now I think we'd all agree that they are one of the best 2-3 teams in the World.
United have a really good team and in recent years have concentrated on buying in (potentially) top quality young players (Smalling, Jones, De Gea, Hernandez, Zaha, Powell) along with a few solid squad players in Fellaini, Young and Kagawa. What we haven't done is what teams that aren't run by money men go out and do (or what we did a decade ago) - spend that little bit more on a World Class player or 2 to add that little bit extra (RVP aside as his contract situation meant he became affordable).
I guess my overall point is: why be "merely" successful when you can be truly exceptional? The likes of Barcelona, Bayern and Madrid don't settle for being "just" successful, although obviously it isn't financially prudent from an accountants point of view.
Spurs were an example of a club that spend almost everything they earn on things relating to the club (not just transfers). Have a look at how much provisions for a new stadium has been costing them over the last few years.
We're run as a business more than a football club. If you could generate the same amount of profit by investing less money, than why invest more?
Why indeed? But that's finneh's point, ain't it - this is precisely an accountant's viewpoint, not a football man's. It's a worry for many, I think, that you can run a successful business these days, owning a big football club, without really aiming for the very summit. The difference between winning things and "merely" qualifying year after year for the CL is - perhaps - negligible. I'm not saying the Glazers are of that mind, I don't know precisely what their "vision" for United might be.
It's tricky, though. Barca and Real aren't models to emulate for us, I really don't think so. Bayern more so, I guess. Run a proper business - but be willing to make investments that aren't strictly speaking necessary from an accounting viewpoint. That certainly sounds like a decent strategy from where most fans are sitting.
We have to be at the minimum, top in the PL every other season and make a good run in Europe.
In Europe, our squad looks far, far off the top 3.
Finneh's points are excellent. Ruud is spot on too - but in a way that highlights the worry of a fan more interested in seeing United, who did make far more ambitious buys as a PLC, aim to be the best in Europe, not strike a perfect equilibrium between the minimum amount investment in the team that achieves the best profit.
In Europe, our squad looks far, far off the top 3.
Finneh's points are excellent. Ruud is spot on too - but in a way that highlights the worry of a fan more interested in seeing United, who did make far more ambitious buys as a PLC, aim to be the best in Europe, not strike a perfect equilibrium between the minimum amount investment in the team that achieves the best profit.
When was the last time you posted anything positive about our club, feck me, the way you go on, you'd think we were arsenal over the last 7 years and not the most successful club in England and arguably the second most successful in Europe over that period!
Off topic I know, but feck me, you don't half fecking complain, EVERYTIME your name pops up in a thread, you just know its gonna be more negative BS, give it a fecking break already.
In short, you're a Penis, not a huge one, no, a micro fecking penis.
Different goals, finneh.
Those clubs are not-for-profit concerns; having no financial stakeholders to reward, they can, in pursuit of the spectacle, maximise reinvestment in themselves. They'll have what they can afford.
We are very much a for-profit concern whose primary function is to return value to shareholders. That value is a function of the difference between what is earned and what needs to put back in to the club. That margin (and the expectation that it will increase) is the reason why the Glazers are sitting atop of a 2b dollar fortune. Maintaining\widening that margin is the reason why the club will not invest the maximum it can afford on players and facilities.
- Status