Rooddboy
What was our cash position when the Glazers took over?
What was our cash position when the Glazers took over?
ALL issues relating to the bond issue and club finances
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the andersred blog: Half a billion £s.....
A bit old but just came across this - sorry if it has been posted before but this shit is depressing.
This paper demonstrates that the pillaging of the club over the last four years by the owners is set to continue and indeed accelerate in the years to come. Nobody can be in any doubt; not the fans, the Football Association, the Premier League, UEFA, the government or indeed the manager or players that what is being allowed to happen is nothing less than a violent assault on one of Britain’s best known sporting institutions
A bit old but just came across this - sorry if it has been posted before but this shit is depressing.
This paper demonstrates that the pillaging of the club over the last four years by the owners is set to continue and indeed accelerate in the years to come. Nobody can be in any doubt; not the fans, the Football Association, the Premier League, UEFA, the government or indeed the manager or players that what is being allowed to happen is nothing less than a violent assault on one of Britain’s best known sporting institutions
If you want to look at like that then yes.
Note that there are further provisions made in the bond prospectus for paying off more of the PIK as well so it is not just about this season.
Personally, I am content to see that the debt is no longer growing and that there is now a clear plan to pay off the toxic PIK and get our total debt down to a more comfortable level.
I would agree with that.
I think that £25m to £30m net is enough - I think 2/3 of the current youngsters will make it to the first team squad and then we will need to buy 2/3 others over the next couple of seasons to replace the old timers.
Im not comparing it to original loan levels - just saying that rather than growing, our total debt seems to have peaked and now we should see the PIK paid off over the next few years (if not sooner.)
The point about installments is very important and usually completely ignored when discussing transfer spend and budgets etc.
I dont know off the top of my head.
Roodboy, I'm not too worried about what we have to spend in the transfer market in all honesty. I'd say Nani's more than capable of replacing Giggs, Rafael to replace Neville. SAF has a lot of faith in Anderson, we have a few other options alongside him, to hopefully step up and replace Scholes. The goal keeper situation is the only one of any worry tbh. If only we could find another VDS type of signing. A lot has been made of our "failures" this season but people are too quick to forget the injury crisis we had, which was just a pure freak of nature and hopefully a one off.
Bearing all of that in mind, is it not a real possibility that the Glazers might use all of the credit facility to pay off the PIKs? Or has it been earmarked specifically for transfers? I can't quite remember.
The club had £200 million or so in the bank, which was earmarked for the quadrants.
Where that money went, no one is 100% sure of, and I cant seem to find out any information if that was ever used to pay for the quadrants, or further financing was used.
I dont believe they will use every available £ to pay off the PIK debts, simply because they know that the team must have money spent on it, and to go out and use every penny on the PIK debts leaves the team in a precarious position should we suffer an injury crisis like last season.
No doubt they will use some of the money, but I very much doubt even they would be stupid enough to leave themselves so cash strapped they couldnt afford a player if it were necessary.
gotta bookmark this post. If I ever feel suicidal with worry about United, I read this and I'll feel a lot better.
The debt hasnt stopped growing though. All that has happened is the money is owed to different people under different conditions.
Where we had to pay money to the banks for the senior debt, we now have to pay even more to the investors. The amount we will be paying to them is far more than would have been paid to the banks.
So ultimately, over the next 7 years the debt hasnt been reduced. Our liabilities have actually increased.
Yes the PIK debts should get paid off, but that doesnt reduce the debt. It just stops it getting any bigger, especially if they need to dip into the rolling credit facility to pay for players which they would have paid for using cash in the bank.
The whole point of getting shot of the PIKs is to stop the debt spiralling even further. It wont reduce the debt.
What we're saving by getting rid of the PIK debts is offset by hte fact we're paying substantially more to the lenders who invested in the bond issue.
What paying the PIK debts also means is, the Glazers then have no liability whatsoever, and the debt is solely and utterly the responsibility of Uniteds.
It also allows them greater scope to gain access to the money in the bank at Old Trafford, meaning they can take a bigger cut for themselves should there be anything left over at the end of the year.
I believe its use is not necessarily restricted to transfers although that is its primary purpose. But they have £70m from the bond money to pay down debt which leaves them with £28m if you accept the cash balance is currently £98m. The bond is costing approx £46m and the remaining PIK will cost £24m (say £170m @ 14.75%). If net earnings are £100m then they have another £30 m available. Deduct net transfer costs - Smalling and Hernandez less Foster + whoever else is disposed of and you are left with at least £18m for the transfer kitty giving a total of £46m (at least). Provided they don't take anything out for themselves, Fergie has got money for players (or one expensive one) without the credit facility being used. Of course the PIK debt doesn't have to be serviced as such, it just rolls up. Obviously they would want to use as much surplus cash, beyond Fergie's requirements to pay as much of this down as they can and as soon as possible. If current net growth continues as in the recent past they can do this within the next five years and then in 2017 refinance around 50% of the bond debt having provided for the other 50%.
All rather simplisitc and, as I said before, dependant on continuing profitability (in itself dependant on so many things) and minimal, if any, payments to themselves over the next five to seven years. They can't pay off the debt, provide minimal funds for the team and pay themselves as well - assuming these projections. What they can look forward to is a substantially appreciated asset by 2017 - say around £2 bn net as opposed to the current £500m net approx on a current valuation of £1.2bn.
BBC - David Bond's Blog: Glazers in no rush to pay off Man Utd debt
2nd BBC blog of the day, they're really spoiling us
2nd BBC blog of the day, they're really spoiling us
"A series of recent off the record briefings with journalists - unheard of in the five years the Glazers have owned the club - demonstrate a desire to close what they see as the reality gap between the public perception of United as a business crushed by their weighty debts and what is really going on."
That's all any of us want; assurance that we can remain competitive. Unfortunately, and somewhat obviously, the Glazers aren't going to divulge strategy to us. It makes no sense to reveal your masterplan before you execute it. Heaven knows we've seen bond villains aplenty come unstuck that way . Personally, I'm feeling more comfortable about the situation. Not about the amount of debt per se, but about our ability to pay it back and remain competitive.
The Glazers also know the importance of on the field success. Keeping us at the top table in football is essential to their strategy of longer term revenue. They've outdone anyone commercially. Look at the markets that we've sold mobile marketing rights to. No sign of USA, China or Japan there yet, no doubt with more to come.
I'm pro-United, but should we consider that *might* mean embracing the Glazer strategy of us being a brand as much as anything to keep our best players and attract others? Football's changed from the simple days of standing on Stretford Terrace and cheering on Colin Gibson, Ralph Milne et al. We've now got some of the best players in Europe playing for us, have recently had our first ever World Player of the Year and have the potential for more. The Glazers would easily get the supporters back on their side by freezing prices for five years and could easily afford to do so.
Given that their plan appears to be working, the RK bid seems doomed to failure. The value of the club at the current time is unknown. They know that they can keep us competitive and that once out of world recession things will pick up even more. Now's the time to invest in things if you've got the money to do so, not sell.
That's all any of us want; assurance that we can remain competitive. Unfortunately, and somewhat obviously, the Glazers aren't going to divulge strategy to us. It makes no sense to reveal your masterplan before you execute it. Heaven knows we've seen bond villains aplenty come unstuck that way
. Personally, I'm feeling more comfortable about the situation. Not about the amount of debt per se, but about our ability to pay it back and remain competitive. The Glazers also know the importance of on the field success. Keeping us at the top table in football is essential to their strategy of longer term revenue. They've outdone anyone commercially. Look at the markets that we've sold mobile marketing rights to. No sign of USA, China or Japan there yet, no doubt with more to come.
I'm pro-United, but should we consider that *might* mean embracing the Glazer strategy of us being a brand as much as anything to keep our best players and attract others? Football's changed from the simple days of standing on Stretford Terrace and cheering on Colin Gibson, Ralph Milne et al. We've now got some of the best players in Europe playing for us, have recently had our first ever World Player of the Year and have the potential for more. The Glazers would easily get the supporters back on their side by freezing prices for five years and could easily afford to do so.
Given that their plan appears to be working, the RK bid seems doomed to failure. The value of the club at the current time is unknown. They know that they can keep us competitive and that once out of world recession things will pick up even more. Now's the time to invest in things if you've got the money to do so, not sell.
"A series of recent off the record briefings with journalists - unheard of in the five years the Glazers have owned the club - demonstrate a desire to close what they see as the reality gap between the public perception of United as a business crushed by their weighty debts and what is really going on."
That's all any of us want; assurance that we can remain competitive. Unfortunately, and somewhat obviously, the Glazers aren't going to divulge strategy to us. It makes no sense to reveal your masterplan before you execute it. Heaven knows we've seen bond villains aplenty come unstuck that way
The Glazers also know the importance of on the field success. Keeping us at the top table in football is essential to their strategy of longer term revenue. They've outdone anyone commercially. Look at the markets that we've sold mobile marketing rights to. No sign of USA, China or Japan there yet, no doubt with more to come.
I'm pro-United, but should we consider that *might* mean embracing the Glazer strategy of us being a brand as much as anything to keep our best players and attract others? Football's changed from the simple days of standing on Stretford Terrace and cheering on Colin Gibson, Ralph Milne et al. We've now got some of the best players in Europe playing for us, have recently had our first ever World Player of the Year and have the potential for more. The Glazers would easily get the supporters back on their side by freezing prices for five years and could easily afford to do so.
Given that their plan appears to be working, the RK bid seems doomed to failure. The value of the club at the current time is unknown. They know that they can keep us competitive and that once out of world recession things will pick up even more. Now's the time to invest in things if you've got the money to do so, not sell.
A thoroughly sensible post from start to finish, and my thoughts exactly.
UnitedRoadRed;8087504[QUOTE said:
Why hasn't this been reported on ? Seems dubious until we get quotes/explanations. If true, why have they waited all this time to come out into the open and why have they done nothing before to engage with fans groups.
That's all any of us want; assurance that we can remain competitive. Unfortunately, and somewhat obviously, the Glazers aren't going to divulge strategy to us. It makes no sense to reveal your masterplan before you execute it. Heaven knows we've seen bond villains aplenty come unstuck that way
So what have they being saying to journalists then ? The future remains hazy and risky with debt still around 60%. We certainly shouldn't be feeling comfortable.
Surely its early days to assess the mobile phone initiative which, like everything else commercially, is dependant on continued success on the pitch.
They cannot afford to freeze prices over the short term. Revenues have to increase each year by at least 10% if debt is to be repaid in the next seven odd years as well as money spent on the team, to say nothing of giving them some return in the interim. They cannot rely on Fergie and his successor keeping us competitive on a relative shoestring
It's a bold statement to say that their plan appears to be working. There's a lot of uncertainty involved including now, the possibility of a double dip recession and an increasing rejection groundswell by the fans. An RK bid could still be successful if the Glazers properly assess the risks involved including the reality that there could be better investments elsewhere
So we basically doubt everything? Communist Mancunia is alive and well.
I don't know and that's the point. I'm feeling comfortable that they've told journos that they know they need to keep the team successful.
iPhone and equivalents have shot through the roof as the must have gadget. Unless you've been asleep for the last 12 months, thought someone as astute as you would have noticed it. It's all part of the Web2.0 revolution.
They could. They can afford to keep prices as they are to keep the ground full to keep investors/sponsors happy that there's 75k fans there each match to see their adverts. It's far more revenue than they were on 5 years ago and they know that a 10% ticket price rise is unsustainable. They've hit a pivotal price point and they know it.
It may be bold, but they're in a position of strength, new revenue streams are increasing year on year and so is football money. That's without their Holy Grail of individual TV rights across the world. They've sorted out the senior debt and can go at the PIKs each year once they know what Fergie has been spending in the window. I want to know what my monthly disposable income is before I treat myself, the wife or the kids - this is a pretty similar situation whereby they'll want to know how much Fergie wants to spend to keep the team competitive before chunking money off to clear the PIKs. The bond payments are a know amount, so are wages (more or less). The major unknown each season is transfer net spend (sorry roodboy, but net spend does matter) and until that window closes in August, people will pluck random numbers out of the air in terms of how much the Glazers can and will throw at the PIKs. It's in their interest to clear them off, but not at the expense of Champions League football.
I agree with you completely on the squad and transfers side of things - but I know that others are far more negative about it.
It is possible they might pay off more than £70m of the PIK - it is something I have discussed with peterstorey and to be honest we just dont know as the details surrounding the PIK are still a bit sketchy. Hopefully next week accounts will tell us more.
Sorry Fred but some of the things you say here are just plain wrong.
Firstly, the amount of interest we will pay each year on the bonds is pretty much the same as we have been paying last few years on the senior debt (just look at the accounts). It is in the £40m to £45m range.
Secondly, if they pay off the PIK then of course the overall debt levels come down. I dont understand how you can claim that they dont?! Yes the new credit facility does confuse matter a bit but I have already addressed that issue.
Just to clarify, the debt is currently made up of the bond (around £500m) plus PIK loan (around £220m) giving a total of £720m. Quite clearly if they pay off the £220m PIK (or even just a part of it) then the overall debt level is going to fall.
Their long term plan must be to get rid of the PIK and just be left with the bond plus possibly the revolving credit facility.
Web 2.0?
Holy shit, have I just travelled back in time 5 years?
Holy shit, have I just travelled back in time 5 years?
His point that the Glazers are exploiting a new stream of revenue is a valid one though A1Dan.
We had the best players in Europe before the Glazers arrived. Ronaldo signed before they took over. Our success on the field is achieved despite the Glazers not because of.
And we did it debt free!
Spot on, the Glazers are lucky the club was in such good shape before they arrived. They are slowly undoing that work
I reckon that's why they bought us in the first place.
They tried building a sports team with Tampa and found it to be very costly, with little guarantee of continued success without massive investment.
United were essentially a turn-key title winning venture. The appeal being that little investment was required and they could still exploit the club's success for massive gains, debts or not.
Yip and we know what direction the Bucc's fortunes took, downwards
That's not exactly relevant, though. The two teams were at opposite ends of the spectrum at the time of purchase.
They built the Buccs into Superbowl winners. They were dire for their entire existence before the Glazers, and dire is being kind. That's important to remember. The Tampa thing was virtually from the ground up. The team existed, that's about it. In North America, losing franchises don't sell tickets and they often end up moving when new owners come in.
United are a different kettle of fish. Winning history, specific mentality throughout the club, 20+ years of success under Sir Alex. It's like buying an established McDonald's restaraunt, your income is virtually guaranteed as long as you don't mess with the product. The debt is a massive expenditure, sure, but the required investment for continued success really isn't that much.
Put it this way, CL...
Tampa are like the Glazers ex-wife. They built her up but were unappreciated so they don't want her anymore, now they can't offload her so easily and there are no suitors (why would there be? she's ugly). As such they're stuck making alimony and other support payments.
They have a new wife in Manchester United, a real trophy wife. They've borrowed to the hilt to get her and, if reports are to be believed, not interested in relinquishing her.
I don't think it's wise to compare the two teams fortunes, they're just too fundamentally different.
Tampa are like the Glazers ex-wife. They built her up but were unappreciated so they don't want her anymore, now they can't offload her so easily and there are no suitors (why would there be? she's ugly). As such they're stuck making alimony and other support payments.
They have a new wife in Manchester United, a real trophy wife. They've borrowed to the hilt to get her and, if reports are to be believed, not interested in relinquishing her.
I don't think it's wise to compare the two teams fortunes, they're just too fundamentally different.
That was a good read doc, you are probably right
Cheers, man. I don't like the Glazer's but I'm pretty sure they like United, at least as a money making venture so I'm pleased by the potential progress on the most damaging parts of the debt.
I'd love them to sell up and get owners who won't go into debt for us but in the current economic climate I think that's unlikely.
Of course they love United. Bear in mind United is worth more than the rest of their business empire all added together.
It makes common sense to protect your most valuable asset, however you would question whether its common sense to allow your other interests to fall by the wayside, given that it was those interests that allowed them to buy into United in the first place...
As for comparing the teams fortunes, I think that you should look at their business methods, and see how they operate. OK the sports are different, but the fact is the one thing that stands out on both clubs is the blatand disregard for supporters that they have. Likewise the way they ran their caravan parks...
Ultimately, they are not customer friendly, and the people paying them are treated like Garbage..
Thats not something unique to United, or Tampa, its their whole business ethic..
Thats why United fans should look at what their other companies are doing. Just to see how badly they treat people who are giving them their hard earned wages, and see how they just do whatever it takes to get as much out of people as possible. Being popular isnt on the Glazer radar. Theres only one thing they want, and thats money.. If they have to shit all over everyone to get it, thats what they do. If they have to sell the players to make money, thats what they'll do.. If they have to sell OT and Carrington to make money, thats what they'll do..
There is only one word in the Glazer dictionary, and that is "MONEY"
Nothing else matters. Sentiment, loyalty, history.. they mean feck all
But has there been progress Doc? Where would they have been without selling our best player? The amount of money wasted so far in interest etc is shocking and the debt will probably rise even more especially if we try to invest in the team. The fans meanwhile are the only fans in the country who forced into a ACS. Bad times ahead Im afraid
It certainly doesn't seem like common sense, no. But then again, neither does going up to and possibly past your limit financially to get something you want, I reckon it's precisely because of their interest in United that their other ventures are underappreciated.
Sure, but how they treat their customers and the future success of United as a football club are two different things. You can argue that they'll eventually alienate supporters to the point of OT being half full but that would be disingenious, I think. The Glazers are shrewd enough to know (and probably already have the market research) that JCL Daytrippers and OOTers will happily take up the slack. Heck, I bet they're developing tourism packages worldwide as we type to fill the stands.
I just think it's wrong to compare the fortunes of Tampa and United. If there was a bigger club than United in world sport, maybe it would be a safe comparison to make. As it stands, there is no other club that a group or individual could purchase that offers more prestige and potential success (and that includes financial success) than United.
And that is where we disagree strongly.
WIthout customers, they dont have a business.
If they think theres an endless tally of supporters dying to get in, they should look at Tampa, because they thought the same thing over there, advertising a 100,000 waiting list. Now their ground resembles the City of Manchester Stadium.. Their fans go dressed as empty seats..
We've already seen them kill of the season ticket waiting list. Theres still alot of fans not renewing ( albeit they will deny this ).
They can only push so far....
And that's cool. I reckon there a plenty of fans who would pay to visit and watch a match. Unlike United, Tampa doesn't have a world-wide fan base.
But that's a risky proposition. You're probably right that they'll have to change their way of doing things to continue as owners. Question is has it gone too far or is the pull of United too strong to keep people away for long?
I guess we'll see.
Not the point that I was making. Many on here still get glassy-eyed about us being a football club. All football clubs in the Premier League are now businesses, like it or not. Pie and bovril are replaced by corporate hospitality suites and official wine sponsors. Since Sky opened its wallet everyone has wanted a piece of the pie. Agents have been another factor in costs spiralling upwards, far more than ticket prices have. United are a brand. We could probably sell United toilet roll to city fans to wipe their arses on it.
The problem that you appear to overlook, is that since the inception of the PL over half the teams that have been in the PL have at some stage or other been in, or been exceptionally close to administration.
In the world of Business, football is notorously poor at producing success stories. Out of all the clubs that went PLC before or around the same time United did, the majority have not performed as well as the prospectus said they would, and even United didnt live up to the expectations that becoming a PLC promised.
By all means, believe football is a business. Just dont brush over the fact, that as businesses, most of the clubs are failing with few if any returning profits, and that includes many of the top clubs. Not just Portsmouth, Hull, Burnley etc..
I was reading the other day an article that said over 70% of the clubs in the football league, if they were treated as proper businesses would be declared bankrupt...
How many companies do you know would face a winding up order by HMRC and be given 3-4 extensions to pay ?
How many companies do you know would not pay their staff for 2-3 months and still be allowed to trade ?
How many businesses do you know would be allowed to run with a wage bill higher than its entire turnover for a season...
Football is not a business. If it were there would only be about 20 teams playing it professionally.
Funnily enough, thats the best post anyones made on here.
Ultimately, no one knows whats going to happen.
If theres one thing we can all be sure of, its never going to be dull on the good ship MUFC....
Too true Fred
Come on Fred - you arent seriously comparing us to all these other lesser clubs are you?
The North Americans have shot down your comparisons with Tampa Bay Buccs so now you want to put us in the same bracket as the likes of Portsmouth or Hull?
We are the biggest and the most profitable - no other club compares.
and big companies dont go tits up..
Remind me again.. what happened to AIG ? You know, the ones that used to sponsor United ?
And if we're the most profitable, then god help the others, because United reported a loss last season if I am not mistaken.
Biggest yes, most profitable you are having a laugh. We showed a profit last year because the Glazers needed to have the books looking good for the bond issue, the sale of Ronaldo enabled them to show a profit. Again if we are making money how come the debt is rising?
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