ALL issues relating to the bond issue and club finances

Discussion in 'Manchester United Forum' started by sammsky1, Jan 2, 2010.

Thread Status:
Not open for further replies.
  1. Jan 2, 2010
    #1

    sammsky1 Pochettino's #1 fan

    Joined:
    Feb 10, 2008
    Messages:
    23,032
    Location:
    Behind my 

    Im not a finance whizz so please can somebody explain in layman's terms what a 'bond' is and how this would be beneficial to the club given our financial situation?
  2. Jan 2, 2010
    #2

    George the Giraffe Full Member

    Joined:
    Aug 28, 2007
    Messages:
    1,489
    Location:
    Manchester
    I'm sure someone who understands this kind of thing, and also has a good knowledge of the clubs financial situation will be along soon.

    *Waits for Ralphie*
  3. Jan 2, 2010
    #3

    WeasteDevil New Member

    Joined:
    Jun 21, 2001
    Messages:
    109,016
    Location:
    Salford in Castellón de la Plana
    Why don't they just cut their losses and float the fecker again?
  4. Jan 2, 2010
    #4

    RonaldoVII Full Member

    Joined:
    Aug 29, 2008
    Messages:
    20,459
    Location:
    PSN:FrozenInHell
    I'm no boffin either but my understanding is that only James Bond can save us now.
  5. Jan 2, 2010
    #5

    Striker10 "Ronaldo and trophies > Manchester United football

    Joined:
    Sep 21, 2004
    Messages:
    18,323
    :( that's God damn awful
  6. Jan 2, 2010
    #6

    esmufc07 Won the Grand National Sweepstake once Scout

    Joined:
    Aug 7, 2007
    Messages:
    33,400
    Why don't the Glazers sell 49% of the club?
  7. Jan 2, 2010
    #7

    Valentino New Member

    Joined:
    May 13, 2005
    Messages:
    1,903
    i though it meant that our team must start smoking these
    [​IMG]
  8. Jan 2, 2010
    #8

    Makki QUITTER

    Joined:
    Dec 22, 2007
    Messages:
    10,794
    Location:
    freguson y u rest the ginger prawn hes most import
    I think they need 75% of it to be able to write their debt on the club.
  9. Jan 2, 2010
    #9

    Burndogg Magic Meat

    Joined:
    Mar 14, 2006
    Messages:
    17,128
    Location:
    Viva La Soviet Union
    Im still astounded this happened to us.
  10. Jan 2, 2010
    #10

    Ole'sbodyguard Full Member

    Joined:
    Mar 2, 2007
    Messages:
    4,199
    I've asked this question myself since May 2005, hoping it was a reliable get out.

    I am no financial wizard, but they'd need someone to underwrite it first, and from what has been muted on refloating they'd be hard-pressed to find somebody who'd do that at an acceptable price.

    It'd be far easier for them to offload the club to some rich multi-billionaire in a single transaction.
  11. Jan 2, 2010
    #11

    WeasteDevil New Member

    Joined:
    Jun 21, 2001
    Messages:
    109,016
    Location:
    Salford in Castellón de la Plana
    The club bought itself, essentially. There is nothing astonishing about it.
  12. Jan 2, 2010
    #12

    kietotheworld New Member

    Joined:
    Sep 10, 2006
    Messages:
    12,638
    The monetary value of 49% of the club is probably significantly less than 49% of the monetary value of the club as a whole, if you get my meaning.
  13. Jan 2, 2010
    #13

    Suedesi Full Member

    Joined:
    Aug 3, 2001
    Messages:
    16,365
    Location:
    New York City

    It's like you're trying to get a new credit card to pay the ones that are charging 20%+ in interest.

    Hardly ideal, but not the end of the world either.
  14. Jan 2, 2010
    #14

    WeasteDevil New Member

    Joined:
    Jun 21, 2001
    Messages:
    109,016
    Location:
    Salford in Castellón de la Plana
    They had a significant holding in the first place, they wouldn't necessarily have to offload the lot would they? It was just a stupid idea in the first place though. I can't see that the value of the club has dropped very significantly, as the income stream is quite stable, in fact probably better now than it was. Also, I'm sure that many disgruntled United fans would lap up the chance to get the club into fan ownership. They should be able to recoup most of their money.
  15. Jan 2, 2010
    #15

    Wumminator The Special One!

    Joined:
    May 8, 2008
    Messages:
    17,362
    Location:
    Obertans #1 fan.
    Bond

    James Bond
  16. Jan 2, 2010
    #16

    rednev There is non worthy of worship except God

    Joined:
    Jul 7, 2006
    Messages:
    24,306
    Great.

    But we'll still be in debt, only it'll be in the form of bonds.
  17. Jan 2, 2010
    #17

    esmufc07 Won the Grand National Sweepstake once Scout

    Joined:
    Aug 7, 2007
    Messages:
    33,400
    We could just open a money-printing factory.
  18. Jan 2, 2010
    #18

    Sultan السلام عليكم و رحمة الله و بركاته Staff

    Joined:
    Sep 1, 2004
    Messages:
    43,841
    Location:
    Don't talk unless you can improve the silence
    How about life memberships for fans at discounted rate?
  19. Jan 2, 2010
    #19

    rednev There is non worthy of worship except God

    Joined:
    Jul 7, 2006
    Messages:
    24,306
    We can employ Mickey Thomas to oversee it.
  20. Jan 2, 2010
    #20

    CptMarvel Full Member

    Joined:
    Sep 4, 2008
    Messages:
    2,757
    Location:
    Cmabridge
    Sounds like a great way to reduce interest payments.
  21. Jan 2, 2010
    #21

    CptMarvel Full Member

    Joined:
    Sep 4, 2008
    Messages:
    2,757
    Location:
    Cmabridge
    A bond is an investment that lasts for a specific amount of time (I'd guess 10 years in this case), over that period you get the money paid back to you with interest (much like a loan in reverse). As we'd be selling bonds as opposed to borrowing money we'd get to set the interest rate (which is currently around 5.25% for long term fixed rate bonds).
  22. Jan 2, 2010
    #22

    Anderson Searl Reserve Team Player

    Joined:
    Dec 9, 2008
    Messages:
    16,406
    Location:
    :lol:
    So essentially:

    - Sell off bonds of 1 Million, which equates to:
    - Getting back 1.0525 Million in 10 years

    Over a course of hundreds of millions of pounds?
  23. Jan 2, 2010
    #23

    kietotheworld New Member

    Joined:
    Sep 10, 2006
    Messages:
    12,638
    Presumably it'd be 5.25% per annum?
  24. Jan 2, 2010
    #24

    Anderson Searl Reserve Team Player

    Joined:
    Dec 9, 2008
    Messages:
    16,406
    Location:
    :lol:
    Aaaaah.

    So if we did a million pound bond at 5.25% for 10 years, we'd get back 1.525 Million instead?

    Which over a span of hundreds of millions of pounds makes a bit of an impact, but how would we re-pay increasing debt off if monies used to do that is being spent on these bonds.

    Most of my financial knowledge of football comes from FM so this is all spanlgishneese to me
  25. Jan 3, 2010
    #25

    Anderson Searl Reserve Team Player

    Joined:
    Dec 9, 2008
    Messages:
    16,406
    Location:
    :lol:
    Question answered:

    Someone send this lad some rep for me please.
  26. Jan 3, 2010
    #26

    Devil_forever You're only young once, you can be immature f'ever

    Joined:
    Apr 28, 2007
    Messages:
    9,493
    Location:
    Head of the naval division of lolibfascon
    That's got to be WeWonItTwoTimes. That just has to be.
  27. Jan 3, 2010
    #27

    esmufc07 Won the Grand National Sweepstake once Scout

    Joined:
    Aug 7, 2007
    Messages:
    33,400
    Why was he banned anyway?
  28. Jan 3, 2010
    #28

    Devil_forever You're only young once, you can be immature f'ever

    Joined:
    Apr 28, 2007
    Messages:
    9,493
    Location:
    Head of the naval division of lolibfascon
    Not sure to be honest but he's stupid for registering with the abbreviation and his financial knowledge gives him away. Good poster when he was up here though.
  29. Jan 3, 2010
    #29

    Addis New Member

    Joined:
    Nov 15, 2007
    Messages:
    3,976
    Location:
    Beckham, in toward Schmeichel, it's come for Dwigh
    I hereby initiate a petition to bring back WeWonItTwoTimes.
  30. Jan 3, 2010
    #30

    rednev There is non worthy of worship except God

    Joined:
    Jul 7, 2006
    Messages:
    24,306
    WWITT was indeed a very good poster. He was a bit of a conservative loon, but a good poster nonetheless.

    I think he was banned quite unfairly, but that's just me.
  31. Jan 3, 2010
    #31

    GAngel Full Member

    Joined:
    Nov 6, 2007
    Messages:
    3,354
    Not sure what you mean exactly. It's essentially a loan from investors who get guaranteed interest. Investors like pension plans or hedge funds are usually the most interested because they get guaranteed returns over the long term which is what there shareholders want. It helps united because they won't have to worry about paying 69 million interest per year it would be something in the 15-20 million range (I'd guess). That way they free up operating profit to pay down the debt that will come due in X amount of years.
  32. Jan 3, 2010
    #32

    sammsky1 Pochettino's #1 fan

    Joined:
    Feb 10, 2008
    Messages:
    23,032
    Location:
    Behind my 
    What would that entitle the member to? How would it be different to having a season ticket like you or owning PLC shares like I used to?
  33. Jan 3, 2010
    #33

    sammsky1 Pochettino's #1 fan

    Joined:
    Feb 10, 2008
    Messages:
    23,032
    Location:
    Behind my 
    Got it. Many thanks
  34. Jan 3, 2010
    #34

    Sojiro Formerly MST3K

    Joined:
    Dec 5, 2008
    Messages:
    4,242
    Location:
    "Sometimes you're not sure about a player,&qu
    there was a newbie named "WeWonItThreeTimes" when i was back in newbieland (early Sept) and i remember WeWonItTwoTimes saying something about he could change his name since it was taken.
  35. Jan 3, 2010
    #35

    amir51 Full Member

    Joined:
    May 7, 2007
    Messages:
    1,788
    This may not be a bad idea depending what rate of interest is on the bond.

    For those who don't know a bond, is a financial certificate which is issued by a firm and bought by an institution or a regular investor. Hence, people give them 600M and this is treated as debt. MUFC has to pay interest to these bond holders (monthly or quarterly). Each bond has a maturity date and when it does mature, they must pay the remaining interest and the full principal of the bond.

    Now they are probably issuing a bond because they are struggling to refinance their loans. Hence, they will take the proceeds and pay off the bank loan and thus just have the 600M in bond debt. This can be advantageous if the interest rate is lower than the bank loan (so we pay less interest). On the flip side, it could have a higher interest rate and we could be paying more interest because they cannot meet their payments and are just looking to delay it.

    Unfortunately, I don't know much about how interest is set or if a bank loan would be cheaper or bonds. Anyone a specialist about interest rates?
  36. Jan 3, 2010
    #36

    RK Full Member

    Joined:
    May 23, 2008
    Messages:
    15,733
    Location:
    Attacking Midfield
    What happens when the bond matures though? Where does the 600M come from then?
  37. Jan 3, 2010
    #37

    beardsleybob Full Member

    Joined:
    Jan 18, 2009
    Messages:
    7,518
    From inside Glazer's mattress
  38. Jan 3, 2010
    #38

    Chris H Video Posting God

    Joined:
    Feb 26, 2008
    Messages:
    6,267
    The cnut couldn't count.
  39. Jan 3, 2010
    #39

    GAngel Full Member

    Joined:
    Nov 6, 2007
    Messages:
    3,354
    They would get a new loan hopefully for significantly less assuming they were using what they spent on interest payments to pay down the loans. Say they freed up 30 million a year they could pay off half of the 600 million and only need a bank loan of 300 million which is much easier to service than current debt.

    Just think of it as going from a 10 year mortgage to a 20 year one. You pay more in the long run but it makes it easier to afford your house.
  40. Jan 3, 2010
    #40

    Chapster Full Member

    Joined:
    Jun 21, 2006
    Messages:
    3,212
    too bad they wouldn't be able to do it in convertible notes since noone would buy into that and htey don't want to dilute their control
Thread Status:
Not open for further replies.