ALL issues relating to the bond issue and club finances

[ciderman9000000]

Eh?

Clearly a huge amount of the club's income goes to pay interest payments on the debt.

The matchgoing fans are paying for that. That's what the Glazers told the banks would happen back in 2005.

No, players' annual wages amount to £130m, matchday income is £110m per annum.

Every £1 fans spend on tickets (plus a further 15p per pound spent invested by the Glazers) goes directly towards paying the players wages; see above statistic. So what are you moaning about?

 

[ciderman9000000]

Well duh!

Profits had to be increased for their creditors to be happy lending them that amount of money (let's not forget that most banks wouldn't touch them or their plan with a barge-pole, hence they ended up paying such an extraordinary amount of interest). In order to do that they made promises about increasing income (including the 50% ticket price rise in 5 years) and obviously curtailing expenditure.

If you, roodboy and eaststand want to continue to pretend that ticket price increases and a lack of transfer spending post-2005 are purely coincidental to this, be my guest.

Link please.

 

[theimperialinn]

After 76 pages of bitch slapping I summarise as follows:

The revenue streams at the club, although immoral in fans eye's, are performing extremely well.

The simple crux of the matter is far too much money, for a football club anyhow, is being used to service the Glazers finance and supporters loyalty is being manipulated to help service said finance.

Shutters .....

 

[GCHQ]

Well duh!

Profits had to be increased for their creditors to be happy lending them that amount of money (let's not forget that most banks wouldn't touch them or their plan with a barge-pole, hence they ended up paying such an extraordinary amount of interest). In order to do that they made promises about increasing income (including the 50% ticket price rise in 5 years) and obviously curtailing expenditure.

If you, roodboy and eaststand want to continue to pretend that ticket price increases and a lack of transfer spending post-2005 are purely coincidental to this, be my guest.

Again, bollocks. The average annual net cash spend on players in the five years prior to the takeover was £18m. The business plan allowed for £25m to be spent every year. The huge fee that the club received for Ronaldo has quite obviously significantly reduced the average net spend figure under the Glazers. If you don't accept that then what you're basically saying is that the club should have spent a net amount of £105m in the 12 months after Ronaldo was sold. And that would make you an idiot.

 

[TheMancRedDevil]

If you, roodboy and eaststand want to continue to pretend that ticket price increases and a lack of transfer spending post-2005 are purely coincidental to this, be my guest.

And if you want to pretend that player wages going up by over 50% during the same period has nothing to do with it either then be my guest.

No one is denying that a certain % of what matchgoers pay goes towards the debt but I think it's just plain wrong to say that the matchgoers are paying for the debts in their entirety and anyone saying that is simply trying to stir up anger amongst the matchgoing support which doesn't help the situation at all.

 

[ciderman9000000]

I think Ralphie's posting libelous accusations against the Glazers again. GCHQ, get them on the blower, someone needs to face legal action over this.

 

[GCHQ]

I think Ralphie's posting libelous accusations against the Glazers again. GCHQ, get them on the blower, someone needs to face legal action over this.

Ralphie is still refusing to answer whether he renewed his season tickets btw.

Please Ralphie, please tell us.

 

[theimperialinn]

After 76 pages of bitch slapping I summarise as follows:

The revenue streams at the club, although immoral in fans eye's, are performing extremely well.

The simple crux of the matter is far too much money, for a football club anyhow, is being used to service the Glazers finance and supporters loyalty is being manipulated to help service said finance.

Shutters .....

This .....

 

[ciderman9000000]

Ralphie is still refusing to answer whether he renewed his season tickets btw.

Please Ralphie, please tell us.

Get someone to ask him over at RI.

If he refuses to answer then he'll be banned for not revealing personal details on the internet, and if he tells the truth and answers that he did renew then he'll be banned for holding opinions that differ from those of the majority. Then he'll come back here, crying, only to find a pm informing him that he's being sued by MUST for not following anders' advice and also being sued by the Glazers for making libelous accusations against them.

Bye-bye, Ralphie

 

[GCHQ]

Get someone to ask him over at RI.

If he refuses to answer then he'll be banned for not revealing personal details on the internet, and if he tells the truth and answers that he did renew then he'll be banned for holding opinions that differ from those of the majority. Then he'll come back here, crying, only to find a pm informing him that he's being sued by MUST for not following anders' advice and also being sued by the Glazers for making libelous accusations against them.

Bye-bye, Ralphie

Very good Ciderman.

 

[Rood]

Profits had to be increased for their creditors to be happy lending them that amount of money (let's not forget that most banks wouldn't touch them or their plan with a barge-pole, hence they ended up paying such an extraordinary amount of interest). In order to do that they made promises about increasing income (including the 50% ticket price rise in 5 years) and obviously curtailing expenditure.

If you, roodboy and eaststand want to continue to pretend that ticket price increases and a lack of transfer spending post-2005 are purely coincidental to this, be my guest.

After all this time I can't believe you are still banging on about the same crap - you are still stuck on the soundbites from MUST circa. 2005, I would've thought you would at least learnt the new ones!

There were no promises for 'curtailing expenditure' as you state - you just made that up - on the contrary expenditure has increased massively with huge rises in players wages in particular.

and who are these 'roodboy and eaststand' fellows you mention? Never heard of them

 

[peterstorey]

After 76 pages of bitch slapping I summarise as follows:

The revenue streams at the club, although immoral in fans eyes, are performing extremely well.

The simple crux of the matter is far too much money, for a football club anyhow, is being used to service the Glazer's finance and supporters' loyalty is being manipulated to help service said finance.

Shutters .....

Excellent post... until the 31 August report reveals how much has been siphoned off to pay down the PIKS...

 

[Rood]

you havent missed much imperial - although we do have spreadsheets nowadays!

 

[TheMancRedDevil]

Excellent post... until the 31 August report reveals how much has been siphoned off to pay down the PIKS...

It has got to the stage where even us "pro-Glazers" (or whatever the hell we are) will actually be pissed off if they don't show £95million taken and used to pay off the PIKs.

 

[Rood]

I'm saying that the this crap about the great bond, bringing "stability", "certainty", "getting rid of all those horrid bank debt repayments", "not costing much more than the bank debt anyway" etc, etc is a complete load of bollocks...

Doesn't seem like bollocks to me - let's have a look at one of your famous spreadsheets ...

Firstly, it is clear that the bond brings 'stability' and 'certainty' because we it costs us exactly the same amount (£44.5m) every year for 6 years, whereas 'Total Debt Service' due on the bank debt changes every year and actually increased after 3 years. Now some of that bank debt might have been refinanced but that bring uncertainty and risk of trying to get whatever deal is available at the time.

Secondly, it is clear that for the first 3 years, from 2010 to 2013, the bond is "not costing much more than the bank debt anyway".

Finally, the bond actually costs the club a lot less from now until 2016 mainly because the bond helps by "getting rid of all those horrid bank debt repayments". Effectively we have changed from a mortgage requiring interest and capital repayments to an 'interest only' deal, thus saving a huge amount of cash over the next few years.
So according to your own figures, the bond will cost the club around £265m over the next 6 years, whereas the bank debt would cost around £500m over the same period - that is almost double!
Plus there is the added benefit of being able to deal with the PIK, which is was the main area of worry for the club - this all seems like positive news to me so I am unsure why you seem to paint it all in a bad light?

 

[peterstorey]

you havent missed much imperial - although we do have spreadsheets nowadays!

Is that supposed to be a good thing? Too many cnuts use a facility with Excel to mask any connexion with logic and the real world.

 

[Rood]

Is that supposed to be a good thing? Too many cnuts use a facility with Excel to mask any connexion with logic and the real world.

No - I fecking hate spreadsheets!
Have avoided reading any of them so far as there didn't seem to much of importance in them. However I noticed a few things in the latest one which I felt needed to be mentioned.

 

[TheMancRedDevil]

No - I fecking hate spreadsheets!
Have avoided reading any of them so far as there didn't seem to much of importance in them. However I noticed a few things in the latest one which I felt needed to be mentioned.

I hate staring at them, they make me want to die.

What I hate most of all about Anders' spreadsheets projecting into the future by seven years is the fact that they don't have an "IN" column. I'm old fashioned in my ways and I like to see both sides of the story.

 

[robertsoncrusoe]

I said in terms of cash available for wages and transfer spending. Do you really think the old PLC board would have taken on debt to finance spending on wages and transfer fees? Would they feck.

I agree- they would probably have just spent the money that is being pissed away now on interest payments.

 

[robertsoncrusoe]

The Glazers didn't take on debt to spend £57.5m net over five years! There you go trying to twist things round again. You're just talking bollocks. Or is this you trying to be funny again?

So what did they take it on for?

 

[robertsoncrusoe]

Doesn't seem like bollocks to me - let's have a look at one of your famous spreadsheets ...

Firstly, it is clear that the bond brings 'stability' and 'certainty' because we it costs us exactly the same amount (£44.5m) every year for 6 years, whereas 'Total Debt Service' due on the bank debt changes every year and actually increased after 3 years. Now some of that bank debt might have been refinanced but that bring uncertainty and risk of trying to get whatever deal is available at the time.

Secondly, it is clear that for the first 3 years, from 2010 to 2013, the bond is "not costing much more than the bank debt anyway".

Finally, the bond actually costs the club a lot less from now until 2016 mainly because the bond helps by "getting rid of all those horrid bank debt repayments". Effectively we have changed from a mortgage requiring interest and capital repayments to an 'interest only' deal, thus saving a huge amount of cash over the next few years.
So according to your own figures, the bond will cost the club around £265m over the next 6 years, whereas the bank debt would cost around £500m over the same period - that is almost double!
Plus there is the added benefit of being able to deal with the PIK, which is was the main area of worry for the club - this all seems like positive news to me so I am unsure why you seem to paint it all in a bad light?

I hope someone has taken away your credit cards!

 

[Redjazz]

Doesn't seem like bollocks to me - let's have a look at one of your famous spreadsheets ...

Firstly, it is clear that the bond brings 'stability' and 'certainty' because we it costs us exactly the same amount (£44.5m) every year for 6 years, whereas 'Total Debt Service' due on the bank debt changes every year and actually increased after 3 years. Now some of that bank debt might have been refinanced but that bring uncertainty and risk of trying to get whatever deal is available at the time.




Secondly, it is clear that for the first 3 years, from 2010 to 2013, the bond is "not costing much more than the bank debt anyway".

Finally, the bond actually costs the club a lot less from now until 2016 mainly because the bond helps by "getting rid of all those horrid bank debt repayments".

So according to your own figures, the bond will cost the club £267m over the next 6 years, whereas the bank debt would cost £505.4m over the same period - that is almost double!
Plus there is the added benefit of being able to deal with the PIK, which is was the main area of worry for the club - this all seems like positive news to me so I am unsure why you seem to paint it all in a bad light?

Sorry, you are missing the point. Interest rates are swap fixed and thus as 'certain' as bond interest. Your interpretation of 'stability' is curious; the stream of steady outgo under the bond merely reflects the interest only nature of the bond. Bank loan interest is fixed but flexs to accommodate the repayment schedule; you will notice how interest under the old bank loans falls away dramatically in the latter years as scheduled repayments are made.
It is important to point out that the sceduled repayments aren't fixed. The senior facilities could have been deleveraged at the borrower's discretion. For instance, the 'ringfenced' Ronaldo money of 75m could have been used to reduce the amount outstanding under the bank loans. Future annual dividends (those earmarked for the PIK) could have been used to further reduce the amount outstanding. AndersRed's other spreadsheet is more pertinent; it neatly demonstrates how all the club's cash that will be used to address the PIK could instead have been used to reduce debt at the club level with a massive interest saving as well. Under reasonable assumprions for future EBITDA growth, the amount to be refinanced by 2016 under the bank loan scenario is estimated to be about 160m; that would be easier and cheaper to refinance than the 500+m bond.

Secondly, it is clear that for the first 3 years, from 2010 to 2013, the bond is "not costing much more than the bank debt anyway".

Again, it is cheaper and the bank 'debt service' includes 50m in capital repayments! By the end of 2012/2013, debt at the RF level would have been 460m as opposed to 520m under the bond. The more capital repaid, the smaller the debt, the smaller the risk for RF and the smaller the future interest bill.

Effectively we have changed from a mortgage requiring interest and capital repayments to an 'interest only' deal, thus saving a huge amount of cash over the next few years.

A completely false analogy. The bond is interest only at the RF level but is designed to meet capital (and interest) repayments at the RFJV level. Cash interest goes out the front door of the club to meet its own debt obligations. Out the back door goes the 'Ronaldo money', the 'anytime' 25m exceptional dividend, the various fees, and the contingent annual dividends to meet the Glazer's personal obligation-the PIK. How is a huge amount of cash being saved?

So according to your own figures, the bond will cost the club £267m over the next 6 years, whereas the bank debt would cost £505.4m over the same period - that is almost double!

Comparatively, the bond cost will be 267m plus whatever capital and interest combo it takes to eliminate the PIK. The combined cost would likely exceed the bank debt cost. The bank debt senario would leave the club in a far healthier position debt wise: 160m Vs 520m. Refinancing of 160m would attract much better terms than a bond refinancing leaving the club with an interest bill much less than 30% of the bond interest (roughly 10m against bond interest of, say, 45m).

Plus there is the added benefit of being able to deal with the PIK, which is was the main area of worry for the club - this all seems like positive news to me so I am unsure why you seem to paint it all in a bad light?

Hmmmm!!! Just how and why is the 'PIK' the main area of worry for the club? By club are you referring to the fans, the players, or the Glazers? You are right in a way, of course; while the Glazers extract enormous amounts of cash from the club to pay back their own personal debt, fans should be concerned but it is percisely because the Glazers are in the process of extracting huge amounts of cash. The PIKs have nothing to do with the club or the fans. Aren't the PIKs supposed to be non-recourse to the club? Why should you be concerned if the Glazers fail to repay their own debt? Removing vast amounts of money from the club, now and in the future, increases risk at the club level but using those proceeds to pay down the PIKs reduces risk at the RFJV (Glazer) level. It's a complete contradiction to say that both the club (assuming the club foots the bill) and the Glazers benefit from elimination of the PIKs. The only PIK-related 'positive news' I can imagine is the Glazers using other means to deal with the PIK. Wouldn't you be more inclined to paint such a development in a 'good' light?

 

[fredthered]

Finally, the bond actually costs the club a lot less from now until 2016 mainly because the bond helps by "getting rid of all those horrid bank debt repayments". Effectively we have changed from a mortgage requiring interest and capital repayments to an 'interest only' deal, thus saving a huge amount of cash over the next few years.

If brains were dynamite you wouldnt have enough to blow your nose with.

Its not saving a fecking penny you halfwit, if anything it costs more in the long term.

Thats like suggesting if you only pay the minimum on your credit card each month, because you arent paying out so much, you are saving money.

You conveniently seem to have forgotten that if we pay the interest only, then they still have to find the money to repay the actual money back at the end of the period.

Wheres that money going to come from.. Oh I know.. they can save what they haven't had to spend out repaying the debt, leave it in the bank and repay it at the end....Hopefully by the year 2043 they will have enough to cover it.

 

[Commadus]

I said in terms of cash available for wages and transfer spending. Do you really think the old PLC board would have taken on debt to finance spending on wages and transfer fees? Would they feck.

Why would they because they could generate enough income internally to pay for transfers and wages - so that is a bad position to be in then?

As to Rood- mate you talk enough rubbish and your grasp of economics was so basic it was laughable.

 

[fredthered]

Ralphie is still refusing to answer whether he renewed his season tickets btw.

Please Ralphie, please tell us.

He has already answered it.

And you are the last person to sit there demanding people reveal details about themselves.

It was for that very reason you were hoofed out of RI.

 

[Commadus]

Rood + GCHQ look at the cash position so capital repayments + interest > interest payments alone. However the benefit is seen on the balance sheet BUT you forget the first rule of Bullshit club - there is no balance sheet,

 

[UnitedRoadRed]

No, players' annual wages amount to £130m, matchday income is £110m per annum.

Every £1 fans spend on tickets (plus a further 15p per pound spent invested by the Glazers) goes directly towards paying the players wages; see above statistic. So what are you moaning about?

I'm sorry, please can you specify exactly how much money the Glazers have invested in the club? They've borrowed every fecking penny to pay for it. The supporters, sponsors, TV companies and players (via success money) are putting the money into the club; the parasites are taking money out of it.

 

[Rood]

Redjazz: As far as I am concerned this is a very simple discussion which compares how much it will cost to service the new bond debt compared to how much it would have cost under the previous senior debt structure. Andersred has kindly provided the exact numbers we need and anyone can look at the two 'Debt Service' columns to see the direct comparison on a year by year basis.

To me the conclusions are pretty clear and you do not need an accounting qualification to see that the club would need to find a lot more cash in the next few years if the old bank debt was still in place. In the 2 year period from 2013 alone, the club would need to come up with almost £300m in repayments which would obviously put a serious strain on the club or bring the uncertainty of refinance at that time.

I also believe my comparison of moving from a standard interest and captial repayment mortgage to an interest only mortgage is perfectly valid and again explains in simple terms what is going on here.
Of course, I understand that some people might think we are better off going for the repayment mortgage because interest only leaves the initial capital to be paid off at some future date - but that of course has been the Glazer Plan the whole time, they do not aim to repay the senior debt at all and will just keep refinancing it. This is the thing that many people just cannot get their head around but it is a standard leverage finance play and I guess the average fan does not understand that kind of thing.

Unfortunately, it seems you are trying to overcomplicate a very simple issue by throwing various other factors into the mix. Most notably the PIK, quite obviously the PIK is there and would need to be repaid under either scenario so I dont really see things in the way you do.

Hmmmm!!! Just how and why is the 'PIK' the main area of worry for the club? By club are you referring to the fans, the players, or the Glazers? You are right in a way, of course; while the Glazers extract enormous amounts of cash from the club to pay back their own personal debt, fans should be concerned but it is percisely because the Glazers are in the process of extracting huge amounts of cash. The PIKs have nothing to do with the club or the fans. Aren't the PIKs supposed to be non-recourse to the club? Why should you be concerned if the Glazers fail to repay their own debt? Removing vast amounts of money from the club, now and in the future, increases risk at the club level but using those proceeds to pay down the PIKs reduces risk at the RFJV (Glazer) level. It's a complete contradiction to say that both the club (assuming the club foots the bill) and the Glazers benefit from elimination of the PIKs. The only PIK-related 'positive news' I can imagine is the Glazers using other means to deal with the PIK. Wouldn't you be more inclined to paint such a development in a 'good' light?

Now I realise you are a newbie around here so are probably not upto speed on our recent discussions about the bond, PIK etc. Firstly, just to clarify when I say 'the club' in this context I am primarily talking about the club as a business. In this particular thread I tend to try and put forward nonemotional business analysis of our finances - I prefer to keep that completely seperate to more emotional matters which we as fans of the club might be interested in (you will see me comment on these in other threads).

Secondly, the general consensus around here has been to accept that the PIK is part of the club debt - after all the media, MUST etc have been including it whenever our total debt levels are ever discussed and this is exactly why we have constantly seen stories about our total debt growing year on year since the Glazers arrived.
That being the case, the growing nature of the PIK loan has always been the major issue for both fans and the business alike. Technically, the PIK is non-recourse and ultimately if the Glazers fail to pay it then they, and not the club, lose out as the debt would convert to equity and dilute their own shareholding. However, this does bring a threat to us as fans as we have no idea who the new shareholders would be or what their agenda is.

Of course, if the Glazers used money from their own pockets to pay off the PIK I would be delighted, but it is pretty clear that the Glazers have never planned to inject their own personal funds into the club.
As that is never going to happen, I do see any move to pay off the PIK, and as a result reduce the overall debt levels of the club, as a positive move for everyone involved with the club. Of course, once the PIK is dealt with we may in the future see some kind of attempt to start repaying the senior debt but that remains to be seen.

 

[Rood]

As to Rood- mate you talk enough rubbish and your grasp of economics was so basic it was laughable.

 

[fredthered]

Secondly, the general consensus around here has been to accept that the PIK is part of the club debt - after all the media, MUST etc have been including it whenever our total debt levels are ever discussed and this is exactly why we have constantly seen stories about our total debt growing year on year since the Glazers arrived.
That being the case, the growing nature of the PIK loan has always been the major issue for both fans and the business alike. Technically, the PIK is non-recourse and ultimately if the Glazers fail to pay it then they, and not the club, lose out as the debt would convert to equity and dilute their own shareholding. However, this does bring a threat to us as fans as we have no idea who the new shareholders would be or what their agenda is.

Of course, if the Glazers used money from their own pockets to pay off the PIK I would be delighted, but it is pretty clear that the Glazers have never planned to inject their own personal funds into the club.
As that is never going to happen, I do see any move to pay off the PIK and as a result reduce the overall debt levels of the club as a positive move for everyone involved with the club.

feck "technically"

Get into the real world.

The more the PIKs increase, the more the club has to pay, because its the club that ultimately will be paying them.

Now your argument is simple. ( like I'd expect anything else ). You say that if we can get the PIKs paid off quickly then the club wont have to pay off so much in the long term.

Great. Rather than deal with the problem, just run a damage limitation exercise and bend over and take it up the arse.

Lets compare that to our thinking.

Stop them paying back the PIKs from the clubs money. After all, as you say, its not "technically" our problem.

The banks then walk in and take equity in the club. What do you suppose the first thing the banks will do with it ? They will put those shares on the market, which then means Glazer loses his sole ownership he cannot stop other people taking shares in the club. The banks can sell those shares to who the hell they like.

You seriously believe that Glazer will have spent all that time and money taking United into sole ownership to let someone walk in and just take chunks of his club.. Not a cat in hells chance. He either wants all of Untied, or he wants none of it. He will sell the shares as quick as you can say god made little apples.

Giving Glazer what he wants just means mountains more debts for god knows how long, money being taken out to bail out their other ventures whenever they feel like it. Prices ever increasing. More hostility from the supporters.

Its not the debt we need to be worried about getting rid of, its the twat that brought the debt in the first place.

 

[Rood]

You conveniently seem to have forgotten that if we pay the interest only, then they still have to find the money to repay the actual money back at the end of the period.

Wheres that money going to come from.. Oh I know.. they can save what they haven't had to spend out repaying the debt, leave it in the bank and repay it at the end....Hopefully by the year 2043 they will have enough to cover it.

That is your problem fred - you are too thick to understand what is going on here.
They don't aim to repay the senior debt at all, they just aim to service it and then refinance - it is all about maximising cash flow in the meantime, that is what leverage finance is all about but then I wouldn't expect you to understand that kind of thing.
Let's not forget that even the mythical Red Knights have said that they would keep the bond in place so it is pretty clear that with or without the Glazers, the £500m bond debt is here to stay.

 

[fredthered]

That is your problem fred - you are too thick to understand what is going on here.
They don't aim to repay the senior debt at all, they just aim to service it and then refinance - it is all about maximising cash flow, that is what leverage finance is all about but then I wouldn't expect you to understand that kind of thing.
Let's not forget that even the mythical Red Knights have said that they would keep the bond in place so it is pretty clear that with or without the Glazers, the £500m bond debt is here to stay.

So that money will never be repaid, and forever and a day United will keep paying out of its bank, millions every year to service a debt that never goes away...

And you don't see a problem with that ?

I fully understand their plan. And its their plans that are what I am so against.

You may be happy for United to be paying millions every year fof absolutely feck all, other than keeping the Glazers sat as owners of UNited, but I and thousands of others sure as hell are not...

 

[UnitedRoadRed]

That is your problem fred - you are too thick to understand what is going on here.
They don't aim to repay the senior debt at all, they just aim to service it and then refinance - it is all about maximising cash flow, that is what leverage finance is all about but then I wouldn't expect you to understand that kind of thing.
Let's not forget that even the mythical Red Knights have said that they would keep the bond in place so it is pretty clear that with or without the Glazers, the £500m bond debt is here to stay.

Absolute bollocks. That is what milking an asset is about.

The PIKs have to be paid asap or the creditors will come for the club. The PIKs are secured against the assets of RFJV - more precisely the entity's 100% shareholding in Manchester United Football Club. It's in their interest to clear the PIKs before they sprial even more out of control.

I'd say it's also in their interest to clear the senior debt in the short to medium term - they would then be able to take money out of the club at a rate that they could choose.

 

[Commadus]

That is your problem fred - you are too thick to understand what is going on here.
They don't aim to repay the senior debt at all, they just aim to service it and then refinance - it is all about maximising cash flow, that is what leverage finance is all about but then I wouldn't expect you to understand that kind of thing.
Let's not forget that even the mythical Red Knights have said that they would keep the bond in place so it is pretty clear that with or without the Glazers, the £500m bond debt is here to stay.

Yep and it's why its a crock of shit - I posted a link about the long term performance of companies bought out through highly leveraged structures and it wasn't pretty.

Yes the Glazers are not interested in repaying the bond debt as they are more interested in clearing the PIK debt.

In the end all these millions have gone from the club to pay fees and interest and not one penny has benefited the club.

 

[ciderman9000000]

So that money will never be repaid, and forever and a day United will keep paying out of its bank, millions every year to service a debt that never goes away...

And you don't see a problem with that ?

I fully understand their plan. And its their plans that are what I am so against.

You may be happy for United to be paying millions every year fof absolutely feck all, other than keeping the Glazers sat as owners of UNited, but I and thousands of others sure as hell are not...

Who cares? As long as the team is looked after, which it is, and ticket prices remain reasonable, which they are, it's none of our business what the Glazers decide to spend the rest of the money on!

 

[didsbury1982]

I posted a link about the long term performance of companies bought out through highly leveraged structures and it wasn't pretty.

Could you post that link again? Wouldn't mind a read.

 

[Commadus]

Could you post that link again? Wouldn't mind a read.

Aghh

Heres a quick link - not the one I posted but simple indicator of the industry.

The Disastrous Performance Of Private Equity: Of The Top 10 LBOs, 6 Are In Distress, 4 Have Defaulted | zero hedge

Man will try search for that link.

 

[Rood]

So that money will never be repaid, and forever and a day United will keep paying out of its bank, millions every year to service a debt that never goes away...

And you don't see a problem with that ?

I fully understand their plan. And its their plans that are what I am so against.

You may be happy for United to be paying millions every year fof absolutely feck all, other than keeping the Glazers sat as owners of UNited, but I and thousands of others sure as hell are not...

Don't be a dickhead Fred - I've said on many occasions that I was initially against the Glazers taking over and would have prefered if we stayed a PLC - you know that full well.

I have also said that while I don't think the Glazers are anywhere near as bad for the club as you believe, that I do recognise that things could be better. But I am realist rather than an idealist.
However, if I see a viable alternate option that i think would be better than the current owners then I will support it, but I have not yet seen one.

The PIKs have to be paid asap or the creditors will come for the club. The PIKs are secured against the assets of RFJV - more precisely the entity's 100% shareholding in Manchester United Football Club. It's in their interest to clear the PIKs before they sprial even more out of control.

I'd say it's also in their interest to clear the senior debt in the short to medium term - they would then be able to take money out of the club at a rate that they could choose.

Did you read my posts? I've already said all this already - good to know you agree with me anyway.

Yep and it's why its a crock of shit - I posted a link about the long term performance of companies bought out through highly leveraged structures and it wasn't pretty.

Just for the record, I am not arguing that leverage structures are a good thing for football or the club. I am just explaing the realities of our current financial situation that many people dont seem to understand.

 

[Commadus]

Just for the record, I am not arguing that leverage structures are a good thing for football or the club. I am just explaing the realities of our current financial situation that many people dont seem to understand.

So you don't believe in these LBO but you support the Glazers LBO or they way they are doing it?

 

[TheMancRedDevil]

What people have to accept* are a few basic truths about the situation:-

1) Manchester United is a business as well as a sporting institution.

2) The Glazers bought it five years ago and are now the owners.

3) As the owners, they are entitled to use the money it makes in any way they see fit. Even the money us fans hand over to them.

4) Once we give them our money, it ceases to be "our" money or "fans' money". It is their money.

5) The club makes money from many different revenue streams (of which matchday revenue is just one). All of this money technically belongs to the owners.

6) As fans we have no right to say how that money is used.

Now, already I can hear people screaming all kinds of stuff in their heads and I probably know everything that you are thinking because I have probably thought it all before.

Basically though, the above is the reality of the situation.

Now, if so much money comes into the club and it is the Glazers' business model to use some of that money to pay interest bills then that is their choice. It doesn't matter whether we like it or not. That is the way it is.

They have no intention of paying off the main £500million debt and they will use £45million of whatever the club makes each year to pay the interest on the Bond. Again, it doesn't matter whether we like it or not. That's the way it is and that's the way it is going to remain for as long as the Glazers are in charge. If they own the club for the next 20 years then, yes, we are looking at perhaps £1billion "wasted" in interest payments.

However, what you have to always bear in mind is that during that time, it is not completely unrealistic to suggest that the club could have brought in perhaps £10billion+ in revenues and £45million in 20 years' time will not be worth the same kind of money it is worth today and neither will £500million.

The PIK debt is the Glazers' debt but it is continually spoken about as our debt (if ever I try to say the club is £500million in debt, I am usually pulled up pretty quick and told that there's £200+million in PIKs to add to it!). It has implications for us because, as Rood said, if the club gets taken from the Glazers as a result of non-payment of the PIKs then we're at the mercy of the banks and god knows what kind of owners we could end up with. I don't believe it is true to say, "They couldn't be any worse" because I believe they could be.

This being the case then we have to accept* that the Glazers are entitled to their dividends each year and whether they choose to spend those dividends on a mansion, a yacht or on their personal debts is none of our business any more than it is our business what Wayne Rooney spends his salary on.

If all this sounds like I am happy to watch the Glazers use money coming into the club on interest repayments well I'm not "happy" about it but I refuse to lose sleep over it and I refuse to get angry about it. I have just come to accept it.

* When I say "What people have to accept" I obviously don't expect everyone to feel the same and some people will never accept it. However, I reconcile it in my own mind like this:-

The money that we pay as fans on matchdays goes directly to paying the players' wages. This is supplemented by prize money from competitions (which would make sense because the better the players do, the further we advance in competitions and their bonuses kick in).

Commercial revenues go towards paying off the interest payments and the Glazers continue to work in this area in order to generate more money making the net effect of their ownership less of a negative.

Media revenues go towards paying for other costs incurred by "the business" (transfers, the electric bill etc).

It's a very basic way of looking at it but it fits into my simple little brain quite nicely.

The alternative is to not accept the situation and to imagine that every penny you spend on the club (shirts, tickets merchandise etc) goes straight down a debt black hole but thinking this way will make you angry and resentful. You will stop enjoying the football experience, you will develop an aneurism and you will die... or something.