At the start of the year, Abhay Bhaniramka wrote an article for RoM to clear up a few misconceptions about the debt and explain it a bit more detail.
Following the news of a our losses over the past financial year, he’s allowed us to pick his brain again.
Apparently some people are happy that we have posted a £83.4 million loss! (albeit with a few one-offs and non-cash items which I will explain later in the post)
There are of two types of exceptional losses, recurring and non-recurring.
1) The loss on the cancellation of swap is around £40m which is a one-time non recurring expense. So yes, even though it will not be here, it is still a CASH loss for this year, which would not be there if the Glazers had not put us in debt in the first place. This has not all been paid off. Only £12.7m has been paid yet and hence out of the £163m in the club’s bank account, £28m you can count out because that will go eventually to pay this balance.
2) The amortisation of goodwill is on the consolidated income statement, not on the income statement of United and hence will not save the club on tax either now or in the future. It may save tax for the Glazers, not the club (but even if it saves the Glazers some money, that’s a good thing because it means they potentially take less money from the clubs coffers in the future).
3) Amortisation of debt issue costs and discounts is a recurring item and will save the club taxes, but the cash hit on it was already taken when issuing the bonds. In fact, if I remember correctly, the amount of issue costs was around £40m which is being amortized over 6 years as around £6.7m every year. The cash hit has already been taken i.e when issuing bonds for £504m we only got cash worth £464m. That’s a straight £40m CASH LOSS (which would not have been there if not for the debt).
You can’t see these adjustments because the Glazers have not released the Cash flow statement.
4) Forex losses – although these are not cash losses today, they may become potential CASH losses in the future if the exchange rates do not turn favourable for United. As for saving tax, they may well do depending on the taxation rules of the UK. I’ll look at the taxation rules of UK in detail and clarify it later.
5) The amortization of player registrations saves the club on tax, but this has nothing to do with the Glazers. This item is there on every clubs books and will always be there. In fact, one of the ways big-spending clubs recoup their cash is by this item. Suppose Real Madrid buy Ronaldo for £80m on a five year contract, they can save on taxes worth £40m over a period of 5 years, assuming the tax rate to be 50%! So almost half the players worth is recouped by saving on tax itself in this way.
6) The way that the operating costs of the club have been brought down is indeed commendable. This shows an incredibly well run business in this respect. However, we must remember it came at what cost. The free snacks and food for non-playing staff were removed when that had been going on for many years, staff wages were frozen (only this year have they given a 6.5% raise to compensate) and so on. This has an effect on the morale of the staff at the club. Nevertheless, in financial terms, it is commendable without doubt.
7) The commercial turnover has risen, no doubt as a result of the Glazers efforts for which they must be lauded.
However, wouldn’t it be fair to assume that United by itself, without the Glazers, would have made some progress in increasing the commercial income? With Peter Kenyon before and David Gill now, it’s not as if the Glazers were necessary for these improved commercial deals to be made.
8 ) The debt can be serviced if we continue doing what we’re doing. But the income stream at the top is highly dependent on United continuing to be successful in winning leagues, going to latter stages of Champions League and winning trophies every year! What if we can’t sustain the success for a couple of years? With the massive amount of financial leverage, can you imagine the effect on the earnings if we don’t do well for a couple of seasons?
9) The interest on the PIK continues to roll up at 16.25% interest. Please tell me a risk-free investment that gives annual return of >16.25% in the world out there at this point of time. I guess the the financial money managers of the world would have figured it out by now if there was. Risky investments might give you such returns but what if those risky investments fail, and what kind of risky investments will continue to give >16.25% pa compounded for the next 6 years continuously? Not even the equity markets can give you that sort of return continuously for 5-6 years.
On a positive note, let me point out that we are NOT SKINT as the ABU media/MUST would have you believe. We still have funds for player purchases.
The fundamental point being that the debt was not productive debt. The £500m pounds wasn’t used to buy new productive assets (players), was not used to build a new stadium (as in the case of Arsenal and the Emirates) but merely to gain control of United and unproductive debt is obviously a bad thing.
Edited and altered in places by Scott.
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Reclaim our club
Man Utd News 24/7
heres hoping yolkie from the stretford end is right and ronaldo does come home
cause united need to sell him
Tragic sums it up I think.
Can you dumb it down more Scott? Rofl, i don’t understand it fully.
for us to know how much cash we have in the bank, they should produce a cash flow statement. Then we will Know the truth.
On a positive note, let me point out that we are NOT SKINT as the ABU media/MUST would have you believe. We still have funds for player purchases.
`
And Breath Out
So basically as long as we remain in the top 4 and get to, at least, the quarter finals of the champions league and FA Cup we should be OK.
Hmm….I’m afraid that having this shadow casting over us will distort the outlook of what the real motivation should be every season – Win it All.
I don’t think anyone is happy that we have posted a £83.4 million loss. Its just not as doom and gloom as some would like to believe. The debt can’t be wished away at this stage. Now its a question of finding the right solution for the club to emerge from the debt situation and continue its successes both on and off the field.
@ Devil310
“as long as we remain in the top 4 and get to, at least, the quarter finals of the champions league and FA Cup we should be OK.”
Its not quite so simple mate…even if we do all that, we must find ways to keep the income growing somehow and substantially if I might add, and that is easier said than done.
This is because the costs are going to keep growing…the wages of the players are always revised upwards, never downwards…. and once the young team that we have develops, we will have to substantially increase their wages to keep them happy at the club and out of the clutches of the other top clubs in Europe..
@arijc
If you read the comments on the topic “we’re rich” , you will actually find some people saying they are happy and satisfied that we have made the loss!
nani scored 2 for portugal so far….
chris smalling scoring for england u-21
It’s the end of the world as we know it
Is it fuck
Manchester United will never die
And at the same time saving the skins of the Americans
That’s where the true power lies at OT
Okay, if I wasn’t majoring in accounting I wouldn’t understand any of that but now I understand. Thanks for the post (explanation)
For fuck sake people stop complaining. You haven’t bought the shirt. You’ve stopped buying your season tickets. You stop buying the programs and going to the museum. …….. The reason the minus post is there, is simply because less money is coming in. I agree with you that i’d rather have an owner that could buy the club outright but unfortunately the sultan of brunei couldnt give an arsehole about football. Funny that probably too bust getting his nobb sucked by 14 year old virgins that have had their mouths sewn shut in preparation for their big day. There is no one man with enough money in the fucking world who is going to invest a sizeable portion of his total wealth to buy a football club, sheik yabouti at city couldnt do it, abramovich couldnt come close.
Be thankful that sir alex has created such a massive club, and be utterly embarrased that your doing your upmost to fuck up his legacy, just because the man who bought the club hadnt enough money. The best way to clear the debt is to spend spend spend and the debt will be cleared quicker.
Its just sickening that people complaign about a debt and the lack of money whilst openly campaigning about not spending money.
Credit to the glazers for not taking any money out to pay the pk loans or to buy yachts and houses. Lets be totally honest and read this before getting on your high horses. If the bank of fucking scotland offered you a loan of 1.4 billion pounds and you could convince the glazers to sell. Are you going to tell me you wouldnt buy united even if it meant that the turnover of the club would finance the loans. I have too great a love for the club to not take the chance, because i believe myself that i would be the best person in the world to take that loan rather than it be offered at the same conditions to anybody else. Anyone who disagrees is a muppet, fullstop.
@Red Devil
I know mate….I was being sarcastic.
What I meant to say is that when you are so financially tied up, you start caring more about breaking even than succeeding. The motivation coming from above changes. It will no longer be “winning” or being “the best”….is just but just staying up there and hitting an specific goal or marks.
Real Shame
My brother has also kindly pointed out that in two years time we are open to a world record signature with Nike and he hears that adidas would make a formal approach if Nike aren’t open to what they paid up
We missed that one – surely that has got something to do with all of this?
What a save!
Sorry five years not two still the same situation applies
Apparently the Glazer’s are relying upon that deal to also strengthen there hand
And about the same time United will either be sticking with AON or replacing them with another shirt deal
So thats two avenues of income that will solidify the United brand and asset
Just something I thought I’d pass on
Further
It’s the main reasons why the Glazer’s are not worried about what’s happening
Talking to my brother he says the revenues of cash generated through the media streams is a clever marketing ploy by the Glazers
They know that if United could go alone on the tv rights right now they’d basically put this to bed
The fact is they can’t so they are looking to build on this content through different forms of media in different countries as United are hugely popular worldwide
Although they have begun and such deals are not as lucrative he says by entering the markets and letting United grow will eventually mean that when contracts are up for review a healthy competition should arise which will allow for higher financial awards
Again all I am doing is passing this information on
The facebook page is testament to the rapid growth and expansion of Uniteds following worldwide – within six months to twelve – the page should easily take over Real Madrid
Well said GoatinaUnitedShirt !
We can’t have it both ways. If people want to boycott and not spend money, then the results will suffer, value of the business will fall, Glazers will be even more motivated to wait until value increases etc etc.
EBITDA / operating profits are great especially when you consider the economy we are trying to operate in. Commercial activities continue to grow and there is considerable cash in the bank.
Lets get back to supporting the team, leave the business to the accountants and move on!
United!
Nani scored 2 goals in 1 minute.
Abhay, thanks for the analysis. Still don’t understand, but think I understand it a higher level than before.
Well, I think so anyway.
Red Devil
Thanks for your analysis.
I have been following that thread. Some people have mentioned being happy, but thats mainly with the increase in commercial revenue and with keeping the costs down. Also I think its a relative thing, some might have been expecting a lot worse.
As MG has pointed out, I think the Glazers are betting big on the growing commercial revenues from the international markets. For example, deals for MUTV with regional providers like the recent deal in the HK market.
Don’t worry about the debt, Nani will be worth 80 million in a few years time, that’ll keep the wolves from the door for another 5 years at least.
That’s an excellent analysis and I’d agree with it completely.
Lads, one of the posters from a couple of days ago quoted some numbers that I don’t see actually reflected in these discussions.
First, that there has always been a cap on players at United, and that the number has aways been 40% of turnover (I think he said turnover, but might be wrong).
Questions:
Does this mean we have 40% of 286M or 163M, or 104M???
Second, the 163M that is quoted by Abhay in his article above, is this just for player purchases, or is this the total available for purchase, transfer fees, salary and bonuses.
If it is true that it is 40% of turnover, then that sounds like we must have increased moneys for players than last year. What am I missing here???
Don’t mind me lads, just trying to stay a bit ahead of the average idiot.
gill said we have 165 millions in the bank despite losing 83.4 millions in the bank wchich is a good thing i presume god i hate the financial side of football
The key point is that none of the debt taken is towards building/ purchasing any assets whereas the means used to bring down operating costs is affecting the morale.
So yes, the brandname is strong and there is no imminent danger to some income streams – it is worrying from a long term perspective.
Fans are naturally optimistic, but the cautionary tale of Liverpool FC should not be ignored.
willierednut
And then Bebe…
sorry for the second in the bank shouldnt be there lol
This article is a bit ridiculous and lacks a lot of credibility. To summarise “If it’s bad, it’s the Glazers fault, if it’s good, it would have happened anyway”…..please. I don’t have a lot of time to go through every point but here’s just a couple:
No4 – ” they may become potential CASH losses in the future if the exchange rates do not turn favourable for United” is simply scaremongering – so what you’re saying is that if exchange rates do turn favourable does that the Glazers make United cash gains. And while we’re on the subject, I don’t for one minute believe they haven’t hedged the foreign exchange exposure of the bond.
No9 – PIKs by definition have to pay high rates of interest because the duration is so long and the risk is so high. Don’t scaremonger by throwing around big numbers. There are many credible companies that issue high yield debt – HMV, Waterstones, Boots just to name a few. And if you want to throw ignorant facts around, the UK government was issuing debt with at 16% as recently as the 1990s……big deal.
No 5,6 & 7 are saying that the Glazers as running the company as, if not more, efficiently than ever before – you cannot spin that in a bad way – on the one hand the losses are the Glazers fault, on the other, amortizing player registrations has been in place for years…..you can’t have it both ways.
No 1 – the costs of unwinding the swap would have been fully priced in when planning the refinancing. Remember the Glazers, as dumb as you would make them out, are not trying to piss money away. They would have calculated this as a worthwhile cost of relieving themselves of the onerous terms of the bank debt. This is standard practise in all M&A activity.
Anyway, would love to stay and picks holes in the 2/3 remaining points but I think I’ve made my point. This is the type of journalism I’d expect from the Daily Mail and not RoM – you’re better than this Scott.
As I said earlier, I would have been more elaxed about this if there was a light at the end of the tunnel. I don’t know if I remember correctly, but an article said that we’ve payed 450mil on interests since 2005? And the debt has grown in that time. We could have bought Liverpool and had 150mil to spare ffs.
@Red Devil
You mean the cavalry at 21:16?
PG – There’s big differences between us and Liverpoo, you just have to look at the valuations of both clubs.
Still the whole structure of the club is being successful so these money grabbing parasites can continue to take money out of the club, the success has delayed the fragile nature of our finances. What really pisses me off is despite the golden era we had between 2006 and 2009, not once have we seen the fruits of this success – when you win titles and European cups, united should have a shit load of cash – especially the TV money has been pouring out like diarrhea coming out of the buffalo. United are the only phew clubs to have no pay-off on this success and it is frustrating. I am not stupid, I know when owners of clubs are taking the piss and the glazer really taking the piss out of the club for their own selfish reasons, just like gillet and hicks have done at liverpool.
look at this
when united win 3 league titles
CL success and another final
2 carling cups
world club cup
Has united seen any of the fruits, the pay off for this success NO. I maybe in the select minority on this, but the success united had recently should have given united the keys to open new doors to new rich horizons, with a new squad built ready to be at the very top of the ladder. What we are left with is a squad not improved much players to young to be ready to take scholes and giggs place, and we are still overplaying giggs and scholes. Yes I understand players prices are hijacked through the roof, but the club is not being improved and it stinks to high heaven. We have a good squad but it still could be an improved squad.
Costas – There will be light at the end of the tunnel, when they decide to sell the club, but until then, we just have to suck it up big time.
I wonder where the club would have been if it was not for fergusons skills to make sure guys like ronaldo and rooney were in check. and ferguson finding gems in vidic and evra to make the squads structure put in place. Because ferguson is the only reason why they are still hanging onto this club
A large chunk of United’s so-called loss is accounting gymnastics.
It doesn’t mean it’s a smokescreen for the Glazers to siphon profit out of the club, but standard procedure from an accounting point of view, actually meaningless in terms of cash.
The bottom line of all these expenses is just a bit of abacus-twiddling … £86 million worth, to be precise.
It needs to be there, because if it wasn’t, the accountants wouldn’t be doing their job.
It doesn’t actually represent cash going out of the business.
It is just paperwork that has the effect of reducing the taxable profit.
It’s not unlike the way I prepare my own accounts by maximazing the tax deductable expenses until my tax liability melts away like the spring snow
Dear STR:
Very respectfully, this article does not clarify anything and contains the same factual and legal errors that tabloids make to sell headlines about Utd’s so-called losses. As I have mentioned before, Utd has a strong business model. Utd hire tax attorneys and advisors to minimize, as best they can within the tax rules, the taxes they would have to pay from the huge cash gains they have. That explains the discrepancy between the 100 million operating profit and the 83 million tax losses. For example, the 40 million “goodwill” item, is going straight into Manutd’s bank account.
(see this article, ignoring the comments from the person who wrote the article, because he is not qualified to discuss tax law implications, just make headlines and add “cristiano ronaldo” to the article, to add to the hits he gets and report to his bosses that the articles was read, whilst it being people who were looking for news about cristiano ronaldo:
http://www.telegraph.co.uk/sport/football/teams/manchester-united/8051808/Manchester-United-chief-David-Gill-denies-club-will-break-Uefa-rules-despite-83m-loss.html).
From a strict business perspective, it is better for Utd to report a loss, becuase they do not pay taxes on losses (e.g., would you rather that Utd pay 40 million in taxes or keep it in the bank for buying players?).
rdurango123 – what you are forgetting is the money aint going on players. It is there to pay for the interest payments
I would rather united pay 40 million pound on taxes than the amount payed on interest fees
Fear, is stronger than hate.
rooney the new king
You say about united not benefiting from the fruits of there success, could you be a little more precise in exactly what these fruits look like. Do you mean like Barcelona where they have made massive losses or maybe you mean the fruits of chelseas success last year, an aging team, a rapidly tiring owner and a somewhat depleated squad. I didnt get your post but please enlighten me.
I contributed responses to some of the other threads, and never once said I was with the loss, the debt, or any of that stuff. What I did say, and still say, is this: Amortization of the players’ registrations, and Amortization of goodwill, are two items that together “eat up” some 75 million of what the club earned (and thrown in Deprecitation too, for another 8.5m). However, those three items do NOT represent money paid out. They simply represent a write-down in the value of things already paid for. They are pretty standard “furniture” on any set of books (except for players’ registration, which is specific to football clubs), and have the effect of reducing the revenue that can be taxed. In this case, they also contribute significantly to the “headline” figure of an 83.6 million “loss” (because those three items together amount to slightly over $84 million, so it doesn’t take a genius to figure out that without them, the bottom line would have been about break even, or slightly ahead).
Of course those items would have been in the books without the Glazers. But so what? That’s beside the point, which is that in terms of “real money” they are basically a fiction. In a previous post, I used the example of a car that you buy for 20,000. Three years later, it’s not worth 20 grand anymore, it’s worth only 11 grand. That means it has depreciated at 3 grand a year (anyone who owns a small business should know all this). That means you are ‘claiming” 3 grand depreciation a year. The value of the thing is declining, but it doesn’t mean you are actually paying out 3 grand every year! Now, after another, it goes down by 3 grand again. But again, you didn’t actually pay out 3 grand. If, in this latest year, your business earned 60 grand, you can deduct 3 grand as a depreciation expense for tax purposes, and you reduce the value of the car to 8 grand (as an asset), but you still earned 60 grand, and it wasn’t really reduced 57 grand.
And that’s what this is: an accounting adjustment, that happens to be tax deductible. Nothing to do with the Glazers, and no-one ever said it did (at least, I didn’t). All I’m trying to do is show people that while the club reported a “loss” of 83 million, it didn’t really, in cash terms, make a loss.
@Red Devil Forever: “gill said we have 165 millions in the bank despite losing 83.4 millions”. I guess the point is that we didn’t really “lose” 83.4 million. Meaning: it’s not the case that we had 249 million in the bank, and then we lost 83 million, so that leaves 165 million (or whatever). In cash terms, the club actually made a whacking profit. It’s just that that profit is adjusted down, for accounting and taxation reasons, by various amounts which themselves do not represent any actual outlay.
@FletchTheMan: if the figure was 40% of turnover, then according to the statement I saw, the club had turnover of 286.4 million. But I am not sure if that’s the figure they use. As to your second comment/question (“Second, the 163M that is quoted by Abhay in his article above, is this just for player purchases, or is this the total available for purchase, transfer fees, salary and bonuses”), the only honest answer is that money is available for whatever the owners and managers deem fit (and whatever they want to do, it’s unlikely they would spend it all, because bsuiensses generally don’t do that). But the only point I want to add is that doesn’t mean it’s the only money we have, because of course there is new money rolling in all the time.
RTNK: Correct. Interest payments are also deductible from taxes, which is why people buy houses, for example, at least in the US. Not sure if when people in the UK want to buy a house they show up with a check for 500 thousand pounds.
All I am trying to do is point out, in the simplest way, that a tax loss does not really mean anything.
What is disturbing is that the press are trying to imply is that Utd will be unable to play in the champions league and/or that Utd are in the same situation as ManShitty or Liverfool, without looking at the issue deeper.
“Edited and altered in places by Scott.”
Why’s that then, Scott? Didn’t it fit your image of the Glazers? What did you change?
Deepest Red – Bizarre claim. It wasn’t written in full sentences, some sentences didn’t make an awful lot of sense, some information needed padding out with more detail.
I didn’t realise my image of the Glazers was any different to any other United fan. Surely we’re all united in the belief that our club would be better without them than with them?
GoatinaUnitedShirt – It is so easy to to twist what I said so you are right. First of all chelsea are owned by the russian and I know they have not bought much since 2006 but they are not paying interest. And there is no point saying wait till the russian leaves, it is 2010 and he bought chelsea in 2003 so he is still around, everyone keeps saying their old yet they could win the league.
barcelona still are not in the debt we are, and they have a great academy that produces players every year, and unlike united they have a team that will win league titles more than united will in the next phew years – if united do not get the positions in need of rebuilding. Add the spanish league will mostly contest madrid and barca they have not got allot to worry about. United have.
Fergie is not going to be around forever.
And united have not benefited from the success, it has only made the glazers to take even more cash out of a club that is almost being sucked dry
united in 06/07 season played in total 59 games
united in 07/08 season played in total 58 games
united in 08/09 season played in total 65 games
that added up the 3 league titles, 2 CL finals united won 1 of these finals, a carling cup and a world club cup
we can add the players united sold between that time period, and that does not include ronaldo being sold and despite united making more money on players than sold where is the money.
united still made record losses. on those 3 seasons, that 08/09 season united made a loss, despite appearing in all but 1 final the fa cup final if ronaldo stayed. ronaldo being sold UNITED BARELY MADE A PROFIT OVER THE RONALDO CASH. Now that to me is a worrying statistic, uniteds most successful season 08/09 season would have made a loss – despite appearing in CL final, winning the league the carling cup, world club cup, and community shield. In 08/09 season TV money was paid for the champions at a record fee at the time
Scott the Red. I agree with you that we all hold United deeply in our hearts but do we all want rid of the Glazers. I don’t see them as perfect, far from it, but whats the option. United should not be held in the same regards as teams like Chelsea, Liverpool or the chicken in a basket football team known as City. They are massive teams, massive football clubs. United is a way of life, and with its followers and interest can only be described as as being the size of a small nation. There are no one with the ability to buy a small nation with the exception of two or three individuals in the world. And let me be frank, we dont want more than one owner or we’ll end up with the Liverpool farce. We are in a possition where we are as good as we are going to get in relation to ownership. Now its time to buckle down and take the responsibility that is ours, the fans. We are several 100 million strong, we owe collectively 700-800 miliion (or whatever the fucking figure is), so start paying.
These numbers are insane, it is shit load of cash united have made, that could have improved the club in all area’s and keep ticket prices at a good state. But no we are left with an ownership cutting corners, hiking prices. sucking the clubs profits and using the club to revive their other dying businesses and using it to pay off interest but never the debt
@rooney the new king
To twis again you say that chelsea aren’t paying any interest, unsurprising as they don’t exactly create much interest. If the waiting for the russian to leave (which isn’t my view but rather its not new and its no longer an exciting game for him, the idea of running a club to show off to other oil garcs isn’t 2010 its so 2000′s) i don’t believe he well BUT your reasoning is that hes been at chelsea since 2003 so he isnt going to leave. Will you give the same leeway to the Glazers when they’ve owned united for just as long and havent taken the club to the cleaners that its not going to happen (like the russian leaving).
As with Barcelona, your right theyre arent paying interest like we are, but if you take away the interest (after successfully paying the debts) we have a sustainable financial picture, in what way is Barcelona healthy. How did they make debt from only income?? Also on your note of successful youth systems, Uniteds pays more than enough for itself and i dont believe the Barca youth system is perfect, they paid hansomely to regain Pique after fucking up and letting him go and now they want to show of the effectiveness of their youth system by splashing out 30 million on Fabregas another player they let go. Atleast our system isnt like that.
The reason why stock market works is that at any price there are always buyers and sellers.
For everyone who looks at the financial condition of an organisation and say “nay” there’s another who says “yae”.
Abhay’s interuptation of our finances mirrors his belief and so does mine.
We could do a lot worst in the current economic climate than have owners like the Glazers and executive leadership like Gill’s. They are managing their way through this expertly and of utmost importance the have retained Fergie’s confidence and full support.
Let’s get back to footbal matters.
Statesidfe Aussie ….some great posts today. Thanks for sharing your insight.
GoatinaUnitedShirt – I never said barca’s youth system is perfect. Has the loop holes is a real kick in the nuts for the Spanish. But they are churning out players while at united we are still using players who came through the ranks in the 90′s, and we do not seem to have the spine to give cleverly evans drinkwater etc etc a proper go, has I think they are better quality players than players like park and anderson – who are ineffective in the final third 8 times out of 10.
I will give you a great example of what united done in the transfer market in one cycle of the Ferguson era. The success between 98 – 03. united win 3 league titles a European cup, fa cup, intercontinental cup, between 99 and 2001 we were raking in the cash also because of the success. Cheap tickets and still united are making money, but fergie kept his powder dry. We never spent much since summer 98 and hardly any cash was spent before summer 2001. After the 3rd league title what happens? he invests nearly 50 million on 3 players, van nistlerooy and veron the big ones, carrol a low key signing but part of the buys. It never worked out like we hoped but the intent showed the size of the clubs ambition.
The buys never stopped, come summer 2002 Ferdinand is signed for 29 million, so it showed then the success united had between 99 and 01 was rewarded with team building and ambition was at a all time high. We tried to sign ronaldinho and robben for nearly 40 million in 2003, so united were not scared to invest because they had the cash. summer 2004 we invest 28 million on rooney. So the evidence shows that the success united had between 99 – 2003 was rewarded with some exciting new players.
now is a different ball game, and the lack of transfer activity is hurting because of the debt placed on the club that united are trying to win titles on the cheap and buying rookies that a phew might make it. I am not saying spend spend spend, but united do not seem to even bother to look at good players on the market. United are still relying on players bought in 2006 2007 and 2008 and it has gone stale
So, no one took any notice of SAF comments the other week, when he said that United would probably have to spend big to replace Giggs, Scholes and VDS. Sir Alex doesn’t do things by halfs, the Glazers would have known of these comments, to which i think they were directed at, just my opinion of course.
willierednut – he will but where is another scholes and giggs – with players like james milner costing more than wayne rooney how the hell can he replace them without spending a kings ransom
@rooney the new king: you say “Barcelona still are not in the debt we are”. Meaning, I presume, that they have less debt than us. Which is true: their debt is (according to a recent audit) is 442m Euros (£369.5m) after a loss of more than 77m Euros (£64.36m) last season.
But I think you are making a big mistake, because you are comparing the size of their debt to ours, but you are not taking into account “ability to pay”. The bottom line is that Barcelona recently had to take out a loan of 125 million pounds just to keep paying players’ and staff wages! Has that happened with ut? No — I am not asking could it happen, because I don’t have a crystal ball, I am asking: have we had to do that? Not to my knowledge.
Last year, Barcelona’s costs were 400 million, yet they earned only 341 million. Now, no doubt there are some figures in their costs which don’t represent “real money” (as there are in ours), yet the bottom line remains: they actually don’t have any money in reserve. Their new president, Sandro Rosel, has said that when he took over, they not only found in a club in debt, but one that has “liquidity problems”. Meaning: they actually can’t pay their way.
In other words, Barcelona are essentially insolvent. And it gets worse: as you know, Barcelona have the advantage of doing their own TV rights deals (unlike us). This is a 7-year s deal with Mediapro, worth €1bn. But, incredibly, it now turns out that it only has a verbal guarantee the money will be paid! And , if you’ve been following the news, you’ll know that Mediapro has announced it is seeking bankruptcy protection (meaning, it can’t afford to pay its creditors, which obviously include Barcelona).
And yet you come on here not only comparing them with us, but actually trying to tell everyone that they’re somehow in a better financial position than us because they have “less debt”? Oh please…
StatesideAussie – I think barca are in a better position for 5 things
- fergie has not got long left
- scholes giggs and VDS are close to retirement
- uniteds squad is in need of rebuilding add united are in transition
- the ownership is dictated by how united do on the pitch, with record loss’s united are making it is a worry
- the premiership has got more stronger teams than spain
the Spanish league is a comfort blanket for barca. What worries me is? united team will need more rebuilding than barca. That means more cash will be needed spending on, a new GK, a couple of midfielders if cleverly and co are not given a proper chance. Add money to get a new manager, so yes these reasons are why barca are in a better position.
I’m so feed up hearing United supporters laud the Barcelona model …like they just re-invented football. More great comments Stateside.
Fact is running a “global sporting enterprise’ in the last part of this decade is at the very least complex but like all business cash is king and United continue to be able to drive it just about as good or better than anyone else in world sport.
RTNK … united just made a record operating profit. Barca would cream themselves to be in our position.
Get a room ffs.
rooney the new king I get some of your points but with the same token you contradict yourself. You say we only seem to buy prospects at the moment (winning on the cheap as ou put it), Rooney was a rookie as you put it with very little playing experience. Ronaldo was a rookie with even less first team experience. And to be fair our big signings and most other teams big signings are very rarely successful. A player who makes his name, makes his name by having the right coaching for him individually, the players around him compliment his style and its so easy to say hes excellent and worth x and x ammount of money, only to be blinded by the fact that his team mates and coaching have changed. See Ronaldo at Madrid, Veron at United, Robinho at City, Shevchenko at Chelsea ….. the list is endless. The same can also be the reverse.
You also have to take into account when it is needed to sign a marquee signing. After 99 we lost a great keeper and because of our success we had a model that every coach in the world studied. We had no choice but to spend in order to keep new ideas coming in, keep opposing coaches guessing and keeping the momentum. To me massive signings are not needed and i would not at all be upset if united nbever made a 30million signing ever again. Sure it makes the off season more exciting but thats not what its about. Ferdinand had to be signed because we had lost the previous years stability in defence and when we thought we found it in stam he took the piss. When we found our striking talismen in Van Nistelrooy we were happy, then we were forced to spend because he started takig the piss. Then we had Ronaldo and he took the piss. Bringing players up with the youth system means more to me than any big signings. Cleverley will get his chance, possibly but physically hes not up to it, he is not as strong as rooney was, ronaldo was, butt was, beckham was, scholes was at the same age. Thats why hes not been given the chance. As for the ambition of the club, nothing has changed, i feel its just a case of once bitten twice shy. And again we have spent money and alot of it. Chicarito was one of three top young strikers at the world cup and we got him, smalling looks very comfortable, Bebe looks very exciting as he is a tall lad with great technical ability.
And personally if the glazers took the money and payed off a massive ammount of debt id welcome that. id welcome all 160 million to be used to pay off debt (before more interest needs to be payed) id take the winging of the fans, give it a few years and all will be forgotten. We dont need the van der vaarts of this world, money spent like that is money down the drain.
RTNK – Well, those players will need to be replaced, simple as that. The Glazers already know this, so lets wait and see what happens on that front.
@Goatina…
Very very good post. What we need is players who believe in the United way.
“Bringing players up with the youth system means more to me than any big signings.”
Spot on mate.
GoatinaUnitedShirt – I am sorry I am not contradicting myself. ronaldo and rooney are bad examples of rookies to compare who united are buying now and who are trying to make it, and they were different animals but they shared one thing, their playing ability was ahead of their time they were guarantee successes. Rooney at 19 cost 28 million meaning united saw rooney already has a first team player at 19, he was tearing up euro 2004 scored a hatrick in a CL debut, and was hyped has the next world class player to break through. Ronaldo young but his ability he was half way there to first team action, in his second season he was playing close to 40 games. so Rooney and ronaldo were guarantee world class players and you cannot compare them with rookies.
macheda obertan smallen evans rafeal fabio welbeck cleverly hernandes nani anderson are miles behind Rooney and ronaldo when they were 18 and 19. These players I mention do not even appear on the radar when comparing with rooney and ronaldo. These 2 players are once in a generation, who could play first team action nearly 40 games a season before they were 20. obertan is 21 or 22 and he can barely make 10 games a season
RTNK: I refuse to believe Barcelona have a better youth system than Utd, as you imply. I also refuse to believe that Guardiola is even close to Fergie. Guardiola merely got handed a group of 7 players that had won the youth world cup, the eurocup, and that had won the champions league before he even took over. They are also the same 7 players who won the world cup last summer. But for those 7 players, Guardiola would be a big nobody, unlike Fergie, who actually built something.
Additionally, as Stateside correctly points out, Barca needs to take out loans to pay wages. That is definitely not the case at Utd. We should just trust what Fergie says, that he has the money to spend, if he really wants.
yes I agree bringing through youth, but we do not want to end up like arsenal.
Dave Mack – and if you read my posts on the success we had, the money is still gone.
07/08 season united made a 57 million pound loss for winning a premiership and CL double how is that positive
RTNK … well, if Barcelona needed to borrow 125 million in order to keep paying their players this year, then presumably they they’ll need to borrow again next year, especially if/when their TV rights disappear up Mediapro’s bankrupted backside. We’ll see how good their system is then. Even if we ignore the TV rights debacle, their latest audit shows they need to improve their cash-flow position by at least 150 million between now and next season. Personally, I wish them the worst of luck…
GoatinaUnitedShirt – It’s a nice thought, replacing Giggs, Scholes with players we’ve produced, but what happens if they ain’t there mate? We’ve always adopted the twin approach of bringing through young players and spending big, don’t see why that should, change if the moneys there of course.
StatesideAussie – I think barca are in a better position for 5 things
- fergie has not got long left
- scholes giggs and VDS are close to retirement
- uniteds squad is in need of rebuilding add united are in transition
- the ownership is dictated by how united do on the pitch, with record loss’s united are making it is a worry
- the premiership has got more stronger teams than spain
AND rooney the new kings agreeance.
The first point is a silly one, Barca is better because fergie wont be around for much longer. 1 Barca haven’t got a fergie and they can win things so fergie isnt the absolute difinitive be all and end all with sucess. 2. Barca now have pep guardiola but i bet all the money that the glazers need to pay off the debt that Fergusson will be manager at OT when peps sacked. so the comparison of the manager status of the clubs in question isnt comparable.
The second point, VDS Scholes and Giggs are close to retirement. Giggs has already been replaced in nani, Scholes isnt the scholes of old and to be fair isnt te centre forward attacking midfielder of old hes more deep lying and playinga Keane roll. His possition is already filled by a change of tactics where we have gone away from the old 4-4-2 to a fluid 4-5-1, 4-3-3 system.VDS will be replace with an experienced big signing with years left in the tank, my guess Steckelberg/ or Buffon.
The third point, United squad is in transition and needing a rebuild. Rafael, Evans, Anderson, Fetcher, Nani, Valencia, Rooney all still the right side of the primes of their careers and planty to go on the clocks. What rebuiilding needs doing. The transition phase was when Rooney and Ronaldo where new and learning their trade, we are the finnished article, maybe one signing (a cantona-esk signing) may help but there isnt anything wrong with our squad or for that matter the way we play.
The fourth point the ownershipo is dictated by the way we perform on the pitch. Name one team that doesnt apply to.
The fifth point i agree with, but its not a negative thing but rather the opposite, it gives us a better spring board into being prepared for all types of opposition in europe and english clubs have proved that with their sucess. Dont believe me how about the last three rubin v barcelona matches.
willierednut – you hit the nail right on the head. Uniteds youth system has always been a big myth in the ferguson era. Fergie’s model is? bring through youth but he always had players signed that were ready made to go into that squad and take charge. The squad was never overrun by youth team players, it had more ready made players than youth players.
While there scholes giggs beckham butt neville bros
there was schmeicheal irwin parker pallister bruce keane ince kanchelskis hughes cantona solkjaer
fergie always made sure he had the men on the field not always inexperience players. And many fans on here think it should be all youth replacing when it has been the other way round.
@GoatinaUnitedShirt … it was actually RTNK that raised those points, not me. For what it’s worth, I agree with you. Cheers!
rooney the new king says:
yes I agree bringing through youth, but we do not want to end up like arsenal.
No chance of that with fergie at the helm. 1 Wengers fledglings are not being taught by an experienced group, a group used to winning titles – we will always have that experience to pass on. 2. Fergusson generally likes strong boddied tall athletic built players ( a bit like the way the germans pick there internationals – alot of 6 footers), wenger likes little french speaking boys. I’ll end there before the libel case is started. lol
Nani plays on the right, so i don’t see how he’s Giggs replacement. Saying that, i think he’s got the ability to float to each wing, much like Ronaldo i suppose. As for Scholesy, I’d say Defour looks like his long term replacement and with Pogba looking impressive for the youth side, that could be our future midfield.
GoatinaUnitedShirt – barca have a got a good manager who knows the barca way it is good enough, uniteds problem is how to transition a new manager money will be needed to get a new manager.
the GK I do not think buffon will join united, and I would not bank on a younger GK has united have been bitten off with foster. When scholes has been on form this season uniteds forwards have played better, for me a new midfielder is needed next season has it is well overdue but the contradicting factor where are they. Nani has not replaced giggs because nani is a hell of allot better on the right, so he has replaced ronaldo for the right more than giggs – anderson I am not convinced at all. Valencia will need a good year to recover so there is concerns.
Like I said if united are making losses for winning 3 league titles in a row and european cup, then it shows united need new owners who are fit to run the club not taking money out.
For me the ownership is a real worry, and it is fucking this club from expanding.
GoatinaUnitedShirt – not in how the teams players style, but united do not want to be overrun by inexperience players, who need time to develop because it is cheaper to buy younger players when half may not make it. Like I said I like youth players coming through but I do like players in their prime. Has players like ronaldo proved, has soon has they get good they cant wait to leave
I find it strange that some of you are saying that nani isnt a replacement for giggs as he plays better on the right. He cuts in more when playing on the right and generally that looks more exciting then taking the man to the byline but i dont think that makes him more suited to one side or another. Dont forget gigs when he was learning how to become a more complete player played also on the right (when sharpe was about, and blomquist) he played both wings, something nanis learning. I call giggs a winger not neccesarily a left winger as he moves about the park and its the united way to swap wings many times during a match. Also putting nani on the right occassionally gives valencia motivation to be better, the old two birds one stone scenario.
rooney the new king you say the owners are stopping the club from moving forward because of the money situation. Its a tough one to prove either way but as i said i do wish things were a little simpler in regards to the clubs finances but when the club is the size it is, thats what you get. If you remember the plc days you will remember the reluctance to pay for the likes of Batistuta, Ronaldinho etc etc. I dont think its as clear cut and the value for money issue is a true one.
A couple of seasons ago kaka, ronaldo, messi new contract, ibrahimovich (who i think is shit – but others dont) were all signed in the same year. so when ronaldo was sold all the so called mega stars couldnt really be signed because they were at new clubs so its easy to see that the ronaldo money looks like its gone elsewhere when realistically all it was was a lack of anyone to spend it on.
GoatinaUnitedShirt – nani just looks the part on the right, he can use his right foot to cut in better and he seems to get past fullbacks with ease on the right. On the left he seems a little more quiet and not has effective, reasons why he has not really replaced giggs. Like I say cleverly could solve a hell of allot of problems in the midfield area. He can be used on the left nani on the right and united could have more variety and guile on both wings.
when glazer talk comes up I go mental typing all sorts of rants, because they piss me right off. United is a passion of myn and they go right to breaking point of my anger
got to go now mate its half past two here in sweden and im cream crackered. nice chatting with you mate and keep the chin up, we’ll have no19 this year. its a cert
GoatinaUnitedShirt – night and let the war to get the glazers out continues
MY questions is: At this rate, WHEN can the Glazers Payout the whole debt???
STR, to be honest, I don’t think it will be 100% true that United will be better off without the Glazers than with them. No one knows for sure.
All I know is, they have never for once, tried to play real life FM. They’ve never tried to act like they know football and forced players upon SAF, and risk forcing SAF out. Or even give them a chance to terminate SAF’s contract just because he probably would refuse and in turn give them a piece of his mind.
(Read as RA and a certain JM, not that JM gave RA a earful, but he got terminated, even though he was arguably the best thing those rentboys have seen for the preceding 20 or 30 years).
There’re no reports or news of them planting their own people in the club’s running. Probably a few, but at least none as key as the CEO or the COO or the CFO.
Sure, everyone would be more comfortable if the debt was whittled away, doesn’t matter if it’s slowly, as long as it’s surely. Perhaps they should take some advice and make an effort to pay off the debt. But does it mean that if they do, the fans’ impression of them will improve? I don’t know, and I’m not sure. It’s human nature to carry on with a pre-existing impression despite of what has happened or is happening.
A good thread / debate for sure. The key takeaways are:
1. Managing operational costs down, does not necessarily equate to “poor morale”. There are many ways in which you can take cost out of a business without reducing staff numbers and/or benefits.
2. Debt repayments are not necessarily at the expense of making further signings. Show me the proof.
3. Losses after depreciation, amortisation etc do not in our case equate to a net outflow of cash out if the club, again at the expense of buying players etc
David Gill is not talking bollocks when he says these are good numbers and a good balance sheet. I think some people are truly pissed to see the Glazers’ approach to acquiring our club now being so clearly vindicated.
Like others, I have concerns over ability to replace VDS, but this isn’t because I don’t think we’ll spend the right amount. It’s because it’s probably the position that above all else determines whether a team will pick up silverware. We could spend £20m on Neuer or Akinfeev and find they struggle to communicate with our back 4. We could spend £25 on Buffon, only for him to turn into Taibi. Such a key position. Personally my money is on Stekelenberg, with VDS joining our coaching staff next season. Let’s wait and see.
I know I am very late to this party, but here are a few thoughts that I wanted to add, which may have been mentioned before.
1) Sir Alex is not a somebody. He is a man of principle, so never for one moment think that Sir Alex is lying about having money to buy players when in fact the Glazers are not giving him any. He doesn’t give a shit about the Glazers’ image, if he did not have any money, he would say so and probably quit. At Manchester United, nobody is bigger than Sir Alex on the football side of things.
2) If Bill Gates is one of the best businessmen in the world, Sir Alex is the shrewdest football manager in the world. The Glazers are not going to cut out money from on-the field activities, because that would piss of Sir Alex, and the Glazers know if they want to recuperate their money, then they need Sir Alex Ferguson running Man Utd.
3) Considering our financial position which has been mentioned in the OP and a lot of great comments, spending a shitload like 40 mil on two players like Silva or VDV would not have been ideal, which is the way Sir Alex would’ve gone about it. Now, imagine, you want to buy a Mercedes and are just about breaking even in your personal income. You know that the Merc is ridiculously overpriced (as were both those players), but you want it. You are not going to spend that ridiculous amount on the Merc because you know for a fact it is overpriced. Either you wait for it to fall in value (which does not work in the case of football players) or you buy cheaper models which would offer the same qualities. In this case, Sir Alex has done the latter. He has bought in players like Chico, Bebe etc. who would offer the same qualities, but in a delayed manner, because they need time to grow.
4) The Glazers are here and they will stay. Unless one of us can offer them 1.2 bil which is not going to happen. I don’t want a lot of people pooling in money to take over because that is not good for football. So, either we want Bill Gates or Mark Zuckerberg to take over, or we are stuck with the Glazers. That is what I understood from other posters who know their accounting.
5) The same situation that has affected Liverpool for now will not affect us. There are various reasons to this: One, we are the wealthiest and most popular club in the world. Even though most of that income is going to the Glazers, we are constantly producing the income, so there is little to worry about on that side of things. Two, unlike Liverpool we have a shrewd manager who knows what he is doing which means we are not going to be wasting money. Three, our on-field success will keep growing because of Sir Alex’s football policies. Which means even more money, which can only be a good thing.
I know I only repeated what other people have said, but one final thought, I wouldn’t be too worried about the actual football side of things, because we have got Sir Alex Ferguson. I am not getting over-excited by this man or something, but if there is one man who can keep our football running properly, it is a genius like him. If, and when, he chooses to leave, and I can’t see it happening for the forseeable future, is when we have to be worried. But if he does leave I can see him finding the proper replacement first before leaving, so that’s that. Peace guys!
I have never really been worried about United going ‘tits up’. I remember when I was a little runt back in the early ’80′s hearing talk that Manchester United, due to it’s immense popularity, was a club that had a license to print its own money.
What does concern me is player acquisition. We can keep an eye on the future by stocking the cupboard with young players, but surely the time will come when we have to bring in a special player. We will need to invest in a world class keeper soon. We lack a long term replacement for Scholes.
We just have to look at Liverpool & the loss of Xabi Alonso to see what happens when you fail to replace a world class player that plays in an important position.
Look I don’t expect Sir Fergie to go out and sign a player, that will cost 25million in transfer fees & will earn 100thousand plus a week, just to prove to the fans he can, but if we are going to carry on competing at the very highest level, we need to know that we do have that ability.
Manchester United’s cornerstone of success has been built on developing young talent, but you have to supplement that sometimes with player acquisition.
We are told there is money for players, but if there is a moratorium in place that restricts us from moving after an experienced player that has world class quality, we will eventually suffer for it.
Thank god we have our crew over at Old Trafford. Must be the best crew in all of football. They sure know how to run a big club in spite of crap owners imposing huge handicaps on us.
My greatest fear is losing Gill, SAF or some of the other vital people running the show. People who are keeping us in the top 2 year in and year out, finding players and developing players and finding us yearly record breaking sponsors and contracts.
Without these people we actually could be doomed. Just look at the muppets running Shitty, Rent boys and clubs like that.
Troy – Fergie said a week ago that we may well have to spend “big ” in the next year or so to replace Scholes and Giggs.
Off topic but interesting. Seems the tabloids are saying Wes had a blazing row with Fergie on the pre season tour hence his exclusion from the team. Hmm.
@Troy,
I think the only mainstays we have to be worried about really are VDS, Ferdinand, Vidic, and Scholes.
We have more than sufficient depth in the other positions’ replacements. But of course, it’s never plain sailing – we saw the candidates who took the gloves when Schmikes left. No players are guaranteed to produce, but no players are destined to fail either.
Compared to that 300mP-valued club, we have so much (touted) depth it is exciting to look forward to.
For them, Alonso was the real under-rated player, probably more important to them than the camera-kissing over-rated captain. And there’s Torres. If they are forced to sell Torres to balance their books, ho ho ho, that would be fun to look at.
Anyway, we are all concerned about the club. Just varying degrees of comfort levels and varying amounts of patience.
@ Hooligankicker……i’m sorry mate but some of your points seem very poorly thought out….
“so what you’re saying is that if exchange rates do turn favourable does that the Glazers make United cash gains. And while we’re on the subject, I don’t for one minute believe they haven’t hedged the foreign exchange exposure of the bond.”
If you read carefully I have actually said that they are non-cash at the moment but may become losses or gains in the future…but the truth is they are 20m in LOSS at this point of time which may or may not reverse in the future……when we let players like khedira 8m and Ozil 13m go because of no-value, 20m comes into perspective!
“HMV, Waterstones, Boots just to name a few. And if you want to throw ignorant facts around, the UK government was issuing debt with at 16% as recently as the 1990s……big deal.”
So You think United = UK Govt ??
I thought Govts were allowed to print money…United dont! besides you cannot even compare the business models of HMV and other companies to United are you….can you imagine if we fail to make Champions league for a couple of years?
“on the one hand the losses are the Glazers fault, on the other, amortizing player registrations has been in place for years…..you can’t have it both ways.”
Thats a FACT…..it has been in place for years and some of these losses weren’t there before the Glazer regime took over….why cant we have it both ways…it is SIMPLE FACT…why is it so difficult for you to accept?
“No 1 – the costs of unwinding the swap would have been fully priced in when planning the refinancing. Remember the Glazers, as dumb as you would make them out, are not trying to piss money away. They would have calculated this as a worthwhile cost of relieving themselves of the onerous terms of the bank debt. This is standard practise in all M&A activity.”
Agreed, these costs must have been factored in…BUT these costs wouldn’t have been there IF THERE HAD BEEN NO DEBT IN THE FIRST PLACE!! you yourself point it out when you say it was done to relieve themselves of the onerous bank debt …who brought on the onerous bank debt in the first place mate?
@ Paul H
2. Debt repayments are not necessarily at the expense of making further signings. Show me the proof.
Agreed..There is no proof (yet) that debt payments are at the expense of signings…but the simple point is this…..why should United be repaying the Glazers debt or the interest on it at all…Was that debt spent on buying players or a new stadium? NO..it was unproductive debt used to gain control of the club
3. Losses after depreciation, amortisation etc do not in our case equate to a net outflow of cash out if the club, again at the expense of buying players etc
What is the Glazers glory in that? Did they invent the concept of amortization on players to save United money? Wasn’t it happening before they came?
all i have to say is … dont push the glazers to selling or u might see the yankies coming in!!!!
Just an addendum to the article
1) Our financial position as it stands is NOT as bad as it is made out in the papers…we do still have money for investment in the playing squad. I have mentioned this even in the original article I wrote in January.
2) We might still make it through and there is no reason to be fearful…The objective of the article is not to scare-monger..just to make people aware
3) the major concern is with regard to the future…with costs always liable to rise (wages always go up, never down), revenues may stagnate or even fall if we do not maintain our success….key question is WHAT THEN?
4) We still have money in the bank —around 163 mn (out of which 28m can simply be set aside as explained above) the question is IF the Glazers do indeed take out money to pay down the PIK’s what then….which is what most of the analysts out there in the world believe is going to happen sooner rather than later….
5) The concept of tax-shield is misunderstood by many and is massively over-rated—-you cannot claim tax-shield on fictitious expenses….’Amortizaton expenses etc’ sounds good, but what do you amortize–something that you have already paid in lumpsum for in the past…so even if you get some tax benefit out of it in the future, the hit has already been taken in the past and because of the concept of time value of money, you are always going to be in the negative.
MG makes a good point…..the massive TV revenue that United could command if they negotiated alone separate from the Premier league is the ultimate POT at the end of the rainbow….
If we do that, then all this debt and PIK and everything will all be taken care of just like that and that is why I believe all these businessmen are so keen on buying the Premier league clubs like United and Liverpool with a massive fan-base and history and brand.
For those like goat and the others who believe the best way to go forward from here is to just support the Glazers, keep buying merchandise, keep spending money on the club so that the debt is repaid faster, I can completely understand where you guys are coming from and you might even be right. Because if the Glazers cannot be persuaded to sell, it would indeed be better to get it over with the other way around…….
BUT just think about it this way…..suppose a country launches a hostile war over your country and takes you over…it spends massive amounts on arms, munition, wages of people, technology in the war….after it succeeds, it asks your country, the defeated country to pay for repaying the expenses incurred by the victor in winning the war. Is it fair on the defeated country to be asked to repay the debt of the victors, especially if the defeated country did not launch the attack first or provoke the war in any way……
The situation described above has parallels with our situation, except I’m not naive enough to suggest that is war or even close to it, but on a purely economic and financial level, the situation isn’t different from what we have at United.
Why should United pay the debt incurred by the Glazers in taking control of United——
Troy – Agree mate. There’s no way in hell that United will go out of business, that’s just not going to happen. Have to say, the discussion has been very good, no one taking lumps out of each other, that’s the way it should be imo.
@Wille
Hello mate….agree with you there….
The discussion thsi time around has been quite civilised, unlike the previous ocassions where there have been child-like insults bandied about and name calling…
A healthy, factual discussion is always good…….no one is perfect, everyone can learn from a good well-informed discussion
@Goatinautdshirt @8th Oct 21:23
Sorry just picked up on this blog.
Spot on mate. I thought thats what the Anti Glazer G+G Wanted ‘ To Starve them out’ Guys you can’t have it both ways either put your money into the club or don’t but don’t start complaining when our Figures show a loss. There are empty seats at Old Trafford why not start filling them.
I also like your comment about the Sultan of Bruni, just reminds me of Monsour, he wants results and a return for his money he doesn’t give a Toss about Football or Shitty.
@James21
Not complaining about the loss mate……just an eye-opener to some people who are ‘satisfied’ or ‘happy’ or ‘impressed’ with the figures as they stand…
@Red Devil
I must admit tho that the figures don’t appear to be as bad. Most posters on here have explaind things quite well to those of us who don’t do Figures. Leave things like that to my Accountant. I didn’t do as well in buisness as I’m sure many others didn’t this last year. This resession is really biting hard.
People do complain though but fail to see that it can be their own actions that contribute to the losses. Take the Empty seats for one at some games there are 73-74 thousand, thats 2 odd thousand down that can loose the club approx £70.000+ a game not only that the refreshments and programme sales losses.
I like Willies comment about it being fairly friendly. Its about time we stopped biting each others heads off. Oh and Wheres Wakey?
@james21
1) Empty seats has not caused the loss figure in these accounts…..These accounts pertain to last year when season ticket sales were full and grounds were completely full….
2) you say these figures dont seem bad to you..but in the very next line you say that you dont understand things like these and leave it your accountant….what basis do you say that these figures arent bad if dont even fully understand them?
3) Let me give you a scenario—suppose we dont qualify for Champions league for a year…..
Media revenue goes down by approx 40+ million
Matchday revenue goes down by 20-30 mn a year..
This is not scare-mongering, this is a very possible scenario—there is no guarantee of success forever is there?
Thats 70 million of straight cash losses…..suddenly we dont even have the cash to even pay the interest on the debt, forget repayment of the principal amount….Suddenly, the business model doesn’t sound very good, does it?
Red Devil.
Red Cafe have an ongoing dedicated thread about this and very interesting it is to.. 118 pages the last time I looked some proper financial wizards debating you should maybe visit and put your points across.Guaranteed experts will respond, fascinating stuff
parryheid
Thanks for the info…will have a look.
I had a look at the redcafe website…but there’s so many threads on the home-page…which one are you talking about?
Also it seems that you need to be a member of the site to be able to post to the forums….
@Red Devil
1The Ground was not completely full last season . Where I sat there was row after row of empty seats also looking at tier 3 that was also a mass of empty seats so I’m not quite sure where you are coming from here.
2 Fair comment there but I was thinking more along the lines of the 100+ million shitty lost also I did say that most posters on here have explained things well.
I didn’t think I said anything about Scare mongering but anyway
its possible that we might not qualify for the champions league but isn’t it also possible we won’t win anything this season or next. Isn’t it possible Rooney might say ah fuck it I’m off.
If you live your life on isn’t it possible you wouldn’t have a house, car or anything on HP.
@james21
All right, maybe I was a bit aggressive, but that doesn’t detract from the simple fact that the risks to the future of the club is too large….
Are you prepared to gamble on the future of the club…..you make a very good point…
but isn’t it also possible we won’t win anything this season or next’.—–exactly the point mate…what if we dont win anything on the trot for two years….the massive prize money that comes from winning stuff dissapears from the club’s accounts and then what do you do?
The bond-holders wont say that “okay, you havent had a good two years so we’ll forego the interest on the bonds and delay the principal by a few years” doesn’t happen hat way does it….
“If you live your life on isn’t it possible you wouldn’t have a house, car or anything on HP.”
Which is why so many people have lost their cars and houses and mortgages during this recession because they went out of a job…these things were repossesed by the lenders..
Except in the clubs case, the lenders will drag the club to the courts for default and carrington might be taken over (remember that was pledged to the lenders at the time of issuing the bonds) a scenario that is unfolding in front of our very eyes in the case of liverpool…..look what has happened to their over-leveraged business model because they didn’t perform for a couple of years…
Except that we are bigger than liverpool so we might be able to sustain for a couple more years of non-performance….
@RedDevil
) and run my own buisness so the risk of me not getting enough work and loosing my house is large but like I said above I can’t sit here worrying.
I didn’t think you were being agressive, If you were then it went over my head so don’t worry. I can fully understand your anger I love Utd as you are proving you do and the most frustrating thing is Utd is a profit making club yet we are loosing money season after season. I can’t see anyone buying us outright though even the Red Knights would have borrowed money.
I can’t sit here worrying about what might happen in the future or I’ll be dead at 40.
By the end of the season I fully expect Utd to be Champions not because I’m arrogant in any way I just Believe and Trust in Fergie.
I also have a mortgage (not as big as the Glazers
I’m also board, a Saturday and no Football on, very Painfull.
@James21
Bring on the football….
really, these international weekends are an absolute pain.
And the fact there are no games will just allow the ABU media to go into over-drive with these financial matters…
As for worrying about the future, thats all I do mate…Thats my job
Working in a financial planning department, thats an integral part of what I do for a living and inevitably it spills over into football…
Its not about his season or the next, its about principle and whats good for the club in the long term. The Red Knights cannot be trusted in the absence of clear information as to their intent and source of funds…if they too are raising debt, then its just a case of frying pan and fire! In fact in that case it might be better to stick with the Glazers to prevent all the problems of multiple ownership!
Forgive my ignorance,
But what if Glazers die of Cancer/AIDS/food-poisoning/Any deadliest of deadliest disease u recollect OR if a Manc-soul barges into United’s office and fires ten rounds of 7.60mm Kalashnikov before cunts even have an iota of chance to fend themselves ?
If entire Glazer family(including David Kill) is wiped off from planet Earth,who will bear the responsibility of re-financing club ?
My take on this :
In case if such an extra-ordinary event transpires,and MUST/IMUSA/Green and gold supporters join hands supplemented by EBITDA(Earnings before Interest,Taxation,Depreciation and Amortisation) and are entrusted with job of financing club-debt, then it is time we hire contract-killers,Win-win situation..
My knowledge on club-inheritance is zilch but I have always made an attempt to theorize and re-flash the debt situation and this was easiest solution I could think off,Fucking kill the lot..
Love United,Hate Glazers..
My my…what do we have here!
What are you smoking mate? It sure ain’t healthy for the brain..
I’m not a financial expert so I won’t bother going into the details..But what’s the probability that the people who take over after glazers are better than them??I mean, there’s a good chance that they might be as bad or even worse..The 1′s who will replace the glazers will most likely be another family or a conglomerate because there are only a couple of guys who can singlehandedly own Utd and I’m afraid those guys aren’t interested in football or Utd..And in any family every person has his/her own agenda which may or may not be good for the family..So the best case scenario for us is to get an owner who genuinely cares about the club and its fans instead of using it like some cash cow..
As for money being available to SAF to spend on players..If you think about it logically, our financial situation depends a lot on our on-field performances and the glazers know this so funds will be made available to SAF to purchase players..If our on-field performance starts deteriorating then so will our financial position and gradually we will become like..touchwood..pool..
@ Red devil
Was watching blood-diamond,heard a gun-shot and instinct kicked in. [:P]
Glazers epitomize everything that is wrong with the modern game and deserve to be punished..
@Amar
Lets not get personal mate…..I have no issues with the Glazers on a personal level, its just that I love and care about United so much.
And I wouldn’t go so far as saying that Glazers epitomize everything that is wrong with the modern game….
No, dirty tackling, cheating and diving, painful refereeing errors and inconsistencies are bigger issues for the sport. Boardroom wrangling and financial matters should not be allowed to over-shadow on-field events….
In fact the way Glazers have brought the costs under control and their way of increasing commercial revenue has been very positive…however its just that the costs and expenses far outweigh the positives from a financial point of view
@utd4life
Your concern over the other potential owners are very well-founded mate….they may be better or worse and we must be very careful about it..
As for funds being available to Sir Alex, I think there will be…but the only question is how much more could have been available to him if not for the years of huge interest expenses and one-off costs
@Amar
Wow contract killing now. The rounds would all miss the Glazers because they’d be in the US.
‘Glazers epitomize everything that is wrong with the modern game and deserve to be punished.’
Tell me, what have the Glazers done wrong that all buisnessmen and owners of buisnesses havn’t done.
@utdforlife
My sentiments, I don’t think any new owners would improve the situation unless we were bought outright. Theres not many Billionaires out there that would.
Red Devil.
All issues relating to Bond issue and its up to page 121.You do have to register to comment but that applies to all sites,however you can still read the posts.
@Red Devil 12:31 (and most of your other posts defending your article)
Mate – you’ve just demonstrated you know nothing about financial markets and are desperately trying to defend your scaremongering by talking even more bollocks. I really can’t be bothered to correct you again on every point but talking about a 20m mark to market loss on a swap as being bad management is simply ridiculous. I really don’t like people trying to talk knowledgably about something they don’t really understand in the hope that no one will challenge them on it.
In fact fuck it, here goes (apologies to those who don’t care about this stuff but I don’t like ignorant fuckers suggesting I’m talking shit when I’m on a topic I know quite a bit about):
In reference to your points:
1. It’s a currency swap which is put in place to cancel completely the currency risk. United’s income is largely in £ and they have borrowed in $ to fund it. The swap negates this risk. Although the mark to market is currently £20m in loss, this will be cancelled by the fact that the currency has moved in their favour so effectively paying back the debt is currently £20million cheaper. The mark to market is completely irrelevant.
2. Why can I not compare the business models of Boots and HMV to MUFC? Yes it is a big risk if we don’t get into the champions league – every company in the world has big risks and plans accordingly – every heard of a SWAT analysis?
The 16% reference was just pointing out that you throwing the number around to scare people about the PIKs is just silly – you need to fully understand the details of the financial instrument to work out if it is too much to be paying or not. Given the inherent risk of a PIK note to the investor they simply have to offer a high coupon – every PIK ever issued has come with a huge coupon – this is standard practice.
Any by the way, the fact that governments print money is irrelevant – the money is worthless if they can’t back it up with assets – if a government is about to go bust who wants their money anyway?
3. I was not debating that amortizing player registrations has been in place for years – I was pointing out that you were blaming the Glazers for any losses and giving them no credit for gains – this is not giving an objective view.
4. Yes wouldn’t it be wonderful “if there were no debts there in the first place”, but there are, and wishing there weren’t is simply childish. Give me a realistic scenario of how MUFC will have no debts at any point in the next 20years? Stuck for words? That’s because there isn’t one.
Stop talking bollocks. Stop scaremongering. Stop suggesting people on this forum don’t know what they’re talking about when they clearly know a lot more about financial markets than you do.
@Hooligankicker
This discussion was being conducted in quite a civilized manner, but instead you just need to start calling names and spout bullshit…
What do you do for a living—-write the script for fucked up laughter shows—because I cant believe that you would be very good in any financial job with that kind of attitude and analytical ability.
1) Mark to market is irrelevant —-Go back and take up your books– for the moment it may be irrelevant , but if the currency doesn’t move back in favour of United, it will end up being a cash loss. All hedges come at a cost and this hedge is currently costing United 20m at todays rates—why is it so difficult for you to get in your brain—oh right coz you dont have one or are either too busy throwing childish insults to be using it…
2) You can compare the business models of different industries, but if you prescribe the same treatment, same capital structure, same solutions for all companies, you are being extremely stupid or naive— you think a football business and a retail business have the same operating and Financial risks? lmao
3) “Given the inherent risk of a PIK note to the investor they simply have to offer a high coupon – every PIK ever issued has come with a huge coupon ” —-So you agree that the business model as it stands is indeed very risky, SO RISKY in fact that it necessitates paying 16.25% even when money market rates and bond yields in the US at this point of time are at one of their lowest in history—–just goes to show the level of knowledge you have about financial markets.
4) you said the UK govt issued PIK’s—taking that statement to be correct prima facie, (i havent checked whether they issued or not becoz its none of my business) I was just pointing out that Governments can issue whatever instrument they want because they have infinite sources of cash to pay up on them. Value of currency is secondary-if the UK govt owed you 220 mn in PIK’s they could easily print 220 mn in Pounds and give i to you to settle the debt tomorrow–United cant–get it? So united issuing PIK and UK Govt issuing PIK isn’t one and the same as you were trying to make out!
5) you are obviously blinkered enough to not read that I have indeed given credit to Glazers for cutting down costs as well as increasing commercial income, both in the post as well as comments—as for blaming them for the losses–that is fact—if not for the one-off costs, interests, bond issue costs, we would not have posted a loss
6) United were a debt-free company—there would have been no debt but for the takeover and it continues to rise till today—–why is it so difficult for you to get facts into your thick skull?
I dont usually like to talk this way to fellow United supporters but you left me no choice…Have a good day kicking hooligans or whatever…coz you certainly shouldn’t be giving financial advice to anyone…
Btw I’m still looking for a relatively low-risk investment that offers >16.25% compounded return for 5 years, please tell me if you find one…maybe we can all invest there and soon we might make enough cash to rid the club of its debt….
Cheers!
Red Devil
You are quite ridiculous. For the record I’ve spent the last 15 years working for the largest investment bank in the world, but you probably won’t believe that anyway…..
This is the last time I’m going to bother going through this…..so you can have the last word big guy and maybe some people will think you know what you are talking about.
1. A currency swap works as follows. Let’s say I borrow $100m pounds but my earnings are all in £. I don’t want to worry about exchange risk so I put on a swap that means I effectively pay the interest and the capital at today’s exchange rate irrespective of what the exchange rate does. Now let’s say the exchange rate moves heavily in my favour ie £ now worth more $ than it was before. I happily now pay less money in £ terms to pay off the interest (which seems to look good for me) but the swap then moves into a mark to market loss to counteract this move. Likewise, if the currency moves heavily against me, my mark to market on the swap moves into profit. Both are irrelevant to me because I have locked in my interest rate when I put the swap on and (this is the important bit) have based all my projections for my business plan on that currency exchange rate so am very happy no matter what the rate does. Therefore in this case, the mark to market profit or less IS irrelevant.
2. Of course they don’t have THE SAME risks but they each have significant risks that they are aware of and have contingency plans for. A company with a lot of debt can still be run very efficiently which is the original point I was making.
3. No the business model is not risky, the PIK note is – FOR THE INVESTORS NOT THE ISSUERS. That is the key point. It’s like an unsecured loan is riskier for the bank than a secured one – as long as the person borrowing the money gets the money they don’t care. In this case MUFC is the person who has borrowed the money and is now happy.
4. I never said the UK govt issued a PIK note – don’t be ridiculous. Govts cannot issue any instrument they want – you see Zimbabwe borrowing a lot of cash in the international markets? No. The reason why? Because although governments can print as much currency as they want it is worthless if the government is going bankrupt -that applies to the UK and sterling as well (though for the record is pretty unlikely in the UK).
5. You’re missing the point. Here in the real world MUFC now has lots of debt. I still haven’t read your answer for any realistic scenario in the next 20years that we won’t have debt……
The floor is yours big guy…..leave financial markets to people who understand financial markets. I remind you and everyone else that the biggest risk to our club is performance on the pitch deteriorating and that is what we should be concerned about. For that reason, the Glazers will do the right thing in terms of transfer budgets etc because only a severe drop in silverware can endanger the structure the Glazers now have in place.
@hooligan kicker
1) I know what a currency swap is – good to know you know about it too. Now if you will just OPEN your eyes and see page number 21 of the Red Football Accounts, the loss of 41 mn is not on a currency swap…it is on the unwinding of the INTEREST RATE SWAP on the erstwhile senior loans which were replaced by the bonds.
Also if you read page 3 under the heading ‘currency risk’ in conjunction with page 21, you will see that United have not chosen to hedge the currency risk on the bonds and the loss of approx 19m is an actual loss at this point of time which will be realised in cash at the time of settlement in 2017.
Of course you would have seen all this if you had stopped beating out your inflated EGO for a minute and cared to read the accounts in detail.
2) “Of course they don’t have THE SAME risks but they each have significant risks” —-which risk has arisen only after the Glazer take-over as you cannot have default risk if you do not owe anyone anything—-UNITED were a debt-free company before being taken over—-of course a debt-laden company can be managed—-but the need to manage such risks has arisen only because of the Glazers choosing to use such high levels of high cost debt.
3) “No the business model is not risky” — Wow i cannot believe you just said that, especially if you have been working for 15 years in an investment bank as you claim. Have you calculated a figure for financial leverage for United? or done a scenario analysis where we fail to qualify for the champions league for a couple of years…..you seem to have spent the last few yaers in hibernation to have missed the devastating events in the world caused by excessively leveraged financial models.
4) You’re right you didn’t say that the UK govt issued PIK (my mistake) you said that UK got also issued debt at 16% —— the name of the debt instrument is not important–its the cost of debt and the covenants that are important— Also you seem to be completely missing the point once again—-say the UK govt has issued debt at 16% for 200 mn to you—after a few years, say the pound has become clearly worthless but still the UK govt has no cash–so it just prints 200 mn worth of notes and gives them to you and settles the debt—-thats it you cannot say the pound is worthless and the debt remains because legally the debt has been paid. So they can issue debt at any rate whatsoever—not United…for a football club to be paying 16.25% as interest in todays scenario where debt is dirt cheap is very bad business.
5).MUFC can become debt-free by simply breaking the joint TV deal and negotiating on its own or by selling the naming rights to Old Trafford..but would you really want that to happen.
Besides, I am yet to hear an investment avenue which yields >16.25% at low risk compounded for 5 years. I guess with all your financial acumen accumulated over 15 years, you might have an answer for me there….do us a favour and give us all on ROM some free investment advice!
StatesideAussie says:
RTNK … well, if Barcelona needed to borrow 125 million in order to keep paying their players this year, then presumably they they’ll need to borrow again next year, especially if/when their TV rights disappear up Mediapro’s bankrupted backside. We’ll see how good their system is then. Even if we ignore the TV rights debacle, their latest audit shows they need to improve their cash-flow position by at least 150 million between now and next season. Personally, I wish them the worst of luck…
—–
I 2nd that, Mallorca couldn’t even their player’s wages for 2 years, this is to do with relaxed way creditors are dealt with in Spain contrastly in the UK, such business would have been shut down. Consequently clubs in Spain don’t have that much cash in their bank account thus they borrow to run their Working Capital unlike especially Man Utd & Arsenal who over 100m in bank acc