The majority of our debt has little to do with completing the buy out. It's a mix of accounting tricks and financing short to mid term spendings. And no the new owners don't have to clear existing debt.
Club Sale | It’s done!
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The majority of that debt concerns current borrowings, a large amount will be paid before we even have a new owner. These are simple instalments there is nothing special about it, there are schedules on when to pay them and there is no clearing to be done by new owners.
While it's interesting for investors to know what the club is supposed to pay or earn in foreceable future, it doesn't reduce the value of the club. On the contrary a large amount of this debt concerns the acquisition of valuable and profitable assets.
So they took almost a £100m from the club's kitty to finance spending on the summer transfer window. We're down to £24m aren't we?
Isn’t that what we wanted?
chelsea we’re bought using a fair bit of debt financing
I don’t know the answer but I’m fairly certain there is no requirement to clear debt here
It's not a kitty, it's the club accounts and that's where the money comes from all the time. The only "difference" is when you look at the accounts, 30 June is the end of the 12 months period while September is the first quarter, there are fluctuations during those 12 months.
And there's still people in here who think that we don't need a super rich guy who is willing and able to pump millions into the team out of his own pockets. We are not self sufficient anymore
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A £20m bughet was a realistic appraisal of pur financial position.
I was obviously wrong. What I am saying is looking at the finances last year, there was no way the club would finance such a huge outlay without significant borrowings. Which is what has happened.
A £20m bughet was a realistic appraisal of pur financial position.
They can do the same thing that many here recommended to Barcelona a few months ago; Do not spend on signings, sell important players who earn a lot of money and go up players from the academy.
I guess the levers now won't look so bad.
Isn't this deceiving though as it's showing only the first quarter of the season - which includes the off season, where we have 0 match day revenue/TV money and all that, but are spending big sums of cash on players.
Yeah we aren't in the best scenario, but i think the biggest issue is the need to renovate Old Trafford and the training ground, where as all the other football operations are pretty much fine to keep going as is. 200m in a summer window isn't sustainable, but the 100-150m has always been sustainable for us even with their shit operations. Don't see why that is different now, but the issue comes from the 1bln needed for renovations.
No. Debt owed remains unchanged (apart from RCF of 100m- the company credit card). Gross debt figure moves about a bit as a result of currency movement. The gross debt is in dollars, but we report in Stg. Accounts express the (fixed) dollar amount in STG at prevailing exchange rates. Dollar strengthens against the pound and the reported Stg amount rises. Not material except at repayment or refinancing dates.
So what do you make of the quarterly?
You can do that and the cash and cash equivalent was 98m but even then it doesn't actually tell you much because it's not as if you necessarily maintain a fixed amount, it's highly circumstantial, for example how much cash may leave one year can depend on how much cash a club that you are dealing with want today and of course how much you want the player in question. It depends on when you are gettingincoming cash and when instalments have been scheduled.
Just to give you an idea of how inconsistent it is in september 2019 the club had 140m, in 2020 58m, in 2021 98m. The differences from one year to the other are often pretty big and this year we barely sold players which is likely to happen in the near future and will increase our cash reserve.
Feck me they need to go and go quickly. Boggles the mind that the FA allowed this takeover to happen.
Basically we don't know if they're a good or bad set of results?
Did anyone seriously think differently?
Pretty much. It represents a limited part of the season(July to end of September) which happens to traditionally be one where clubs bleed money. Now because we are not in the CL, I don't think that we will finish the year particularly well but even that isn't really an issue, there is nothing special in those figures.
It's amazing that these guys are going to fall ass backwards into billions after serious mismanagement of the business.
And they say luck is down to hard work...
And they say luck is down to hard work...
I'm sure I read the Glazers didn't take dividends. Also if they were a good set of results the Glazers wouldn't be selling up, surely?
I’m seeing lots of people talk about leveraged buyouts of football clubs being banned, but a quick bit of Googling brings up articles about proposals and discussions rather than concrete rules.
The articles around the sale of Chelsea and the ‘anti glazer clauses’ seem to be about dividends and management fees being taken out of the club rather than debt fuelled take overs.
Obviously Burnley is a particular example - leveraged against the club, using the clubs own money and placing debt - and may now be a front for a totally different owner and is under investigation.
Can anybody link to definitive articles or is this all hearsay and wrong end of the stickage? Is it actually banned?
The articles around the sale of Chelsea and the ‘anti glazer clauses’ seem to be about dividends and management fees being taken out of the club rather than debt fuelled take overs.
Obviously Burnley is a particular example - leveraged against the club, using the clubs own money and placing debt - and may now be a front for a totally different owner and is under investigation.
Can anybody link to definitive articles or is this all hearsay and wrong end of the stickage? Is it actually banned?
It can always be slightly misleading to read the financials and compare to prior year's quarter.
If you look at the cashflow statement, Sep 2021 was higher AT THAT POINT IN TIME due to a deferred revenue of more than 65m (which could be the delayed covid broadcasting payments/advertising revenue?). That was the major difference.
Our net finance cost in 2022 actually has increased its positive carry significantly, but I'm not exactly sure what this line item entails.
Not saying the financials are rosy. Far from it as the glazers seem to have neglected the debt and just gone gung ho in spending/leeching off the club.
Its clear to see they want to sell now though. With rising interest rates and far more money to be spent on stadium/renovations etc. I think they know their time is done and they will need to sell to a far wealthier owner who is able to clean the slate so to speak.
If you look at the cashflow statement, Sep 2021 was higher AT THAT POINT IN TIME due to a deferred revenue of more than 65m (which could be the delayed covid broadcasting payments/advertising revenue?). That was the major difference.
Our net finance cost in 2022 actually has increased its positive carry significantly, but I'm not exactly sure what this line item entails.
Not saying the financials are rosy. Far from it as the glazers seem to have neglected the debt and just gone gung ho in spending/leeching off the club.
Its clear to see they want to sell now though. With rising interest rates and far more money to be spent on stadium/renovations etc. I think they know their time is done and they will need to sell to a far wealthier owner who is able to clean the slate so to speak.
Dividends aren't big enough to be that much of an issue. Glazers used to not take annual dividends even when the club had tone of cash, so I wouldn't draw any conclusion on it. And I don't think that the Glazers decision making would be based on this, keep in mind that the majority of the family wants to sell the club for a long time, it's not a secret, Joel and Avram are the two sport fans that needed convincing which has seemingly happened.
I think they were definitely banking on the super league to take our revenue to the next tier.
Many clubs were.
Thats why the spanish clubs and italian clubs are still desperate to do so. Those without middle eastern owners will continue to get left behind.
While inconsistency and fluctuation is certainly common, the fact that the Glazers are now looking to sell and have stopped taking dividends should make it pretty clear that they think the situation is going south. Definitely a bad situation.
It does feel a bit that way doesn't it? they've all gambled that it would happen and when it failed left a few clubs with egg on their faces.
Or they want to sell the club because there is a good chance to make a lot of money in 2022-2023. Also the majority of the family has been known to want to sell the club for a long time at the exception of the two that are actually involved in the club.
You guys are trying to draw conclusions and connect dots for no good reason. The same things was done with the protests, people are trying to create any sort of story to explain things that don't really need it.
I think its a little more pressing than that. This might be their only chance to sell the club at the valuation they'd like. A few more years of their mismanagement and the club could be in a more precarious state - both competitively and financially. Best sell now while there's still an aura of positivity around the club.
Ronaldo’s bonus
It wouldn't change the value of the club by much, you are not talking about a club in bad financially state. In fact I have to say that for years I have underestimated the lunacy of some of the potential future owners, the evaluation made of a franchise like the Commanders who is literally criminally mismanaged shows that potential buyers don't really care about positivity. Also United makes a lot of money, we just happen to also spend a lot which is something that can easily be changed for a year or two.
And why have those 2 suddenly decided to sell? There's obviously a clear reason and even if they think they can make a lot of money by selling, there's clearly also the implication that they don't believe the club can continue making them money for another 5 years, so they can then sell for even more money in 2027. There's plenty reason to start drawing conclusions, even without a somewhat concerning financial report.
Is it sudden?
Seems to be. The suggestion for years now had been that they weren't interested in selling. Even as recently as the Chelsea sale this was the message that was being sent by everyone within the media as well as by Jim Ratcliffe for example. The message has always been that the Glazers are hard, they don't care about protests, and they don't want to sell. Now there seems to have been a very quick change that's taken place this season for some reason. The Glazers will have far more financial insight into the club than any of us, and it's likely their financial advisors are telling them that this is the ideal time to sell for whatever reason. Certainly this financial report and their decision to not take dividends this Quarter, while not definitive, adds some extra indication that the financial state of the club is not great at this point of time or at least in a worse state than it has been.
My point is that there is no indication that the Glazers or any people in a similar position, make their thought process public as soon is it crosses their minds. That's the assumption that you are making and it's quite obviously wrong, the Glazers have no reason to leak anything to Ratcliffe until they are ready to make their decision public and that process is unlikely to come from a sudden decision unless they are even stupider than I think.
Not much in it really. As I said earlier the 2 most notable things are cash drain from player purchases and revised outlook on the profit side- EIBTDA now expected to be up to 25% higher than anticipated (as a result of Ronaldo's departure most likely). Begs a question about his wages.
It hasn't, not quite.
Our debt situation looks like this.
1. We have senior secured notes of $425.0 million outstanding -- which i. They mature on 25 June 2027. They were sold to a bunch of pension funds back in 2015. We pay interest on them, think its 3.79 percent. Is it a disaster if they aren't repaid in 2027? Nope, normally this type of debt is refinanced by issuing new bonds, by making a rights issue or private placement, or some other type of debt.
These bonds have so called "covenants" which basically are "do nots" for Manchester United plc. It could impact for example the clubs spending. The terms are available in full, filed with the SEC, but are also described a little more reader friendly in the AR. I haven't checked them in detail. The most relevant is probably (as described in the AR):
"[The Bonds] contains a financial maintenance covenant requiring us to maintain consolidated profit for the period before depreciation, amortization of, and profit/(loss) on disposal of, intangible assets, exceptional items, net finance costs, and tax (“EBITDA”) of not less than £65 million for each 12 month testing period (with the flexibility to reduce this to £25 million during the period 31 March 2021 to 30 September 2022 inclusive).We are able to claim certain dispensations from complying with the consolidated EBITDA floor including up to twice (in non-consecutive financial years) during the life of the senior secured notes if we fail to qualify for the first round group stages (or its equivalent from time to time) of the Champions League."
2. We have a secured term loan facility $225.0 million. This is in essence a bank loan. Think the covenants mostly impact how much interest is paid on the loan. The interest is a margin vs LIBOR (LIBOR + 1.25 to 1.75 depending on the financing of the company). Falls due on 6 August 2029.
3. We have a credit line, under which a syndicate lends us 150m £. As of 30 June, 2022 -- 75m of 150m was used.
Comment:
On 30 June, our long term borrowings (1 and 2) was 530,365,000£ (650m USD) and short term borrowings was 105,757,000£.
On 30 September, our long term borrowings (1 and 2) was 577,367,000£ (650m USD) and short term borrowings was 102,892,000£.
So we didn't draw on the credit line to buy Antony and Casemiro.
How does our cashflow look for Q2? Its probably horrible with no game-day revenue. Last year Cash In was like 25m and our cash flow during Q2 (October-December) was minus 10m. But was that including the sacking of Ole (18,715,000)? I think so right. That means that we netted 10m under normal cirumstances. How much of the 25m was game day revenues?
Our cashflow won't be that negative for Q2. Minus 10? We can draw another 50m on the credit line.
Conclusion:
Without outside financing (the Glazers has since taken over the club provided zero pennies in financing), we aren't spending much more than 100-150m in total over the 2023 January transfer window and the 2022 summer transfer window. This is what Murthough also said before. Its not happening.
Caveat: This is not my home field -- perfectly possible I got something wrong.
I'm hoping the failure of the Super Leage is what drives them out. American owners and Canadian prefer a closed league. Where their is no risk and salary caps. The reason for salary caps is because they are so shit at running these type of sports clubs. They treat them like a business.
Take a look at the Maple Laughs(leafs) of the NHL, they haven't won anything since 1967 when their was 12 teams in the league. And they are the most valuable team in the NHL. So owners don't really have to be competent in running the sports side of the business. They are probably one of the worst run sports teams in the world but they aren't held accountable for it. In fact they are rewarded.
It's why I love the open system. You are held accountable for your decisions. You make bad decisions or don't care and you are punished financially. The Glazers have shown what happens when you have incompetent owners. They have no idea how to run the sports side of the club.
Take a look at the Maple Laughs(leafs) of the NHL, they haven't won anything since 1967 when their was 12 teams in the league. And they are the most valuable team in the NHL. So owners don't really have to be competent in running the sports side of the business. They are probably one of the worst run sports teams in the world but they aren't held accountable for it. In fact they are rewarded.
It's why I love the open system. You are held accountable for your decisions. You make bad decisions or don't care and you are punished financially. The Glazers have shown what happens when you have incompetent owners. They have no idea how to run the sports side of the club.
There's a tifo video on what drove them to sell. One of the few good tifo videos.
Did anyone find it a little funny that on November 15th they didn't get any dividends for the first time, and then exactly one week later they decided that enough is enough?
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