Club Sale | It’s done!

[croadyman]

He is still going to buy the club for more than what the Qataris are offering. It's nothing to do with being the cheapest. It's just a multi stage takeover. Which the Qataris are equally capable of agreeing to. Full control now and then full ownership over 1-3 years... What's the issue?

Yeah why he hasn't ever matched I will never understand,sounds like he wasn't serious enough about buying the club

 

[Blackbeard]

If nothing else the glazers have managed to cause a huge divide in the fan base in what could be their final act and managed to poison the next owners start.

 

[croadyman]

If nothing else the glazers have managed to cause a huge divide in the fan base in what could be their final act and managed to poison the next owners start.

Yeah you are absolutely right we are divided

 

[NK86]

I think your are pretty much on the money, that the two bids are much closer than what’s being rumoured but still no one has answered the most important question?

you can offer an enterprise value per share of say $30 so selling all of their 113m B controlling shares for $3.39bn, Forbes recently valued the club at $6bn which is twice the market cap for a reason. If you buy controlling shares of the club you also take over considerable assets of land around old Trafford which the Glazers have been buying up since 2008, they, the Glazers want a premium ontop of the shares to relinquish their control and allow SJ to build restaurants and hotels or SJR to set up fracking Site(That’s a joke btw!)

They also have future broadcast and merchandising deals in place which are all part of Forbes $6bn evaluation and again the Glazers do not want to relinquish these since they basically have paid their dividends every year bar one of £20m per year for all 6 Siblings. Again they don’t want to relinquish these future deals unless someone compensates them accordingly.

I also thought that both Bids both like you valued at 100% and then the Glazers expected 69% of that value to buy out all of their shares(or 51% in SJR new bid) most fans assumed that this was the amount to be paid to the Glazers to relinquish control yes £6bn to the Glazers as the 100% valuation of the club is not necessarily 100% of shares it also includes Current assets, both short and long term like Player Squad Value and Property owned outright by the clubs , plus more importantly future Broadcasting and Merchandising deals.

I also like you, assumed that the Glazers would only get 69% or 51% of the valuation but the more I dig into this the more it seems that the bids by both parties are to take over the controlling shares and involve much more that a simple purchase and transfer of shares.

So for example SJR bid is £5.4 possibly going up to £6bn for 51% of the Glazer Control including compensatory payments for loss of future broadcasting, merchandise contracts, relinquishing control of the clubs short, mid and long term assets.

So SJR valued the shares at $30 which is 163 million at $30 = $4.89bn (£3.92bn) plus the club debt which must be factored into the bid even though it does not have to be cleared under a merger takeover of $675m(£570m) and then Ineos made an additional payment in lieu of Future assets, Broadcasting and Merchandising of £800m or $1bn This would mean that the Glazers would receive 113m shares at a guaranteed $30 which is $3.390 Billion plus $1bn to relinquish control of the club giving them a guaranteed buy out of $4.39bn (But it could rise to $4.99bn).

The deal from SJR and Ineos would mean 73% of that agreed deal must be paid now and 27% later in a structured put and call layered take over where they payments could go up but never down.

So for clarity SJR woulD have to pay $3.20bn (£2.6bn) now for 51% controlling shares and a minimum of $1.239bn(£1bn) over 4 years but this could also rise to $1.87bn(£1.5bn) dependent on team success.

This is how the £6bn bid is actually being pitched it’s like Sky Reporting we bought A Martial for £58m because it assumes that all the clauses to meet that value will be met.

SJ offer of $6.5/6.6bn might also value the club slightly differently on that ;

1. The debt is paid $675m
2. They value the shares at $29 so 163m 163*29 = $4.72 billion (£3.78bn)
3. Legacy payment to relinquish control $1.1bn(£882m)

Therefore the Glazers would get 113m @29 = $3.277 billion plus $1.1bn legacy plus $220m for selling remaining 4.3% of A shares giving them a total right now of $4.6bn (£3.7bn) cash and tax free right now.

I’m scratching my head right now too as this whole process is so more complicated than a normal merger needs to be.


Conclusion neither bid is accepted by the Glazers as they clearly want £6bn minimum and they want the money upfront and not a penny less !

Two really interesting posts on how the whole financial side of it could be. Thanks for taking the time to write it up in such details.

 

[Marcelinho87]

There you go like I said that's not clearing debt

Which he said from the off, no new debt would be placed on the club.

INEOS are a long standing multi billion pound operation I think it's fair to say they know much more about how this works than any single person on this forum, qualified or not.

If they are happy to borrow who are we to question their ability to repay it.

 

[Marcelinho87]

This is not a fair statement at all. Sometimes you get lots of debt easily and then end up being in a complete clusterfeck.

Yes Deborah who goes into bright house and gets a new washer, Xbox for her son and a TV for her husband who leaves the nick next week might get into lots of debt easily.

INEOS are a company who lives and breathes this shit, it's how they operate.

 

[JPRouve]

This is not a fair statement at all. Sometimes you get lots of debt easily and then end up being in a complete clusterfeck.

Case in point, Altice and Patrick Drahi.

 

[putzmcgee123]

I'm not sure it's that cut and dried. Either result would not surprise me at this point.

The thing I find most SJR friendly is the lack of movement in the share price. But I also wouldn't put it past the Glazers to be quietly hoovering up shares in advance of a Qatari takeover.

I will continue to beat the drum on this: unless the suggestion being made is that illegal tipping or insider trading is taking place, the stock price cannot be used as a precursor of what the likely outcome is.

My take is the stock price has simply reflected the media coverage, which at the moment, is clearly in Jimmy Rat's favour. The conditions are also ripe for volatility, because the float is very low and the Class A shares have limited appeal outside of a takeover due to the lack of meaningful voting rights or dividends. Also, generally when a company publicly announces they are exploring strategic alternatives, the reporting is pretty scarce until there is an announcement made. This has been covered by the press like a transfer saga with play-by-play "updates," most of which are actually just the three parties (Raine, Jassim, Ratcliffe) playing games with one another and swaying public opinion, or is just straight up click bait nonsense from cretins at second-rate media outlets.

 

[croadyman]

Which he said from the off, no new debt would be placed on the club.

INEOS are a long standing multi billion pound operation I think it's fair to say they know much more about how this works than any single person on this forum, qualified or not.

If they are happy to borrow who are we to question their ability to repay it.

So why can't they clear it IF they have the necessary funds to buy the club then

 

[dpansheth]

The 969m will remain with the club albeit with a much better plan than the Glazers have going on how INEOS operate.

The 5bn is a figure thrown out of nothing, we don't know how much they are borrowing or putting down themselves but whatever is is will be put onto INEOS books not United so the debt will be that of INEOS, who as you can see have a load of debt of which they must be good at paying or they wouldn't keep getting it.

what exactly is the plan & how is it better?

 

[croadyman]

what exactly is the plan & how is it better?

Guess we find out when he takes over

 

[Marcelinho87]

So why can't they clear it IF they have the necessary funds to buy the club then

They probably could but with debt comes tax relief and other benefits that help companies.

what exactly is the plan & how is it better?

Who knows, I said going off how INEOS operate.. it's obvious they use debt wisely to invest etc whereas the Glazers just let it rot and paid capital only afaik.

 

[Appletonred]

Cash now is better than cash in 3 years down the line for the Glazers, surely they must of heard about the brevity of life, a lot can happen in 3 years, if I am in their shoes
I am taking the huge cash out from Qatar without any hesitation, and I personally believe that they will.

 

[Barthez]

Please not Sir Jim Glazer and the Goblins.

 

[IncyWincySpider]

Guess we find out when he takes over

Hel'll turn up to Old Trafford day one carrying a branded umbrella and make a quip about his first job being to fix the hole in the roof. Everyone will laugh because we all love eccentric billionaires and all the nastiness of the last few weeks will be forgotten.

 

[dpansheth]

They probably could but with debt comes tax relief and other benefits that help companies.



Who knows, I said going off how INEOS operate.. it's obvious they use debt wisely to invest etc whereas the Glazers just let it rot and paid capital only afaik.

Their expertise is not using debt wisely anywhere. Their expertise is how to use debt to fund their own petro business. The reason is they exactly know how much risk they are taking on being expert in their field.
Taking debt to own sports clubs is a different ball game.

 

[Rightnr]

what exactly is the plan & how is it better?

Brexit and chill.

 

[Member 125288]

Yeah why he hasn't ever matched I will never understand,sounds like he wasn't serious enough about buying the club

Presumably because he has a ceiling in mind and he doesn't want to overpay. The difference between the two bids is not just monetary though is it - what the Glazer's lose in financial value with SJ's bid they gain in having the proceeds immediately and a much simpler, quicker sale transaction.

 

[Dr. Dwayne]

Cash now is better than cash in 3 years down the line for the Glazers, surely they must of heard about the brevity of life, a lot can happen in 3 years, if I am in their shoes
I am taking the huge cash out from Qatar without any hesitation, and I personally believe that they will.

Is it? A lot of posters suggest they could get the cash in hand now and do something with it but we have seen recently that investments and banks can collapse with very little warning. A guaranteed payout from INEOS in two or three years carries a lot less risk.

 

[LawCharltonBest]

Presumably because he has a ceiling in mind and he doesn't want to overpay. The difference between the two bids is not just monetary though is it - what the Glazer's lose in financial value with SJ's bid they gain in having the proceeds immediately and a much simpler, quicker sale transaction.

If they were good businessmen, they could take the money now off the Qatari sale and reinvest it to make it worth more.

Problem is, they aren't good businessmen at all. Just riding off their Daddy's money

 

[Cassidy]

But they will have to cough up another couple of billions in 3 years, right? Do you have figures for their revenues which show that they would have enough money to service all this debt while investing in the Club?

No the 2-3.5bn would be the total outlay paid over the 3 years or whatever timescale is set. Options contracts are used so that if the value of the club changes in that time the present value outlay from SJR is not affected.
No I don’t but plenty of posts online have gone over it.

 

[Cassidy]

Is it? A lot of posters suggest they could get the cash in hand now and do something with it but we have seen recently that investments and banks can collapse with very little warning. A guaranteed payout from INEOS in two or three years carries a lot less risk.

Read up present value and time value of money. Cash today is always worth more than the same cash tomorrow (especially in this high interest environment)

Also worth noting that if someone is going to pay something in 3 years, you have opened yourself up to counterparty and credit risk Thats why options contracts will be used but at the end of the day who says INEOS will be solvent in 3 years?

Anyone paying you at a later date carries more risk.

 

[Woziak]

Thanks for the post but tbh this make my head hurt ...

Anyway I'm so fed up of this mess I don't really care who and who anymore just get this done asap so ETH could start his summer plan. Surely we don't wanna wait till mid Aug to start buying. There's probably nothing left by then.

I did say it makes my head hurt too !

 

[Rhyme Animal]

Cash now is better than cash in 3 years down the line for the Glazers, surely they must of heard about the brevity of life, a lot can happen in 3 years, if I am in their shoes
I am taking the huge cash out from Qatar without any hesitation, and I personally believe that they will.

I agree.

Very confident Jassim will win, increasingly so.

 

[Nick7]

I agree.

Very confident Jassim will win, increasingly so.

Ratcliffe also has a “cash now” bid.

 

[Cassidy]

It's not just my opinion though. The fact that they entered into final stages with him shows it was the primary consideration ahead of all others.

Its your opinion that the delay is due to the structure of the bid and not anything else (which I gave an opposing opinion to). Its not a fact its not been reported anywhere, its your opinion.

We do know other things have been reported elsewhere (including the delay before SJR decided to change the bid structure)

 

[Berbaclass]

Nice???

It's utterly pathetic. He's not even got it yet and still might not either. Not to forget he could make a far better owner than Jassim will for all we know.

I don't want Qatar and have made it perfectly clear but I won't be tweeting Qatar out after 5 seconds if they do win the auction.

The level of intellect we're talking about here on twitter probably says everything though.

Think about it.

 

[Nick7]

Read up present value and time value of money. Cash today is always worth more than the same cash tomorrow (especially in this high interest environment)

Also worth noting that if someone is going to pay something in 3 years, you have opened yourself up to counterparty and credit risk Thats why options contracts will be used but at the end of the day who says INEOS will be solvent in 3 years?

Anyone paying you at a later date carries more risk.

I think you’re missing that the Glazers want to stay in some capacity. Ratcliffe/INEOS aren’t offering the 51% deal out of the good of their heart. They’re doing it because the Glazers have indicated time and time again that they aren’t sure they want to completely sell up. If they want to keep the shares the constant argument over the time value of money is moot.

 

[Cassidy]

I don't get the underbidding at all

You don’t get negotiating?

 

[Cassidy]

I think you’re missing that the Glazers want to stay in some capacity. Ratcliffe/INEOS aren’t offering the 51% deal out of the good of their heart. They’re doing it because the Glazers have indicated time and time again that they aren’t sure they want to completely sell up. If they want to keep the shares the constant argument over the time value of money is moot.

Im not missing anything. Im responding to a post about whether money now is better than money later. And if a payout later carries alot less risk (which of course is no is any financial transaction)

 

[Marcelinho87]

Their expertise is not using debt wisely anywhere. Their expertise is how to use debt to fund their own petro business. The reason is they exactly know how much risk they are taking on being expert in their field.
Taking debt to own sports clubs is a different ball game.

Whichever way you wanna spin it it's INEOS taking the debt, maybe they have the wiggle room who knows... One thing for sure is they're successful and a billionaire in the meantime so again in a much better place to evaluate than you or I.

 

[L1nk]

You don’t get negotiating?

What kind of negotiation is it when you value the club lower than the rival bidder, like 5 times. Regardless of how the bids are setup, regardless of how much they are overpaying - SJ has undervalued the club to SJR 5 times, that is not negotiating.

 

[TrebleChamp99]

Sir Jim is a penny pinching poorper, any club under him will suffer especially as he refuses to shower and smells musky.

I can’t take a man seriously who is as poor as him and attempting a buyout of the biggest club in the world, beggars belief he was allowed into the process whilst being so scruffy and smelling like a tramp.

 

[Nick7]

Im not missing anything. Im responding to a post about whether money now is better than money later

It means feck all if the Glazers believe it will be worth more later. There’s risk in everything with regards to investments. Take the money now and our value spikes and they’ve left money on the table.

 

[romufc]

It means feck all if the Glazers believe it will be worth more later. There’s risk in everything with regards to investments. Take the money now and our value spikes and they’ve left money on the table.

Who is to say our value spikes? it could tank too... another few years where we dont win and City and Newcastle start dominating, the Man Utd value could tank too.

 

[Woziak]

Two really interesting posts on how the whole financial side of it could be. Thanks for taking the time to write it up in such details.

We may get an interesting development on Friday where SJ and 92 Foundation publicly pull out or The Glazers through Raine state that either SJ or SJR is the preferred bidder and they are looking to conclude the merger takeover within 6 weeks. To be clear here SJR proposal will take at least 12 weeks to complete taking us to the middle of September at best. We may even find that SJ ups his offer from £5.2bn to £5.4bn for a quick completion as a sweetener, this may be why he said The Glazers and Raine have until Friday to discuss offers with him!


I do think that the fact that no preferred bidder has been declared yet means that this is much more of an open race than many outlets are reporting.

 

[Swedish_Plumber]

Any worthwhile developments or are we still going round in endless argument circles?

 

[Pogue Mahone]

Any worthwhile developments or are we still going round in endless argument circles?

The latter.

 

[Berbaclass]

Any worthwhile developments or are we still going round in endless argument circles?

Think tomorrow we may hear something but probably wishful thinking.

I prefer Qatar but I'd like some sort of resolution soon, even if it's INEOS. It just needs to get done now.

 

[Red in STL]

Who is to say our value spikes? it could tank too... another few years where we dont win and City and Newcastle start dominating, the Man Utd value could tank too.

It could tank but it isn't very likely to, United's value is not totally based on whether the team does well or not, we've been shite for a decade and the revenue is still in excess of our competitors and that's not likely to change any time soon