I'd imagine you aren't too far off the mark with that. Maybe some United fans will take their heads out of the sand now and realise what a precarious position we are in.
ALL issues relating to the bond issue and club finances
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I'd imagine you aren't too far off the mark with that. Maybe some United fans will take their heads out of the sand now and realise what a precarious position we are in.
Wouldn't that infringe on the government's monopoly of churning out fiat currency?
Anyone wants to read the full prospectus, send me a PM. 322 page of data and confusing language at your perusal...
Wierd how so many didn't give a feck when the team was doing well, but as soon as they think we need investment and it's not there, Oh noeeees.
I'm no expert on most of the terms used, far from it, but it was clear from the early days that Glazer was trouble. The success on the field has very much glossed over this, and it's worrying to note the loss we would have made...this coming after the prestigue of a Champions League win, and all the business opportunities that presents...not to mention having the worlds best player. If we couldn't capitalise on that *(despite various new deals the were announced, that watch company?, some Dubai company etc) following 07/08, how the feck are we going to capitalise on a season where we maybe don't win anything?
I'm no expert on most of the terms used, far from it, but it was clear from the early days that Glazer was trouble. The success on the field has very much glossed over this, and it's worrying to note the loss we would have made...this coming after the prestigue of a Champions League win, and all the business opportunities that presents...not to mention having the worlds best player. If we couldn't capitalise on that *(despite various new deals the were announced, that watch company?, some Dubai company etc) following 07/08, how the feck are we going to capitalise on a season where we maybe don't win anything?
With the interest coming down to 5% from 14 %, our profits would be higher and I'm guessing, all those profits could be used to eat off interests from the bank on those amounts itself. So hopefully the profits and the interests we make of those profits can accumulate to a considerable sum come 2017 and the glazers hopefully would add the remaining amount.
Or if all else fails, the glazers could sell a part of the club for that sum depending on how much the club is valued at.
Or if all else fails, the glazers could sell a part of the club for that sum depending on how much the club is valued at.
I fully admit I am not as expert on finance issues as your self, however I see the bond issue as a method of the Glaziers maintaining total control. Why not have a share issue or sell part or hopefully all of the club. I dont know what their plan was when they bought the club but whatever it was they got it badly wrong and now have an expensive toy they cannot afford .
It is now obvious that we sold Ronaldo in the summer, not because of pressure from the club and player, but because we had to, that is why we have Diouf and Owen because after signing Valencia that is all we could afford. Now no disrespect to Diouf and Owen I hope they are a roaring success, but I feel that had the club been owned by people who could have afforded it SAF would have went in a different direction
SAF knows what is going on and I hope for the sake of us the fans he eventually stands up to the Glaziers and stops toeing the company line, he probably would have more effect on them than all of us put together. They the Glaziers are bleeding us dry and it needs to stop
Worrying times...
feck this, feck it, fecking feck feck feck feck fecking twatting feck
Nicely put.
It's difficult to call it properly without knowing the full details. But it will improve the financial stability and free up some cash. Better than the current structure anyhow IMO. So an improvement and it that sense the fans should be pleased.
I think to say we are fecked is far to simplistic. First of all, the Glazers should be able to recoup the money and even make a healthy profit if they sold United or something. There are in fact several possibilities. The most simple is that a new investor takes the club off there hands. Being Manchester United they'll have plenty of buyers.
Secondly, how much do you own for your house?
We may not approve of the way the club is run financially but that doesn't mean that the club is fecked.
I think to say we are fecked is far to simplistic. First of all, the Glazers should be able to recoup the money and even make a healthy profit if they sold United or something. There are in fact several possibilities. The most simple is that a new investor takes the club off there hands. Being Manchester United they'll have plenty of buyers.
Secondly, how much do you own for your house?
We may not approve of the way the club is run financially but that doesn't mean that the club is fecked.
Might be a very naive question but ..... exactly how do the Glazers make any money out of owning Manchester United? If they do make a profit, how much do they get in their pockets?
A very good question, one we don't hear enough IMO. That's the bit I don't understand, what's in it for them? I can only presume they plan to sell United off for a healthy profit.
One thing I forgot about the bond thing, who's going to buy them? Not exactly the greatest investment ever.
As things stand in 2017 the debt would be around 1b. if they are sucessful with the bond issue debt will only be around 500-600m, ie, roughly what it's out now give or take 1-200m.
They're relying on the value of the club increasing by more than the debt used to buy it.
Correct. Serious miscalculation on there part.
Getting only one home game in the FA Cup this year and last must have been a smack in the chops for them.
Manchester United is raising £500m through a bond issue
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Roll up, roll up, who wants to lend to Manchester United for seven years at a fixed rate of about 8.5%? The actual coupon on the £500m bond will be determined by demand, but it would be surprising if the Glazers can't attract funds. The football club made top-line operating profits of £91m last year. Debts totalling more than five times that sum still represent an adventurous leverage ratio but there's a price for everything and 8.5% should be roughly it.
So far, so good. But there are two points to note. First, United will not feel much benefit in terms of interest costs, which last year consumed £42m of that £91m, since the club is already paying 8% or so on bank loans of £509m. Rather the point of the exercise is to extend debt maturities to seven years (instead of five-and-a-half) and to lock in an interest rate. That's sensible if you fear rate hikes.
Second, the bond issue appears designed to clear the way for a *refinancing of the £200m of pay-in-kind, or PIK, notes that are the *responsibility of the Glazers, rather than the club. These are rolling up at 14% a year, which is a pauper's rate. The idea is that *negotiations to repay the PIKs will be easier if the club replaces its bank debt with bonds.
Nice theory, but it's still one hell of a leap to believe there's enough spare cash at United to pass up to the Glazers to pay off the PIKs. Even after five mostly successful years for United in *footballing terms, it is still very hard to see how the Glazers will make a return on their investment.
Manchester United is raising £500m through a bond issue | Football | guardian.co.uk
*
Roll up, roll up, who wants to lend to Manchester United for seven years at a fixed rate of about 8.5%? The actual coupon on the £500m bond will be determined by demand, but it would be surprising if the Glazers can't attract funds. The football club made top-line operating profits of £91m last year. Debts totalling more than five times that sum still represent an adventurous leverage ratio but there's a price for everything and 8.5% should be roughly it.
So far, so good. But there are two points to note. First, United will not feel much benefit in terms of interest costs, which last year consumed £42m of that £91m, since the club is already paying 8% or so on bank loans of £509m. Rather the point of the exercise is to extend debt maturities to seven years (instead of five-and-a-half) and to lock in an interest rate. That's sensible if you fear rate hikes.
Second, the bond issue appears designed to clear the way for a *refinancing of the £200m of pay-in-kind, or PIK, notes that are the *responsibility of the Glazers, rather than the club. These are rolling up at 14% a year, which is a pauper's rate. The idea is that *negotiations to repay the PIKs will be easier if the club replaces its bank debt with bonds.
Nice theory, but it's still one hell of a leap to believe there's enough spare cash at United to pass up to the Glazers to pay off the PIKs. Even after five mostly successful years for United in *footballing terms, it is still very hard to see how the Glazers will make a return on their investment.
Manchester United is raising £500m through a bond issue | Football | guardian.co.uk
Ronaldo actually done us a favour. We would have reported a loss of 30 something million without the sale of ronaldo
Well they've not made any money. So far United has cost them an awful lot of money. The only way they can make money is if they manage to increase the value of the club beyond the amount they owe in the debt.
If you buy your house with a mortgage and the amount grows year by year and your house doesn't increase in value at the same rate you end up in negative equity.
Why not? The first tranche were paid off? The bit I don't get is how you can underwrite the bond issue with Man Utd assets which are already pledged against the existing debt? Unless the bond is simply a high-risk securitization of future gate receipts.
Most probably they plan to make money when they sell it sometime in the future, if they manage to survive....
BTw this is the latest from the Financial Times...
PIKing apart the Man Utd refinancing
Posted by Neil Hume on Jan 11 21:38.
You have to look hard to find it, but it’s there in the notes on page 30 of the (printed) prospectus– what appears to be a key reason for Manchester United’s £500m senior notes offering and refinancing.
Emphasis ours…
(1) Cash and liquid resources include cash at bank and in hand and deposits held at call with banks. Of our cash and liquid resources of £116.6 million as at 30 September 2009, as adjusted to give effect to the offering of the Notes and the application of proceeds therefrom, we may, without restriction, make a distribution or loan of up to £70.0 million to our immediate parent company, Red Football Joint Venture Limited, that may, in turn, use the proceeds of that loan for general corporate purposes, including repaying existing indebtedness. See ‘‘Description of the Notes—Certain Covenants—Restricted Payments’’.
In other words, the Glazer family will be able to take £70m out of the club and use it to repay some of the £200m PIK notes they personally used to finance the £780m buyout of the Premier League champions.
The PIKs, which have an eye-watering coupon of 14% that rolls up annually, reside in the Red Football Joint Venture. This sits near the very top of the Manchester United financial structure.
If, as seems likely, the Glazers do that, the effect will be to make Manchester United even more geared that it is now. Cash will be taken out of the club and up-streamed to the Red Football JV, leaving pro forma adjusted net indebtedness much higher than the £466.1m stated in the prospectus.
Pro forma annual interest expense will also be higher than the £46.3m quoted.
Which could mean a smaller transfer budget for Manchester United boss Sir Alex Ferguson
And that’s not good news, unless you are a Manchester City fan of course.
FT Alphaville PIKing apart the Man Utd refinancing
PIKing apart the Man Utd refinancing
Posted by Neil Hume on Jan 11 21:38.
You have to look hard to find it, but it’s there in the notes on page 30 of the (printed) prospectus– what appears to be a key reason for Manchester United’s £500m senior notes offering and refinancing.
Emphasis ours…
(1) Cash and liquid resources include cash at bank and in hand and deposits held at call with banks. Of our cash and liquid resources of £116.6 million as at 30 September 2009, as adjusted to give effect to the offering of the Notes and the application of proceeds therefrom, we may, without restriction, make a distribution or loan of up to £70.0 million to our immediate parent company, Red Football Joint Venture Limited, that may, in turn, use the proceeds of that loan for general corporate purposes, including repaying existing indebtedness. See ‘‘Description of the Notes—Certain Covenants—Restricted Payments’’.
In other words, the Glazer family will be able to take £70m out of the club and use it to repay some of the £200m PIK notes they personally used to finance the £780m buyout of the Premier League champions.
The PIKs, which have an eye-watering coupon of 14% that rolls up annually, reside in the Red Football Joint Venture. This sits near the very top of the Manchester United financial structure.
If, as seems likely, the Glazers do that, the effect will be to make Manchester United even more geared that it is now. Cash will be taken out of the club and up-streamed to the Red Football JV, leaving pro forma adjusted net indebtedness much higher than the £466.1m stated in the prospectus.
Pro forma annual interest expense will also be higher than the £46.3m quoted.
Which could mean a smaller transfer budget for Manchester United boss Sir Alex Ferguson
And that’s not good news, unless you are a Manchester City fan of course.
FT Alphaville PIKing apart the Man Utd refinancing
I agree, the problem being that didnt happen. Rather maybe break even or take a small loss they are prepared to hang in there and gamble that SAF can keep us winning with no budget
..Mission impossible...
More from FT...
Man Utd reveals £35m hedging loss
By Roger Blitz andAnousha Sakoui
Published: January 11 2010 22:11 | Last updated: January 11 2010 22:11
Manchester United revealed it had incurred losses of £35m on derivative trades designed to hedge against rising interest rates, more than twice as much as it spent on an individual player in the last transfer season.
Monday’s announcement came as the Premier League champion team confirmed it was launching an issue of seven-year bonds to raise £500m to restructure its finances and revealed a return to pre-tax profits in 2009
The £80m sale of Cristiano Ronaldo to Real Madrid in summer 2009 helped the club bounce back from a pre-tax loss of £21.4m in 2008 to a £48.2m profit in 2009. The rise came in spite of making net interest payments of £41.9m to service its £500m of senior loans.
It suffered the £35m loss on the derivative hedges against rising interest rates, which people close to the club’s refinancing said had been crystalised by the unwinding of those senior loans. Manchester United has already made provision to reduce that liability by £8m with the remainder set to be amortised over the next six years.
The overall amount compares with the £17m the club is widely reported to have paid for Ecuadorian winger Antonio Valencia last summer.
The new issue of bonds, which are understood to be secured against most of its assets, will replace £400m of senior ranking debt and £100m of second ranking loans.
The bond issue will give the family of Malcolm Glazer, the US sports franchise owner who bought the club in 2005 in a £790m deal, greater flexibility over its finances.
The restructuring will enable the Glazer family to repay so-called payment-in-kind notes – a debt instrument that allows borrowers to roll over cash interest payments – taken out to buy the club. The amount owed under the PIK notes, which carry an interest rate of 14.25 per cent, has risen to £202m.
After the bond issue, the club will have £117m of cash on its balance sheet, of which £70m will be made available to the Glazer family to pay down PIK debt or to be used in the transfer market.
Turnover grew from £256.2m to £278.5m in 2009, with matchday, media and commercial revenues all increasing. Operating profit before depreciation and amortisation rose from £80.4m to £91.3m.
The bond issue is being underwritten by JPMorgan, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and Royal Bank of Scotland. KKR, the private equity fund, is one of the managers of the deal.
FT.com / Companies / Travel & Leisure - Man Utd reveals £35m hedging loss
Does this mean that Fergie will have 47m of cash to spend after the Bond issue?
Man Utd reveals £35m hedging loss
By Roger Blitz andAnousha Sakoui
Published: January 11 2010 22:11 | Last updated: January 11 2010 22:11
Manchester United revealed it had incurred losses of £35m on derivative trades designed to hedge against rising interest rates, more than twice as much as it spent on an individual player in the last transfer season.
Monday’s announcement came as the Premier League champion team confirmed it was launching an issue of seven-year bonds to raise £500m to restructure its finances and revealed a return to pre-tax profits in 2009
The £80m sale of Cristiano Ronaldo to Real Madrid in summer 2009 helped the club bounce back from a pre-tax loss of £21.4m in 2008 to a £48.2m profit in 2009. The rise came in spite of making net interest payments of £41.9m to service its £500m of senior loans.
It suffered the £35m loss on the derivative hedges against rising interest rates, which people close to the club’s refinancing said had been crystalised by the unwinding of those senior loans. Manchester United has already made provision to reduce that liability by £8m with the remainder set to be amortised over the next six years.
The overall amount compares with the £17m the club is widely reported to have paid for Ecuadorian winger Antonio Valencia last summer.
The new issue of bonds, which are understood to be secured against most of its assets, will replace £400m of senior ranking debt and £100m of second ranking loans.
The bond issue will give the family of Malcolm Glazer, the US sports franchise owner who bought the club in 2005 in a £790m deal, greater flexibility over its finances.
The restructuring will enable the Glazer family to repay so-called payment-in-kind notes – a debt instrument that allows borrowers to roll over cash interest payments – taken out to buy the club. The amount owed under the PIK notes, which carry an interest rate of 14.25 per cent, has risen to £202m.
After the bond issue, the club will have £117m of cash on its balance sheet, of which £70m will be made available to the Glazer family to pay down PIK debt or to be used in the transfer market.
Turnover grew from £256.2m to £278.5m in 2009, with matchday, media and commercial revenues all increasing. Operating profit before depreciation and amortisation rose from £80.4m to £91.3m.
The bond issue is being underwritten by JPMorgan, Bank of America Merrill Lynch, Deutsche Bank, Goldman Sachs and Royal Bank of Scotland. KKR, the private equity fund, is one of the managers of the deal.
FT.com / Companies / Travel & Leisure - Man Utd reveals £35m hedging loss
Does this mean that Fergie will have 47m of cash to spend after the Bond issue?
They are taking money out from the club in the form of loans and paying themselves consultancy fees. Was in the paper.
Won't they need that money to keep the club ticking over (wages, running costs etc)?
I had assumed it was the £70m loan which was going to be spent on either paying off the Glazer PIKs or on players.
I hope that these fees were not paid to those that advised the club in losing 35 million in hedging fees....(see Ft.com article)
With the club's latest financial statement one thing is clear, We dont have much money to spend. SAF is looking for a Ronaldo like signing. Somebody who can be a world beater for like 10 million. Even if those players dont make it we can always sell them and make more money. See this trend of unknown signings who've made us money.Manucho is one signing. I am thinking we will have a huge squad with some more unknown players coming in from Europe, Africa who nobody's ever heard of. We will then endorse the Manchester United brand on these players and sell these players on profit.
feck me. Leeds United springs to mind.
Won't they need that money to keep the club ticking over (wages, running costs etc)?
I had assumed it was the £70m loan which was going to be spent on either paying off the Glazer PIKs or on players.
You re probably right.
re: 70 million - it will be very interesting where it will go... ie towards paying off the glazers PIK's or on players
It's an akward situation for them. On one hand putting 70 million in the PIK, will help the debt from balooning. On the other hand, they know that they cannot continue to deprive the club from transfer funds, as this will eventually impact negatively on the club's turnover
Yet another article from ft.com...
This is somewhat a bit more optimistic, claiming that the club has three years “to get themselves sorted out”, although the business is sound.
It also mentions the new UEFA rules which will make it more difficult for United to get a loan of 75 million to be used for transfer funds and also that the Glazers might get a nice surprise if the bond offer is oversubscribed.
This is somewhat a bit more optimistic, claiming that the club has three years “to get themselves sorted out”, although the business is sound.
It also mentions the new UEFA rules which will make it more difficult for United to get a loan of 75 million to be used for transfer funds and also that the Glazers might get a nice surprise if the bond offer is oversubscribed.
I'm still trying to get my head round this, there's so much information. But the stuff that's coming out is very bad reading.
So they are basically looking to use £70m of the club's finances to pay off a share of their own personal debt? Have I got that right?
I'm still trying to get my head round this, there's so much information. But the stuff that's coming out is very bad reading.
So they are basically looking to use £70m of the club's finances to pay off a share of their own personal debt? Have I got that right?
That's certainly how it reads to me.
There is a lot of more detailed info slowly coming out - people will now have seen the bond prospectus and will be digesting the small print with details slowly being released into the public domain - over the next few days we should start to get a real picture what is really going on at the moment (and maybe what has been going on in the past).
Keep up the good work with posting info dev1l !
Keep up the good work with posting info dev1l !
I'm still trying to get my head round this, there's so much information. But the stuff that's coming out is very bad reading.
So they are basically looking to use £70m of the club's finances to pay off a share of their own personal debt? Have I got that right?
It has always been my understanding that the PIK's were secured on the glazer family and not on our club. However with the new info i agree in your assessment in that it looks like the gingeminges are trying to directly use united cashflows/united borrowing capability to pay down their personal PIK loans.
perhaps one of the wallstreet lads on here can get a hold of the full bond prospectus and post it on here?
You can get it if you've got an FT login.
Loads of horrible little bits coming out - sale and leaseback of Carrington amongst them.
And a little window into our transfer policy too -
There you go. http://www.joinmust.org/docs/mufc-notes.pdf
What have we done to deserve this?
(Note: Liverpool, Arsenel, City and Leeds fans should not reply).
(Note: Liverpool, Arsenel, City and Leeds fans should not reply).
cheers mate. i need a stiff drink before i dive into this because right now i am irate as feck.
hopefully after this, the ostrich crowd on here will finally see the light.
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