Can someone please explain how are we ever going to pay the debt off? I'm not clued up with all this stuff but with PSR etc are our 2 owners allowed to just pay some off if they wanted to? Because I can't see how we can invest in everything we need to when we're paying 50 million or whatever it is per year for that.
The long term debt (roughly 500m) will be need to be refinanced in the next few years. Realistically we will carry it indefinitely though the need for new debt (for say a stadium) might require a different approach. It is a hindrance cash wise and wrt the profitability tests for sure. The 2 principal owners could pay it back but we are a plc with multiple owners so no one owner is going to charitably pay down the debt (and thus benefit the non donating parties). The club could issue new shares and use the proceeds to pay down the existing long term debt (and that would be akin to all shareholders agreeing to paying down the debt), but investment wise that wouldn't make much sense at this time.
We are a for profit plc. The goal is to be self financing and provide shareholders with a return. In other words, for INEOS and the Glazers, we have to be more profitable than what PSR\FPP requires. And the club will have to pay for its own stadium (with likely more debt).
Folks on here are a little too obsessed with PSR/ FFP. We are compliant and probably have some room to spend more this Jan and still be compliant. Thing is, what you can do in theory doesn't stack up in reality.
Expenses that can be ignored in the profitability testing have to be paid in real life and we don't get to ignore what happened in the distant past (FPP only looks back 3 years). Our current cash position is a reflection of decisions, good and bad, since, well, forever. FPP and co overstate profitability and cash availability. A club that just makes break even on the profitability tests would require regular investment to keep afloat. A club working to the permissible loss limit would require even more. Our current owners are not the type to prop up the club like that. They want the club to be truly profitable and if the club is truly profitable then compliance isn't an issue.
So, a club can be compliant and have the room to spend more (according to the tests) but not have the capacity to do so because of its actual cash position. And I reckon this is where we are at.
If the club stopped buying (and selling) players for 3 year, it would still have an average net spend of 100+m a year for the next 3 years (as a result of payments due to other clubs for players already acquired). All else being equal, expected cash profits over the next 3 years would just about cover it and clear some of the credit card debt (latest figure of 230m). Now, obviously that's not a realistic proposition, but it illustrates the bind we're in cash wise. It's hard to finagle a budget for additional players when 3 to 4 years worth of budgets remains outstanding. At some stage, unless you're in the excavation business, you have to stop digging.
The deal that brought INEOS to the club was pretty miserly for the club. 200m sterling to the club wasn't nearly enough and of course an equivalent amount was spend on supporting a manager they didn't trust and subsequently fired. A woeful start for them and not entirely encouraging for the rest of us. That deal also meant that cost cutting was inevitable and indeed was probably priority number one on their agenda .
Financially though the situation is salvageable. We are high earners, but we can't continue to be shopaholic high earners. And we can't do all the things we need to do at once. A new stadium will cost but ultimately it will be self financing. There are also a lot of "levers" (even more than Barca) we can pull to help meet the initial costs of the build.
