ALL issues relating to the bond issue and club finances
- Thread starter sammsky1
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no, I'm saying that numbers are numbers, the context is in the accompanying text and that's where opinions, interpretations and the like come into it.
Are you saying that some one has put up misleading figures in this thread?
Would we have made as much in commercial activities - doubtful. Hublot et al wouldn't have been coughing up their millions, Kuntyon seemed delighted to have vastly undersold us on the Vodafone deal.
A go it alone TV deal like in Spain would, many suspect, make United but break the league. Everyone wants to watch Real and Barca in Spain and they're both pulling even further away from the rest financially. It's like a warm SPL!
The figures are manipulted by the Glazers not you personally of course. So why when the club is making money has the debt risen, tell us people who do not understand
you are talking about 'theimperialinn' - yes he is pretty clued up and I had many disagreements with him in the past about our financials. However, I met him at a match recently and we did speak about this subject.
I dont want to speak on his behalf, but I believe that what he has seen in the bond prospectus has changed his view quite significantly - perhaps he will come along and tell us himself.
Casanova's Chinese restaurant. He's actually a bleedin' bean counter - I think he just got bored saying the same stuff over and over and over. Roodboy must be near that point as well.
Yea that fella... Was going to ask in what way he changed his mind but I'll wait for him to post.
Lol... makes sense that.
Could you clear this up for us please roodboy?
Well the funny thing is that I agree that the figures are manipulated by the Glazers but as I have explained they are manipualted to make it look like we make less profit and not more !!
The rising debt level is all about the PIK loan - this is a type of loan where instead of paying interest annually, the interest is added to the original amount to be paid off sometime in the future.
The bond prospectus does now set out how they will start to pay off the PIK and thus our overall debt levels seem to have peaked and should now start to come down.
If we were making enough profits, why didn't we pay the interest on the PIK off, instead of letting it roll up?
Does the prospectus set out a plan to pay off all of the PIK or just part?
Do they plan on paying off the bonds? or will they just refinance again in 2017?
Thanks again.
So you dispute the fact that if we spend in the summer, the debts won't go up? Bear in mind that there's a draw down facility for player purchases.
Yes - I reached saturation point the other day so avoided much financial talk over the weekend - not sure how much more I can take !
Details about the PIK (and when exactly it could be paid off) are still sketchy - we dont have enough info to answer all questions about it as it is technically the Glazers' debt and not the club's.
Prospectus sets out detailed plan for paying off £70m of the PIK and then makes provisions for further payments.
There is no specific plan to pay off the bond - refinance is the most likely option.
See analysis from Julian Denny in this post who feels that there is a fair bit of cash available for transfers without even touching the new credit facility:
https://www.redcafe.net/f6/all-issu...-cash-out-etc-280859/index33.html#post8070776
Even if all the revolving credit facility is used, which would leave the debt levels the same after paying off £70m of PIK, the total annual interest bill would still come down as the new debt is far cheaper than the old.
So even this worst case scenario of using the full £75m credit facility, it is still a step in the right direction.
When we had the loand we had to pay off the loan before the PIK - there was a covenant in place - restriction if you like.
Once United had swapped the bonds where they pay higher interest than the loan they could then consider paying off the PIK. However again there are some covenants I believe tied to this.
Julian's opinion relies on the EBITDA hitting £100m and the Glazers not taking more money out of the club than he believes (naive imho). If, as he suggests, the Glazers rightly believe that we need to stay at the top of the tree, then arguably we need two excellent players in with one senior player going (Berba-off?). That in itself would push the debt up.
^^How would it push the debt up?
BTW the reason I am highlighting JD's analysis is because he is strongly antiGlazer yet even he agrees that there is cash for players without needing to get into more debt.
BTW the reason I am highlighting JD's analysis is because he is strongly antiGlazer yet even he agrees that there is cash for players without needing to get into more debt.
The money has to be borrowed, end of story and that is fact
Im sorry but it is clear you are not following what is going on here. Leave the financial analysis to those who understand it.
Is that your way of not answering a simple question, you have been found out by not giving us an answer my friend
without wanting to get involved I think what he means is that if we use 70m cash to pay down the PIKS then even if we take out credit to the tune of 70m to fund player purchases then our overall debt level wouldn't increase and the debt we had remaining would be slightly cheaper?
Meaning that using our cash reserves to pay off the high interest loans even if it means having to take other loans out to fund other requirements would be the sensible solution.
Meaning that using our cash reserves to pay off the high interest loans even if it means having to take other loans out to fund other requirements would be the sensible solution.
Is that your way of not answering a simple question, you have been found out by not giving us an answer my friend
He's answered a hundred times already.
Endulge me again then, why is the debt growing, no bullshit just a plain answer
Is that your way of not answering a simple question, you have been found out by not giving us an answer my friend
You are right, you found me out - well done you.
(Lets just ignore the fact that I addressed that very issue just a few posts ago)
I only asked for a simple answer for us less well educated beings what is the harm in that? that will shut me up once and for all and I am willing admit I was wrong. Now why has the debt grown despite all this new investment and no money of significance spent of transfers? How does this make the Glazers good for us when they have blew enough of the clubs money on interest etc that would have built Liverpool a new stadium, Im puzzled
this thread certainly makes for some very interesting reading, hats off to roodboy et al for taking the time and effort in analysing it and giving their spin on things - i'm able to understand most of what is being said, but parts are going well over my head, and im sure its the same for the majority.
its well appreciated though.
its well appreciated though.
Agree 100%..
If the money was going to United then I think most people wouldnt care, but the fact is the so called extra profits are going elsewhere, so for us United supporters, all that extra money means absolutely sod all.
They can increase profits to £200 million a year, but if its not going in Uniteds pocket then as far as I am concerned it doesnt exist...
I believe he is referring to United using the rolling credit agreement.
I understand where you are coming from regarding paying off the PIK with the cash instead of using it to buy players with, then using cheaper finance to buy players. That, as you say, makes sense.
However it doesnt alter the fact the club will still have to repay that money, and more importantly increase the sum total it owes. A sum total which is still way way more than United comfortably can affotd whilst remaining competitive.
I believe they were not allowed to do it.
Because of the way they negotiated the deals, any spare revenue was meant to go to the senior debt first.
Thats why they did the bond issue, so they could pay off the senior debt, thus releasing that clause, and they can get to work on paying off hte PIKs.
If they didnt do it, then things would have got very messy. The PIKs are spiralling out of control, and the Glazers need to get rid of them. If they dont UNited are in the shit.
As for the bonds, I believe they will simply just refinance.
There is no way United will find £500 million in 7 years. Its just not physically possible.
I think the interest repayments on the bond are about £304m over the 7 years. That's without the PIK debt. The £504m from the original issue doesn't need to be looked at until 2017.
Thats what I am saying..
Theres no way they'll find £500 by 2017 to repay the bond investors, so a re-finance is a nailed on certainty.
How are you working out that the debt will go up, Fred? The way i see it is as follows...
Let's say we're £700m in debt at a 16% interest rate. The £80m from the Ronaldo sale pays off some of that so we're now £620m in debt. The Glazers then take £30m from the rolling credit facility at a 4% interest rate to pay for summer transfers. So we're left with £650m debt, £30m of which is at a much lower interest rate than before. How can you conclude that this has gone up? Even if SAF used the entire £75m credit facility on new players, the total debt, at £695m, would still be down £5m and at a much lower interest rate.
Yes you are more or less there Cider
The very worst case scenario of using the entire new credit facility leaves us at around the same debt level with a lower annual interest bill.
However, I believe that there is cash to spend on players even without using the new facility - Julian Denny agrees and has put this figure at £50m going forward (which personally I think is a bit on the high side but who am I to argue).
There is a lot of excess cash in the club bank account at the moment (£100m as of 30Dec09). The bond prospectus makes it clear that upto £70m will be used to pay off some of the PIK and the net result is that, for the first time since the Glazers turned up, our total debt obligations will actually come down.
The very worst case scenario of using the entire new credit facility leaves us at around the same debt level with a lower annual interest bill.
However, I believe that there is cash to spend on players even without using the new facility - Julian Denny agrees and has put this figure at £50m going forward (which personally I think is a bit on the high side but who am I to argue
).There is a lot of excess cash in the club bank account at the moment (£100m as of 30Dec09). The bond prospectus makes it clear that upto £70m will be used to pay off some of the PIK and the net result is that, for the first time since the Glazers turned up, our total debt obligations will actually come down.
In a nutshell that is the main area where our opinion differs.
I believe there is enough funds available after paying all our annual debt obligations to keep the team competitive.
How much do you think is required to keep the team competitive?
But really this is more a footballing discussion than a financial one and depends on how you rate our current squad. As far as I am concerned, even if we didnt buy anyone else this summer, we would still have a very strong squad and be challenging for top honours again next season.
So we can conclude that, in the year in which we sold a player for £80m, the debt actually came down for the first and only time?
Is Fred not talking about the future - ie the debt will go up? The rest of your post is about whether it has gone up... in the year in which we sold Ronaldo for £80m.
Yes you are more or less there Cider
The very worst case scenario of using the entire new credit facility leaves us at around the same debt level with a lower annual interest bill.
However, I believe that there is cash to spend on players even without using the new facility - Julian Denny agrees and has put this figure at £50m going forward (which personally I think is a bit on the high side but who am I to argue
There is a lot of excess cash in the club bank account at the moment (£100m as of 30Dec09). The bond prospectus makes it clear that upto £70m will be used to pay off some of the PIK and the net result is that, for the first time since the Glazers turned up, our total debt obligations will actually come down.
This transfer fund is predicated on the assumption that the Glazers dont take out any more consultancy fees or offer themselves low cost loans.
I would say the cash available for transfer before having to tap into the credit facility is nearer the £25-£30m mark.
Fair enough. I don't think anyone disputes that the £500m will be refinanced, but £500m then will be roughly £300m now, so it will feel less.
How much do you think? Scholes, Giggs, Nev, Van Der Sar all going to be finished within the next couple of years, odds are Rio, Hargreaves, Brown, Owen, Berbatov, Carrick and O'Shea within 5 years. How many of the youngsters are realistically good enough to take their places? How much did it cost to get these guys in? Now put that at today's prices with the likes of shitty and Madrid inflating the market.
By all accounts though, the bond re-financing and the lowering of the PIK's, coupled with the new lucrative sponsorship deals and aggressive expansion into new markets, has solved the problem of increasing debt. If anything, the financial future looks brighter than have the last five years. There's an element of risk, which if you read the prospectus the Glazers are fully aware of and will undoubtedly have made contingency plans for, but as things stand it seems the accounts are well under control.
Isn't 70 million slightly less than the amount the PIK debt has increased since the takeover though?
So that 100 million is likely to have gone well down when we see the accounts on 28th May.
Like you pointed out though, any players we buy would be installments so we don't really need to have that much cash to buy players. We are a debt-absorbing machine these days anyways :P
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