How bad is it, really? (Financial thread)

[lsd]

I think it's point two.

There's no point signing anyone in January because the league is effectively a write off. We aren't making up a 14+ points gap on any of the current top five so the only chance of European football we have is winning the Europa or FA cup.

Surely to have a better chance of winning those cups especially the Europa we need to be looking at signing players

 

[PizzaPlanet]

What I'd love to be able to understand is how Chelsea has been able to spend close to a billion on players during the last couple of years alone. What happened to the money that club owed to Abramovich? If the debt was "written off", what's stopping every other owner (including ours) from loaning their club a couple hundred million, and write the debt off in a similar fashion? I understand there's been a change of ownership, but surely that alone shouldn't reset all ffp requirements?

 

[Jezpeza]

What I'd love to be able to understand is how Chelsea has been able to spend close to a billion on players during the last couple of years alone. What happened to the money that club owed to Abramovich? If the debt was "written off", what's stopping every other owner (including ours) from loaning their club a couple hundred million, and write the debt off in a similar fashion? I understand there's been a change of ownership, but surely that alone shouldn't reset all ffp requirements?

Dont know if the Russian sanctions came into it to allow the takeover to happen quickly and get him out of the business quickly.

With regards their spending, they have sold a significant amount of players and also they were doing very long contracts. A £100m player amortised across 6,7,8 years suddenly doesnt add much to the PSR sheet. Think they changed the rules on that.

PSR is stupid anyway. We saw clubs who were about to fall foul of it swapping academy players amongst themselves at ludicrously inflated prices just before the deadline. It isnt stopping the big clubs outspending the smaller clubs. Dont know what its meant to achieve.

 

[Tallis]

What I'd love to be able to understand is how Chelsea has been able to spend close to a billion on players during the last couple of years alone. What happened to the money that club owed to Abramovich? If the debt was "written off", what's stopping every other owner (including ours) from loaning their club a couple hundred million, and write the debt off in a similar fashion? I understand there's been a change of ownership, but surely that alone shouldn't reset all ffp requirements?

Chelsea have been selling 100-150m of pure profit players every season to balance out the books. Mount, Gallagher, Hall, Maatsen, Hutchinson etc. They have also been massively bailed out by the Saudi league which bought many of their failed transfers for decent money. Plus they have sold some hotels etc to book profit.

 

[Marcus]

In theory, can SJR pay off United's debt in full if he wanted to and would that free up funds to buy players? While he would not be able to fund purchase of players, this would at least stop the bleed from paying yearly interest on the debt?

 

[Rozay]

I imagine our issues are primarily cash flow as opposed to PSR. People speak about us spending £200m last summer for example, but we also recouped over £100m (and counting) of that, of which Greenwood, Hannibal, McTominay, Carreras were all pure profit academy players, and Wan Bissaka had almost nothing left on his book value either. Those deals alone would allow us to spend hundreds of millions on the balance sheet.

 

[Big Ben Foster]

In theory, can SJR pay off United's debt in full if he wanted to and would that free up funds to buy players? While he would not be able to fund purchase of players, this would at least stop the bleed from paying yearly interest on the debt?

Why would he do that when he only owns a fraction of the club? He'd effectively be giving hundreds of millions of pounds in free money to the Glazers.

 

[Big Ben Foster]

I imagine our issues are primarily cash flow as opposed to PSR. People speak about us spending £200m last summer for example, but we also recouped over £100m (and counting) of that, of which Greenwood, Hannibal, McTominay, Carreras were all pure profit academy players, and Wan Bissaka had almost nothing left on his book value either. Those deals alone would allow us to spend hundreds of millions on the balance sheet.

Yes, PSR is a real constraint but the massive elephant in the room is that the club is broke. We can no longer afford reckless spending sprees like those of the past decade.

 

[NZT-One]

Yes, PSR is a real constraint but the massive elephant in the room is that the club is broke. We can no longer afford reckless spending sprees like those of the past decade.

Lets hope, the higher ups realize that as well and double or triple their efforts in improving our scouting and recruiting game

 

[Shanghai Red]

The evidence of a financial crisis is there for all to see. There is penny pinching on a massive scale going on - latest being that the likes of Robson, Irwin and Cole having their daily ambassadorial fee cut. This goes alongside major cost cutting (like effectively banning incoming transfers despite having a playing squad of no hopers). When any organisation is cutting costs at panic levels, you know that they have a big problem.

 

[bosnian_red]

What I'd love to be able to understand is how Chelsea has been able to spend close to a billion on players during the last couple of years alone. What happened to the money that club owed to Abramovich? If the debt was "written off", what's stopping every other owner (including ours) from loaning their club a couple hundred million, and write the debt off in a similar fashion? I understand there's been a change of ownership, but surely that alone shouldn't reset all ffp requirements?

Chelsea's transfer ban helped a lot to give them space to be able to do their stupid spending spree. They made a ton of profit in 2019/20 without making signings, and then continued to sell players for big money (especially to saudi) to help fund that. We've struggled with sales for ages (last summer was decent, but we usually spend 200m without selling anyone).

 

[Puskas_007]

United fans all lapped it up at the time talking about how much may be in the ‘war chest’

Aye, and after all that spending we've gone from Ed's 'War Chest' to Sir Jim's 'Combat Canister'...

 

[DevilRed]

In theory, can SJR pay off United's debt in full if he wanted to and would that free up funds to buy players? While he would not be able to fund purchase of players, this would at least stop the bleed from paying yearly interest on the debt?

In reality, what he is going to do is pile on even more debt onto the club when we confirm the stadium rebuild. Its just how it works.

Lets just hope in the long run we make money off the rejuvenation of the surrounding area via residential/commercial real estate.

Hard to see it coming from Football at the moment.

 

[JohnnyKills]

The evidence of a financial crisis is there for all to see. There is penny pinching on a massive scale going on - latest being that the likes of Robson, Irwin and Cole having their daily ambassadorial fee cut. This goes alongside major cost cutting (like effectively banning incoming transfers despite having a playing squad of no hopers). When any organisation is cutting costs at panic levels, you know that they have a big problem.

Yeah agree. They're only pinching the pennies because there are no pounds left to be pinched.

 

[NicolaSacco]

The evidence of a financial crisis is there for all to see. There is penny pinching on a massive scale going on - latest being that the likes of Robson, Irwin and Cole having their daily ambassadorial fee cut. This goes alongside major cost cutting (like effectively banning incoming transfers despite having a playing squad of no hopers). When any organisation is cutting costs at panic levels, you know that they have a big problem.

Couldn’t you make an argument that it’s just how Ratcliffe operates, and not indicative of anything in particular? That stupid ‘marginal gains’ thing. Much of that is obviously sporting, but part is financial: wringing every last drop of spending power out of the club in time for 25/26. I’m not sure I’m right, but I do think you are looking at the (sparse) available evidence and making a single certain inference when in reality there are other possibilities, and we can’t know which is true.

That said, there’s such a thing as ‘soft power’, when it comes to football. Man Utd and Liverpool have it in spades. In the UK I’d probably add Celtic to that, too. And as a rule treating your club heroes badly (or at least publicly treating them worse than before) surely can’t be worth the tiny amount of money saved.

 

[Hammondo]

Couldn’t you make an argument that it’s just how Ratcliffe operates, and not indicative of anything in particular? That stupid ‘marginal gains’ thing. Much of that is obviously sporting, but part is financial: wringing every last drop of spending power out of the club in time for 25/26. I’m not sure I’m right, but I do think you are looking at the (sparse) available evidence and making a single certain inference when in reality there are other possibilities, and we can’t know which is true.

That said, there’s such a thing as ‘soft power’, when it comes to football. Man Utd and Liverpool have it in spades. In the UK I’d probably add Celtic to that, too. And as a rule treating your club heroes badly (or at least publicly treating them worse than before) surely can’t be worth the tiny amount of money saved.

We are in the most debt we have ever been in I believe, so there is perhaps something behind it

 

[Amir]

In theory, can SJR pay off United's debt in full if he wanted to and would that free up funds to buy players? While he would not be able to fund purchase of players, this would at least stop the bleed from paying yearly interest on the debt?

Obviously it would help, but I'm not sure it would make a huge difference short term.

As far as I know we pay interest on the debt every year, rather than chunks of the debt itself. The sum varies from year to year but it appears to be in the region of 30-35m a year. That would make a big difference long term, but it wouldn't give us a lot of extra money per year.

 

[Marcus]

Obviously it would help, but I'm not sure it would make a huge difference short term.

As far as I know we pay interest on the debt every year, rather than chunks of the debt itself. The sum varies from year to year but it appears to be in the region of 30-35m a year. That would make a big difference long term, but it wouldn't give us a lot of extra money per year.

I think nothing here is short term for course. If SJR truly wants to leave a lasting honorable legacy, then money is nothing compared to being remembered as the one who saved United. He is after all in his seventies. Who knows what could be going through his mind?

 

[davidmichael]

In theory, can SJR pay off United's debt in full if he wanted to and would that free up funds to buy players? While he would not be able to fund purchase of players, this would at least stop the bleed from paying yearly interest on the debt?

Ratcliffe could easily wipe all debt and buy the Glazer’s out if he wanted BUT by clearing the debt whilst minority owner he’d basically be clearing the decks for the Glazer’s to massively profit rather than the club as the debt is what they saddled on the club, his buying of just the minority ownership has already given them breathing space when what was needed was to let the Glazer’s have nothing to work with and be forced into a full sale at a much cheaper price than they wanted.

 

[Marcus]

Ratcliffe could easily wipe all debt and buy the Glazer’s out if he wanted BUT by clearing the debt whilst minority owner he’d basically be clearing the decks for the Glazer’s to massively profit rather than the club as the debt is what they saddled on the club, his buying of just the minority ownership has already given them breathing space when what was needed was to let the Glazer’s have nothing to work with and be forced into a full sale at a much cheaper price than they wanted.

That means ... tanking United would make the Glazers sell the rest of their shares wholesale to him at lower cost. I am kidding. We are such a commercial juggernaut that only multiple-years of relegation might make that a possibility.

 

[Shiva87]

I think nothing here is short term for course. If SJR truly wants to leave a lasting honorable legacy, then money is nothing compared to being remembered as the one who saved United. He is after all in his seventies. Who knows what could be going through his mind?

You don’t build an empire by throwing good money after bad money.

He will do whatever he believes is right to get the club in a better position financially and structurally. He needs confidence in his support staff to enable him to be sure that any additional funding he brings in, through asset purchases, equity, or otherwise is used in the best possible way. Right now, it is on Barada Wilcox and the others to implement turnaround with the constraints they have.

Unfortunately, this means that we have another season at least of up and down performances. Suddenly, the 2028 target seems to be the first real chance, we may have of consistent performances, forget about being the title contender

 

[Top_Bins]

I think nothing here is short term for course. If SJR truly wants to leave a lasting honorable legacy, then money is nothing compared to being remembered as the one who saved United. He is after all in his seventies. Who knows what could be going through his mind?

If he truly wanted to leave a lasting mark on the world he could buy the Glazers out and then posthumously gift 51% of the shares to a fan trust. That way he gets to run it and then give the people back their club in perpetuity.

It's the stuff of philanthropic fairy tales, and sadly that's where that idea will stay.