(BN) Manchester United, Arsenal Deserve High-Risk Ratings, S&P Says

Suedesi · 25th June 2008, 19:10

Manchester United, Arsenal Deserve High-Risk Ratings, S&P Says
2008-06-25 12:26 (New York)

By Michael Shanahan
June 25 (Bloomberg) -- Manchester United, Europe's club soccer champions, and U.K. rivals Arsenal deserve high-risk, high-yield credit ratings because of a lack of limits on player salaries or borrowing, according to Standard & Poor's.
S&P assessed the creditworthiness of English Premier League clubs because they may seek to refinance borrowings with asset- backed debt, the ratings firm said in a report yesterday.
London-based Arsenal Holdings Plc became the first European soccer team to sell bonds backed by ticket receipts in 2006 to finance the construction of its Emirates Stadium.
``Football clubs are relatively easy to mismanage,'' S&P's London-based analyst Olli Rouhiainen wrote in the report. ``But although the perceived risk of default for football clubs is high, actual events of default are low.''
Both Manchester United and Arsenal warrant BB rankings, two steps below investment grade, the report said. High-risk, high- yield, or junk bonds are those rated below Baa3 by Moody's Investors Service and BBB- by S&P.
Soccer clubs in the U.K. may attract lower ratings than U.S. sports franchises because there are no restrictions on player's salaries in Europe, no fixed penalties for high borrowings by clubs and there's a risk of relegation to lower leagues, Rouhiainen wrote.
The economic downturn may hurt the clubs' credit quality because it will test their fans ``in terms of attendance and pricing pressure,'' he wrote. It may be possible for clubs to gain investment-grade rankings ``if their business risk profiles prove resilient through the current economic downturn,'' the report said.
Manchester United, bought in 2005 by the U.S. Glazer family for $1.4 billion, owes creditors about 660 million pounds ($1.3 billion), according to data compiled by Bloomberg.
Arsenal's 210 million pounds ($414 million) of asset-backed bonds due in 2029 were initially rated at AAA, the top investment-grade ranking at S&P. The notes were downgraded by two steps this month after Ambac Financial Group Inc., which guaranteed the debt, lost its top grade.
--Editor: Gavin Serkin

To contact the reporter on this story:
Michael Shanahan in London at 44 20 7673-7959 or mshanahan3@bloomberg.net
To contact the editor responsible for this story:
Gavin Serkin at (44) 207 673 2467 or
gserkin@bloomberg.net.

'feckin monolines...

VoetbalWizard · 25th June 2008, 19:19

not surprised.

who backs our debt?

Suedesi · 25th June 2008, 21:18

I don't think our debt is structured.

bazalini · 25th June 2008, 21:32

They reckon it can be proven that an elephant can dangle off a clift by a Daisy.

Nothing surprises me only what I see with my 2 eyes - which is success and trophies

711 · 25th June 2008, 21:46

Quote:

Originally Posted by bazalini

They reckon it can be proven that an elephant can dangle off a clift by a Daisy.

Nothing surprises me only what I see with my 2 eyes - which is success and trophies

It's a good job Fergie wasn't judged on success and trophies early on though, ain't it?

25th June 2008, 19:10	#1 (permalink)
Suedesi First Team Sub Join Date: Aug 2001 Location: New York City Posts: 9,281	(BN) Manchester United, Arsenal Deserve High-Risk Ratings, S&P Says Manchester United, Arsenal Deserve High-Risk Ratings, S&P Says 2008-06-25 12:26 (New York) By Michael Shanahan June 25 (Bloomberg) -- Manchester United, Europe's club soccer champions, and U.K. rivals Arsenal deserve high-risk, high-yield credit ratings because of a lack of limits on player salaries or borrowing, according to Standard & Poor's. S&P assessed the creditworthiness of English Premier League clubs because they may seek to refinance borrowings with asset- backed debt, the ratings firm said in a report yesterday. London-based Arsenal Holdings Plc became the first European soccer team to sell bonds backed by ticket receipts in 2006 to finance the construction of its Emirates Stadium. ``Football clubs are relatively easy to mismanage,'' S&P's London-based analyst Olli Rouhiainen wrote in the report. ``But although the perceived risk of default for football clubs is high, actual events of default are low.'' Both Manchester United and Arsenal warrant BB rankings, two steps below investment grade, the report said. High-risk, high- yield, or junk bonds are those rated below Baa3 by Moody's Investors Service and BBB- by S&P. Soccer clubs in the U.K. may attract lower ratings than U.S. sports franchises because there are no restrictions on player's salaries in Europe, no fixed penalties for high borrowings by clubs and there's a risk of relegation to lower leagues, Rouhiainen wrote. The economic downturn may hurt the clubs' credit quality because it will test their fans ``in terms of attendance and pricing pressure,'' he wrote. It may be possible for clubs to gain investment-grade rankings ``if their business risk profiles prove resilient through the current economic downturn,'' the report said. Manchester United, bought in 2005 by the U.S. Glazer family for $1.4 billion, owes creditors about 660 million pounds ($1.3 billion), according to data compiled by Bloomberg. Arsenal's 210 million pounds ($414 million) of asset-backed bonds due in 2029 were initially rated at AAA, the top investment-grade ranking at S&P. The notes were downgraded by two steps this month after Ambac Financial Group Inc., which guaranteed the debt, lost its top grade. --Editor: Gavin Serkin To contact the reporter on this story: Michael Shanahan in London at 44 20 7673-7959 or mshanahan3@bloomberg.net To contact the editor responsible for this story: Gavin Serkin at (44) 207 673 2467 or gserkin@bloomberg.net. 'feckin monolines...

25th June 2008, 19:19	#2 (permalink)
VoetbalWizard Reserve Team Player Join Date: Jan 2006 Posts: 4,345	not surprised. who backs our debt?

25th June 2008, 21:18	#3 (permalink)
Suedesi First Team Sub Join Date: Aug 2001 Location: New York City Posts: 9,281	I don't think our debt is structured.

25th June 2008, 21:32	#4 (permalink)
bazalini Join Date: May 2000 Location: President of The Bring Back "Charlie Devils, Neil Thomson & Clayton Blackmore" Fan Clubs Posts: 16,657	They reckon it can be proven that an elephant can dangle off a clift by a Daisy. Nothing surprises me only what I see with my 2 eyes - which is success and trophies