Bad financial news...

Chris H · 6th May 2008, 04:24

An operating profit of £75m for last season has been outweighed considerably by interest on the Glazers' debts and "other accounting provisions". Not sure how much of this is new, but it does sound like there's some reportage of financial records recently made public, so I thought I'd post it.

Quote:

United play for the double on back of £58m losses last year
David Conn
Tuesday May 6 2008

With Manchester United powering to a probable second successive Premier League title and ready for a Champions League final, it appears that life at Old Trafford could hardly be rosier, but the club's accounts, now published in full, detail a significantly bleaker picture of the club's finances under the ownership of the Florida-based Glazer family.

Before the family's 2005 takeover, United prided itself on being the only Premier League club regularly to make a significant profit, to have cash in the bank and, unlike all the others, no debts. After the leveraged takeover, the Glazer family loaded their borrowings on to the club and the position has changed. The accounts for the company that the Glazers use to own United show total borrowings, in the year to June 30 2007, were up to £666m, by far the highest of any English football club, ever. The total owed to all creditors, including the banks, was up to £764m and includes £56m that United owe to other clubs in transfer fee instalments on players Sir Alex Ferguson has signed.

The total interest payable by the club on its borrowings was £81m, although only £42m was actually paid. The rest, which accrued on the millions owed to hedge funds, is allowed to roll up until the whole amount has to be repaid in 2016, or, alternatively, until the Glazers can refinance it. A total of £152m is currently owed to hedge funds, at 14.25% interest a year - £22m from 2007-08. Last year the Glazers tried to refinance but were unable to strike a deal with financial institutions, and a spokesman acknowledged that the credit crunch is making it more difficult now.

David Gill, United's chief executive, announced the headline results back in January, stressing that United's phenomenal money-making power, with 76,000 crowding into Old Trafford and the Premier League's huge TV rights deals, had produced record income of £210m and operating profits of £75m. The full accounts show, however, that even though United made a further £11m profit from buying and selling players, the interest and other accounting provisions pushed United into recording an overall loss of £58m.

The accounts also reveal that by far the highest proportion of income, £92.5m, is still generated on home match days, and although the club has announced more modest ticket price rises for next season than for the previous two, supporters groups continue to protest that they are paying the debts of a takeover they opposed. "It is outrageous that supporters are paying the huge interest on these borrowings, which are worrying for the club's future," said Sean Bones of the Manchester United Supporters Trust. "Our money is pouring out to pay the Glazers, while they have not put a penny into the club."

The spokesman for the Glazer family pointed to the club's success on the field, and in generating income off it, as evidence of the family's competent management. "The family continue to run United as a business," he said. "Their model is to encourage success on the pitch by backing Sir Alex Ferguson, and to grow revenues off it. The interest payments are more than covered by the cash generated."

http://www.guardian.co.uk/football/2....premierleague

Suedesi · 6th May 2008, 04:27

Fuck, that's bad.

reddevilcanada · 6th May 2008, 05:10

Dippersripper · 6th May 2008, 05:11

KeyserSoze · 6th May 2008, 05:12

Not surprising. We all know what the situation is

At least Fergie is still being backed in the transfer market.

prateik · 6th May 2008, 05:19

rubbish , cant believe we pay 130m a year as interest for the 660 m loan

talking robot · 6th May 2008, 05:34

I feel like I'm not getting the whole story. This article implies that even after getting to the semi finals and winning the premiership, the club has accrued 58 million pounds more debt (if I am understanding correctly). For something like that to happen, the Glaziers would have to be incredibly bad at business, which I don't think they are.

talking robot · 6th May 2008, 05:44

Quote:

Originally Posted by prateik

rubbish , cant believe we pay 130m a year as interest for the 660 m loan

the article said it was more like 81m in interest on the 660 m loan, and while 12% seems a little high, it is probably in the ball park for what we are paying. maybe 10% is closer. interest rates are also dropping if any are adjustable rate mortgages from the states.

talking robot · 6th May 2008, 05:51

Ok, here are two questions that I don't know the answer to.
1) How much of the principal on the 660 million pound loan are we paying off every year?

2) The club's income is 210 million pounds per year. We have 75 million in "operating profits." That means that 135 million pounds are being paid out somewhere every year. How much, if any of that money goes towards paying the debts?

I wish there was a very simple explanation for the clubs finances that I could go and read somewhere.

Cold_Boy · 6th May 2008, 06:10

Old news.

We all know the situation.

Anyways I Don't think the figures/facts in this article are true.

jasonrh · 6th May 2008, 06:21

We're fucked financially if we miss out on the CL one of these years.

That which wouldn't necessarily be a footballing disaster could well mean financial ruin.

AlwaysRedwood · 6th May 2008, 06:55

Quote:

Originally Posted by jasonrh

We're fucked financially if we miss out on the CL one of these years.

That which wouldn't necessarily be a footballing disaster could well mean financial ruin.

I'd think it would just lead to a quick sale to some Dubai consortium.

Plechazunga · 6th May 2008, 07:00

Quote:

Originally Posted by jasonrh

We're fucked financially if we miss out on the CL one of these years.

That which wouldn't necessarily be a footballing disaster could well mean financial ruin.

They could make back the shortfall just by selling off a big star, so I think there would be footballing effect.

When Ronnie decides to make his move, it's going to be a black day for the football club but a good one for the owners of the Man United 'franchise'.

Wibble · 6th May 2008, 07:32

Quote:

Originally Posted by talking robot

Ok, here are two questions that I don't know the answer to.
1) How much of the principal on the 660 million pound loan are we paying off every year?

Hard to know but last year the debt increased due to ne off fees associated with refinancing the most expensive bits of debt.

2) The club's income is 210 million pounds per year. We have 75 million in "operating profits." That means that 135 million pounds are being paid out somewhere every year. How much, if any of that money goes towards paying the debts?

The 75 mill profit is the club's operating profit I believe. Any debt repayments would have to come out of that. United payed a 35 mill loan to Red football (or whatever it is called) which was presumably used to pay interest and or capital.

I wish there was a very simple explanation for the clubs finances that I could go and read somewhere.

There isn't one.

Chris H · 6th May 2008, 09:26

Quote:

Originally Posted by talking robot

2) The club's income is 210 million pounds per year. We have 75 million in "operating profits." That means that 135 million pounds are being paid out somewhere every year. How much, if any of that money goes towards paying the debts?

Operating profits means how we did just in terms of running a football club - money in from tickets, TV, prize money, sponsorships, and money out for player purchases, wages, staff, facilities, etc. Doesn't have anything to do with the debt.

Wage bill was £85m two seasons ago, probably several million more now. That's most of the £135m you mention.

holyland red · 6th May 2008, 09:31

Quote:

Originally Posted by Plechazunga

They could make back the shortfall just by selling off a big star, so I think there would be footballing effect.

When Ronnie decides to make his move, it's going to be a black day for the football club but a good one for the owners of the Man United 'franchise'.

You're being a bit over-dramatic here, aren't you?

prateik · 6th May 2008, 09:31

Quote:

Originally Posted by Chris H

Operating profits means how we did just in terms of running a football club - money in from tickets, TV, prize money, sponsorships, and money out for player purchases, wages, staff, facilities, etc. Doesn't have anything to do with the debt.

Wage bill was £85m two seasons ago, probably several million more now. That's most of the £135m you mention.

wages are included when we calculate the operating profits

75m profit to 58 m loss is rubbish
theres no way we are paying 130m in interest

The Hairdryer · 6th May 2008, 09:43

I can't be arsed discussing this right now. In sixteen days time, maybe.

Right now we have a league and CL double to win. After that we have all summer long to talk about finances.

theimperialinn · 6th May 2008, 09:45

I downloaded the accounts the other day from companies house and have been going slowly through them.

I wouldn't read too much into the loss of £58 mil. This figure includes all kind of write offs that are common when a company is taken over. From what I can remember £27 mil was amortisation of goodwill. Which is basically writing off the different between the consideration paid and the value of united on the books. This is being written off over 13 years. Players registrations are also being written off over the length of their contract. This means in effect that sunk costs are being spread over several accounting periods.

As long as we are making a healthy operating profit and have cash in the bank I dont think there is a need to hit the panic button.

There is also talk of the credit crunch hitting the Glazers hard.

This should not be the case as they have hedged against there floating rate loan with interest rate swaps.

At the end of the day you dont get as rich as the Glazers without knowing your onions.

I would be more worried about there ticketing policies and there core principles such as 'treating fans like customers' rather than what the accounts say.

UnofficialDevil · 6th May 2008, 10:38

Sell Tampa Bay Buccaneers and pay off our debts you fat wanker.

gaffs · 6th May 2008, 11:09

With debts like these, I cant imagine the Glazers will be able to sell the club. Any potential buyer would have to pay well over £1billion for the club and to clear the debt.

I wouldn’t be surprised if players like Ronaldo are sold and the stadiums naming rights are sold. The Glazers are going to have to milk every penny to pay these debts.

Kelvin · 6th May 2008, 11:19

Kill the Glazers.

Raven_Blade · 6th May 2008, 11:19

Quote:

Originally Posted by UnofficialDevil

Sell Tampa Bay Buccaneers and pay of our debts you fat wanker.

Agreed. Manchester United > Tampa Bay Buccaneers

Tabata · 6th May 2008, 11:22

Quote:

Originally Posted by Raven_Blade

Agreed. Manchester United > Tampa Bay Buccaneers

Not to them.

George the Giraffe · 6th May 2008, 11:32

Quote:

Originally Posted by Plechazunga

They could make back the shortfall just by selling off a big star, so I think there would be footballing effect.

When Ronnie decides to make his move, it's going to be a black day for the football club but a good one for the owners of the Man United 'franchise'.

To what extent is this actually true? A player like Ronaldo is a marketing dream, not only is he contributing to our success on the field, but he is also increasing United as a brand. Take Bekham as an example, his value to Real Madrid was alot more than his skills on the pitch:

Quote:

A month after the conclusion of Beckham's Real career, Forbes magazine reported that he had been the party primarily responsible for the team's huge increase in merchandise sales, a total reported to top $600 million US during Beckham's four years at the club.

(a wikipedia summary of : http://www.forbes.com/facesinthenews...acescan01.html)

If I remember correctly wasn't "David Beckham" one of the most recognised brands throughout the world? I've no doubt that Ronaldo can replicate this.
I know this kind of thinking is wrong, and we should look at players based on their skills on the pich. But the fact is Football is more than just a sport now. We just have to look at the removal of "Football Club" from our crest in 1998.

theimperialinn · 6th May 2008, 12:23

Quote:

Originally Posted by gaffs

With debts like these, I cant imagine the Glazers will be able to sell the club. Any potential buyer would have to pay well over £1billion for the club and to clear the debt.

I wouldn’t be surprised if players like Ronaldo are sold and the stadiums naming rights are sold. The Glazers are going to have to milk every penny to pay these debts.

I'm sure if the Glazers sold the club the debts would be repaid out of the proceedings. The banks wouldn't let them off that lightly!

Plechazunga · 6th May 2008, 12:33

Quote:

Originally Posted by holyland red

You're being a bit over-dramatic here, aren't you?

Well, we have the best player in the world, the most exciting to watch and effective. It would be a bad day indeed if we lost him.

Quote:

Originally Posted by George the Giraffe

To what extent is this actually true? A player like Ronaldo is a marketing dream, not only is he contributing to our success on the field, but he is also increasing United as a brand. Take Bekham as an example, his value to Real Madrid was alot more than his skills on the pitch:

(a wikipedia summary of : http://www.forbes.com/facesinthenews...acescan01.html)

If I remember correctly wasn't "David Beckham" one of the most recognised brands throughout the world? I've no doubt that Ronaldo can replicate this.
I know this kind of thinking is wrong, and we should look at players based on their skills on the pich. But the fact is Football is more than just a sport now. We just have to look at the removal of "Football Club" from our crest in 1998.

Of course. But the necessity of paying the interest might lead them to calculate that a short-term windfall was more in their interest - or indeed not leave them with the choice.

peterstorey · 6th May 2008, 12:42

The transfer system is heading for meltdown because of the unenforceability of contracts - if you want to cash in on Ronaldo you better do it quick

George the Giraffe · 6th May 2008, 12:43

Quote:

Originally Posted by Plechazunga

Of course. But the necessity of paying the interest might lead them to calculate that a short-term windfall was more in their interest - or indeed not leave them with the choice.

If they are looking for a short term windfall to then sell up, not having ronaldo will devalue the club.

Van Piorsing · 6th May 2008, 12:46

Tickets price will propably rise, again.

Not sure about funds on tranfers, but muppets will declare a World War III if something will go wrong in that department.

I'm worried.

6th May 2008, 04:27	#2 (permalink)
Suedesi First Team Sub Join Date: Aug 2001 Location: New York City Posts: 8,929	Fuck, that's bad.

6th May 2008, 05:10	#3 (permalink)
reddevilcanada First Team Sub Join Date: Mar 2007 Posts: 9,412

6th May 2008, 05:11	#4 (permalink)
Dippersripper Fancies Footballers - Gaylord Join Date: Apr 2007 Location: I don't need nobody Posts: 5,830

6th May 2008, 05:12	#5 (permalink)
KeyserSoze First Team Sub Join Date: Oct 2006 Location: The Way I Hear It Soze's Some Kind Of Butcher A Peerless Psycho Butcher Posts: 5,310	Not surprising. We all know what the situation is At least Fergie is still being backed in the transfer market.

6th May 2008, 05:19	#6 (permalink)
prateik Reserve Team Player Join Date: Dec 2005 Posts: 1,931	rubbish , cant believe we pay 130m a year as interest for the 660 m loan

6th May 2008, 05:34	#7 (permalink)
talking robot Reserve Team Player Join Date: Sep 2006 Location: on your nerves Posts: 698	I feel like I'm not getting the whole story. This article implies that even after getting to the semi finals and winning the premiership, the club has accrued 58 million pounds more debt (if I am understanding correctly). For something like that to happen, the Glaziers would have to be incredibly bad at business, which I don't think they are.

6th May 2008, 05:51	#9 (permalink)
talking robot Reserve Team Player Join Date: Sep 2006 Location: on your nerves Posts: 698	Ok, here are two questions that I don't know the answer to. 1) How much of the principal on the 660 million pound loan are we paying off every year? 2) The club's income is 210 million pounds per year. We have 75 million in "operating profits." That means that 135 million pounds are being paid out somewhere every year. How much, if any of that money goes towards paying the debts? I wish there was a very simple explanation for the clubs finances that I could go and read somewhere.

6th May 2008, 06:10	#10 (permalink)
Cold_Boy Amit Join Date: Apr 2006 Location: somewhere i hate to live Posts: 9,403	Old news. We all know the situation. Anyways I Don't think the figures/facts in this article are true.

6th May 2008, 06:21	#11 (permalink)
jasonrh Join Date: Jul 2004 Location: "You sir, are the syphilitic cockbiscuit son of a hamster rimmer."; "Sir Alex Ferguson, trainer of the English champions, wants to start the spoon fruits since early." Posts: 57,504	We're fucked financially if we miss out on the CL one of these years. That which wouldn't necessarily be a footballing disaster could well mean financial ruin.

6th May 2008, 09:43	#18 (permalink)
The Hairdryer Crikey that stung Join Date: Feb 2005 Location: Hello Posts: 10,782	I can't be arsed discussing this right now. In sixteen days time, maybe. Right now we have a league and CL double to win. After that we have all summer long to talk about finances.

6th May 2008, 09:45	#19 (permalink)
theimperialinn Reserve Team Player Join Date: Feb 2007 Location: W3105 Posts: 4,034	I downloaded the accounts the other day from companies house and have been going slowly through them. I wouldn't read too much into the loss of £58 mil. This figure includes all kind of write offs that are common when a company is taken over. From what I can remember £27 mil was amortisation of goodwill. Which is basically writing off the different between the consideration paid and the value of united on the books. This is being written off over 13 years. Players registrations are also being written off over the length of their contract. This means in effect that sunk costs are being spread over several accounting periods. As long as we are making a healthy operating profit and have cash in the bank I dont think there is a need to hit the panic button. There is also talk of the credit crunch hitting the Glazers hard. This should not be the case as they have hedged against there floating rate loan with interest rate swaps. At the end of the day you dont get as rich as the Glazers without knowing your onions. I would be more worried about there ticketing policies and there core principles such as 'treating fans like customers' rather than what the accounts say.

6th May 2008, 10:38	#20 (permalink)
UnofficialDevil Reserve Team Player Join Date: Aug 2006 Location: Love United. Posts: 1,523	Sell Tampa Bay Buccaneers and pay off our debts you fat wanker.

6th May 2008, 11:09	#21 (permalink)
gaffs Reserve Team Player Join Date: May 2007 Location: E236 Posts: 2,331	With debts like these, I cant imagine the Glazers will be able to sell the club. Any potential buyer would have to pay well over £1billion for the club and to clear the debt. I wouldn’t be surprised if players like Ronaldo are sold and the stadiums naming rights are sold. The Glazers are going to have to milk every penny to pay these debts.

6th May 2008, 11:19	#22 (permalink)
Kelvin First Team Sub Join Date: Jan 2006 Posts: 7,813	Kill the Glazers.

6th May 2008, 12:42	#28 (permalink)
peterstorey Winner of the 'Most pompous arrogant pretentious Gooner' title 2004 Join Date: Nov 2002 Location: Dead Cat Bounce, Fl. Posts: 7,712	The transfer system is heading for meltdown because of the unenforceability of contracts - if you want to cash in on Ronaldo you better do it quick

6th May 2008, 12:46	#30 (permalink)
Van Piorsing Lost his light sabre Join Date: Feb 2006 Location: Polska Posts: 10,035	Tickets price will propably rise, again. Not sure about funds on tranfers, but muppets will declare a World War III if something will go wrong in that department. I'm worried.