ALL issues relating to the bond issue and club finances

[Will Absolute]

The clubs debt is big news to some

The club's debt is presently £423M - 20% of the value of the business. It's fallen by £100M since issued in January 2010.

Debt interest is now £35M per year.

Last years profit was £111M per year.

Despite failure to qualify for the later stages of the Champions League, early exits from the domestic cups, and 2nd place in the Premier League, profits this year are likely to be close to £100M.

With new TV deals, and ever increasing revenue from commercial sources, turnover will greatly increase in the coming years.

Even in a bad year, (Profits - Tax - Debt interest) provide plenty of money for player purchases.

It doesn't enable us to pay City wages. If we removed the £35M debt interest payment from our books and paid no dividends, we still couldn't afford to pay City wages. Even if we dropped the 50% wages cap.

Because City lose £200M a year. And if we had the money to match their wages, they could raise them by £50M and lose £250M a year.

That's about it.

 

[Sir A1ex]

I wish the City takeover had never happened. Not just for the obvious reasons, but there now seems to be this weird acceptance amongst some fans that it's fine if our club gets financially raped because heh, we couldn't match City's spending anyway.

 

[Comsmit]

It always strikes me as odd that the public find their football club with debt more shocking than their employers, their livelihood, being burdened with debt.

Interesting comment. I'm guessing it's a lot to do with the emotional ties fans have to their club. Perhaps they don't feel they have the same bond with their company or firm. They may look at their football club through overly idealistic eyes. An element of romanticism and escapism exists in football and perhaps economic reality hits harder when something is viewed in this way?

I am certainly not a fan of the glazers, far from it, but if you ignore your sentimental ties to man utd it really isn't that shocking. The world operates on credit. Car loans, mortgages, credit cards, student loans. almost every m&a deal will involve some debt finance.

To be fair £500 million of debt finance is a pretty heavy burden for any football club to cope with. So in the sense that a club goes from a debt-free, prosperous outlook to having to buy itself for the sake of being privately owned.......by people who have never been remotely involved in establishing it's position, then it is actually pretty shocking to a lot of people.

ISafe to say that utd have lost out significantly in terms of taking money out of the club that could have been reinvested. But let's not kid ourselves. Our revenue would be no where near what it is without the glazers influence.

There's very little point in generating record revenues if they are eaten away by interest payments, re-financing charges and increased staff costs. All this boasting of record profits is actually fairly hollow when you see the depressing reality of this make-or-break IPO.

But you can't fault the glazers for their business acumen.

Again not saying it is a good thing at all, just saying you have to admire their head for business. Doubling the value of the underlying asset in 5 years is no mean feat.

To be honest people who are involved in the world of business may well admire the Glazers "business acumen." But as you say it is definitely not a good thing...it's a fecking embarrassment quite frankly.

Looking at the cold hard facts and the cost to the club, the route of this admiration for ordinary fans with no interest in capitalism becomes less clear. The simple fact is the Glazers are opportunistic investors (if you can barely call them that) who have exploited the very worst rules and channels of capitalism to make themselves...and themselves alone fabulously wealthy off the back of an iconic sporting institution that they had no hand in the building of. It really wasn't that difficult for them to exploit United and ramp up revenue when the brand was already established but just not peaked in it's overall potential.

I could not give two shits about how much Manchester United is worth in value. It will not benefit anyone else but the Glazer family. Sad reality.

 

[ecantona7]

Such a strange question. Well I'm not anti Glazer. There are better ownerships but as owners in this format they have proved several times to know their stuff. I will go as far saying that they are good owners. They don't interfere with our manager. They invest in the future. They don't change things for the sake of it.

I rather have Glazers as owners in this format then ending up like City, Chelsea or Liverpool. There you have it.

Their investment in the future should be applauded really....

Best owners out there....

 

[LondonRed]

To be fair £500 million of debt finance is a pretty heavy burden for any football club to cope with. So in the sense that a club goes from a debt-free, prosperous outlook to having to buy itself for the sake of being privately owned.......by people who have never been remotely involved in establishing it's position, then it is actually pretty shocking to a lot of people.

Nice post Coms, liked reading that.

Debt at <30% of 'market cap' is perfectly sustainable though especially as it was c.70% on acquisition. It is abhorrent to you as a Utd fan, but it is fine if you are looking at it as a business that you intend to make a profit on. They don't see this as a football club remember. They see this as an investment.

You just described an LBO perfectly! I am not a big fan of them at all. Haven't done any M&A work in a long time but they are so messy. Massive risk involved, nearly always huge swathes of redundancies/sell offs as the business is streamlined ready to be sold in a few years. Not nice to be a part of.

The whole point of an LBO is that to be successful, you have to run the acquired business better than the previous owners did. Sure you lose a lot of money buying it in the first place - interest/loans/PIK etc. But the rewards are reaped when you flog it five/ten years down the line.

The debt will go. The interest will go. The revenue will remain. The % of the company they retain after the debt is no more (if paying it down with equity like the Glazers are doing) is their profit. Quite a tidy little profit it will be too.

 

[DFreshKing]

Interesting comment. I'm guessing it's a lot to do with the emotional ties fans have to their club. Perhaps they don't feel they have the same bond with their company or firm. They may look at their football club through overly idealistic eyes. An element of romanticism and escapism exists in football and perhaps economic reality hits harder when something is viewed in this way?



To be fair £500 million of debt finance is a pretty heavy burden for any football club to cope with. So in the sense that a club goes from a debt-free, prosperous outlook to having to buy itself for the sake of being privately owned.......by people who have never been remotely involved in establishing it's position, then it is actually pretty shocking to a lot of people.



There's very little point in generating record revenues if they are eaten away by interest payments, re-financing charges and increased staff costs. All this boasting of record profits is actually fairly hollow when you see the depressing reality of this make-or-break IPO.



To be honest people who are involved in the world of business may well admire the Glazers "business acumen." But as you say it is definitely not a good thing...it's a fecking embarrassment quite frankly.

Looking at the cold hard facts and the cost to the club, the route of this admiration for ordinary fans with no interest in capitalism becomes less clear. The simple fact is the Glazers are opportunistic investors (if you can barely call them that) who have exploited the very worst rules and channels of capitalism to make themselves...and themselves alone fabulously wealthy off the back of an iconic sporting institution that they had no hand in the building of. It really wasn't that difficult for them to exploit United and ramp up revenue when the brand was already established but just not peaked in it's overall potential.

I could not give two shits about how much Manchester United is worth in value. It will not benefit anyone else but the Glazer family. Sad reality.

Excellent post.

The people who bemoan "anti glazerites" or any other terms of endearment might want to read this post and really try to understand it.

 

[ghaliboy]

Excellent post.

The people who bemoan "anti glazerites" or any other terms of endearment might want to read this post and really try to understand it.

Fair enough, but someone like me with no economic training and little business deduction skills I am gleaning more out of the people who explain United in terms of a 'business'. The more I read the 'they're fleecing the club for millions' and 'millions are going to the banks and not back into the club to compete' comments the more it annoys me that it's happening to keep the club alive through these times. It's unfortunate but there is little you and I can do in the grand scheme of things. (I personally would not like to see someone come in and spend a billion dollars on combustible investment such as players and managers and not the club itself.)

Yeah we've had to ship out 500m but I don't see that as investment loss I see that as the absolute negative to keep the club from going under. It's risky but if it works is it worse than if it had have failed and the club went under?

We've won plenty of trophies since then and it's only really now that a genuine contender with unlimited funds has entered the picture and got their act together that we're starting to see the 'we can't compete' line coming out. Fair enough too I am not going to deny that.

Even the lads who know their shit backwards are saying they are a detriment to the club but have conducted business very well. It's hard to go past the basic instinct of 'MY club is still running, therefore I continue to support'.

Maybe that is just being naive and the day the club goes under because of their ownership will be the day I come to realise what a sad event has transpired but right now there is feck all I can do about it as i'm not contributing to match day revenue. Only putting in my sub £1000 a season through buying merch for myself, my mrs, my niece and nephew and my few mates that all buy each other various United bday and christmas presents from the United store.

 

[Jippy]

Interesting comment. I'm guessing it's a lot to do with the emotional ties fans have to their club. Perhaps they don't feel they have the same bond with their company or firm. They may look at their football club through overly idealistic eyes. An element of romanticism and escapism exists in football and perhaps economic reality hits harder when something is viewed in this way?



To be fair £500 million of debt finance is a pretty heavy burden for any football club to cope with. So in the sense that a club goes from a debt-free, prosperous outlook to having to buy itself for the sake of being privately owned.......by people who have never been remotely involved in establishing it's position, then it is actually pretty shocking to a lot of people.



There's very little point in generating record revenues if they are eaten away by interest payments, re-financing charges and increased staff costs. All this boasting of record profits is actually fairly hollow when you see the depressing reality of this make-or-break IPO.



To be honest people who are involved in the world of business may well admire the Glazers "business acumen." But as you say it is definitely not a good thing...it's a fecking embarrassment quite frankly.

Looking at the cold hard facts and the cost to the club, the route of this admiration for ordinary fans with no interest in capitalism becomes less clear. The simple fact is the Glazers are opportunistic investors (if you can barely call them that) who have exploited the very worst rules and channels of capitalism to make themselves...and themselves alone fabulously wealthy off the back of an iconic sporting institution that they had no hand in the building of. It really wasn't that difficult for them to exploit United and ramp up revenue when the brand was already established but just not peaked in it's overall potential.

I could not give two shits about how much Manchester United is worth in value. It will not benefit anyone else but the Glazer family. Sad reality.

That is a great post. So basically by bringing in a stronger commercial team and maybe partnering at the margins with a private investor the exact same could have been achieved without the brutal PIK charges or the punitive charges the Glazers took.

The Caf has changed over the last few years. The green and gold brigade are silent and the pro-Glazers much happier to admit so than in the past.

For all the improvements in revenue, I can't forgive the fees and juggling of finances around their different corporate structures. They stripped hundreds of millions out of our club.

 

[KingMinger22]

The anti-Glazerites here and in the media are amazing. They descend on every piece of news from the club like a flock of vultures, hungry for every bit of bloody nourishment to feed their prejudices.

How anyone can be anything other than anti-Glazer is baffling to me. They represent everything wrong with capitalism and having the UK's economy so open. And I am absolutely pro-capitalism and globalisation to be clear.

It's a tragedy that this is happening to one of Britain's most iconic modern achievements. It makes me sick.

HMRC and the government fecked up so badly on this and many more instances which are costing us tax revenues. I feel like I should offshore my company - 90% of revenues are international - and save on tax but I'm torn by a loyalty to the country that gave my education.

GHCQ is the Glazer's equivalent of Josef Goebells

 

[KingMinger22]

The debt wasn't for a new stadium or other investment. It was all essentially for nothing. Some forget that.

 

[robertsoncrusoe]

Lets see- they sold Ronnie for 80m which went to pay off interest.... then paid out another 400m+ on interest - surely enough for another 5 Ronnies or the equivalent

That's the equivalent of 6 Ronaldos stripped from the club, just so they and those hedge fund bastards can keep driving Ferraris and fecking models in Greenwich Connecticut!

Meanwhile we're all paying out a 1000 for season tickets, still driving the old escort and scoring occasionally round the back of the chip shop.

 

[Comsmit]

Nice post Coms, liked reading that.

Debt at <30% of 'market cap' is perfectly sustainable though especially as it was c.70% on acquisition. It is abhorrent to you as a Utd fan, but it is fine if you are looking at it as a business that you intend to make a profit on. They don't see this as a football club remember. They see this as an investment.

You just described an LBO perfectly! I am not a big fan of them at all. Haven't done any M&A work in a long time but they are so messy. Massive risk involved, nearly always huge swathes of redundancies/sell offs as the business is streamlined ready to be sold in a few years. Not nice to be a part of.

The whole point of an LBO is that to be successful, you have to run the acquired business better than the previous owners did. Sure you lose a lot of money buying it in the first place - interest/loans/PIK etc. But the rewards are reaped when you flog it five/ten years down the line.

The debt will go. The interest will go. The revenue will remain. The % of the company they retain after the debt is no more (if paying it down with equity like the Glazers are doing) is their profit. Quite a tidy little profit it will be too.

Cheers Red. Yeh I wasn't getting at you at all as you know. I agree with your reflections particularly the issue of debt and how it manifests itself at all levels in society and business. I like the way you explain all this from an owner/investor perspective whilst remaining pretty impartial. Not an easy thing to do, but you obviously know your stuff and lay it out in a way someone like me (not much of a business head) can understand perfectly.

Regarding everything you say here its pretty clear the Glazers have followed the manual to a tee. The truth is if it wasn't them it would be someone else, they saw the potential for themselves in an underdeveloped business and they doubled the value in 5 years. They are smart opportunist bastards but they have also been lucky, particularly with the sustained success on the pitch and the bond demand. I can't possibly admire them but I do understand everything they are doing, its just hugely depressing.

Of course they are not out of the woods just yet.

 

[gaffs]

Such a strange question. Well I'm not anti Glazer. There are better ownerships but as owners in this format they have proved several times to know their stuff. I will go as far saying that they are good owners. They don't interfere with our manager. They invest in the future. They don't change things for the sake of it.

I rather have Glazers as owners in this format then ending up like City, Chelsea or Liverpool. There you have it.

Do they know their stuff? When they bought they club, they never expected to have to sell shares or having to raise a £500mil bond.

With regards to "not interfering", im sure they would if Fergie wasn't in charge.

I don't see the Glazers putting any of their personal fortune into the club to reduce the debt.

They have bitten off more they can chew with United.

 

[Denis' cuff]

How anyone can be anything other than anti-Glazer is baffling to me. They represent everything wrong with capitalism and having the UK's economy so open. And I am absolutely pro-capitalism and globalisation to be clear.

It's a tragedy that this is happening to one of Britain's most iconic modern achievements. It makes me sick.

HMRC and the government fecked up so badly on this and many more instances which are costing us tax revenues. I feel like I should offshore my company - 90% of revenues are international - and save on tax but I'm torn by a loyalty to the country that gave my education.

GHCQ is the Glazer's equivalent of Josef Goebells

the FA and PL were quick enough to put the mockers on Sky's proposed takeover - pity they weren't so vigilant in seeing these creeps off

if you're not anti-Glazer you're not a United fan as far as I'm concerned

 

[Pogue Mahone]

If you ask me, any United fan who could magically turn back time and somehow stop the Glazer takeover yet would choose not to, needs their head examined. It's probably the single most damaging event to happen to this club since the Munich disaster.

Of course, this whole turning back time thing is tricky. We are where we are and I've no idea what the best way forward for the club is. I'm not even sure I would be pleased if some billionaire oligarch came in and bought them out. I'd hate to see the club go through the same relentless turnover of manager and players we've seen at City/Chelsea these last few years, with no meaningful attempt to bring homegrown players through into the first team. A pissing contest between very rich men. Horrible, soulless way to run a football club. Don't want to see it at United.

 

[didsbury1982]

But let's not kid ourselves. Our revenue would be no where near what it is without the glazers influence.

I really don't understand this argument. Why wouldn't the club continue to operate with increasing profits without the influence of the Glazers? It's absolute nonsense.

 

[didsbury1982]

If you ask me, any United fan who could magically turn back time and somehow stop the Glazer takeover yet would choose not to, needs their head examined. It's probably the single most damaging event to happen to this club since the Munich disaster.

Of course, this whole turning back time thing is tricky. We are where we are and I've no idea what the best way forward for the club is. I'm not even sure I would be pleased if some billionaire oligarch came in and bought them out. I'd hate to see the club go through the same relentless turnover of manager and players we've seen at City/Chelsea these last few years, with no meaningful attempt to bring homegrown players through into the first team. A pissing contest between very rich men. Horrible, soulless way to run a football club. Don't want to see it at United.

Great post. The thing is, without having to service the debt, we wouldn't need a billionaire to realistically compete in the transfer market.

 

[Denis' cuff]

If you ask me, any United fan who could magically turn back time and somehow stop the Glazer takeover yet would choose not to, needs their head examined. It's probably the single most damaging event to happen to this club since the Munich disaster.

Of course, this whole turning back time thing is tricky. We are where we are and I've no idea what the best way forward for the club is. I'm not even sure I would be pleased if some billionaire oligarch came in and bought them out. I'd hate to see the club go through the same relentless turnover ofmanager and players we've seen at City/Chelsea these last few years, with no meaningful attempt to bring homegrown players through into the first team. A pissing contest between very rich men. Horrible, soulless way to run a football club. Don't want to see it at United.

let's face it though Pogue, that might well happen anyway in view of Fergie surely retiring in the near future. But I agree, I can't see a happy outcome here given the amount it's going to take to buy the club and who knows how much capital growth is left after that? It looks like the only possibility is a mega rich oil shiek or similar.

 

[Sultan]

not a fan of his?!

He's just batting for the side who pays his salary. Perfectly understandable.

I would say he wasn't fully aware or realised the full extent of Glazers line of thinking, consequences and business ethics. I don't have an issue with the guy, just think he needed to be a bit tactful with some of his pro-Glazer comments.

 

[Sultan]

If you ask me, any United fan who could magically turn back time and somehow stop the Glazer takeover yet would choose not to, needs their head examined. It's probably the single most damaging event to happen to this club since the Munich disaster.

Of course, this whole turning back time thing is tricky. We are where we are and I've no idea what the best way forward for the club is. I'm not even sure I would be pleased if some billionaire oligarch came in and bought them out. I'd hate to see the club go through the same relentless turnover of manager and players we've seen at City/Chelsea these last few years, with no meaningful attempt to bring homegrown players through into the first team. A pissing contest between very rich men. Horrible, soulless way to run a football club. Don't want to see it at United.

Spot on P...

Basically, my thoughts on the subject.

 

[7even]

Do they know their stuff? When they bought they club, they never expected to have to sell shares or having to raise a £500mil bond.

With regards to "not interfering", im sure they would if Fergie wasn't in charge.

I don't see the Glazers putting any of their personal fortune into the club to reduce the debt.

They have bitten off more they can chew with United.

I'm not so sure about this. They seem to have had a long term strategy but maybe the economical downfall and the competition from City and Chelsea probably changed the original plan a little bit. Converting the loans to bonds was probably a correction, but repaying the PIKs after a couple of years must have been their first priority in that plan. After that the next step must have been to sell some parts of the shares via a IPO to reduce the depth, I can't see any other alternatives.

LondonRed described it very well in his posts. If the Glazers was thinking of all this scenarios in their first "master plan" is debatable but what is impressing is how they adapted to every new situation along the years. Talk about finding solutions for every problem.


Finally. I'm not in any way happy with their take over, it was a hostile and I remember that I didn't like it at the time it was happening. But then you have to adapt to the new situation, at least I did. Glazers is the symptom, not the root of this financial misery that some Premier League clubs have become. The one's to blame is the FA, UEFA and FIFA because of sloppy economical rules. When the club was listed the first time and became a PCL it was more or less a invitation for aggressive investors like the Glazers.

If I compare us to Liverpool our situation is extremely good. If and when we reduce the depth we are in a very good position and can look forward to the future. We have a renovated stadium with a great capacity, Carrington is top class and our squad is competitive enough to challenge for the top. The new Financial Rules will work in our favor and our brand is strongest in the business. The downside is that supporting this club as STH cost a fortune, and that increasing prices hurt our most loyal supporters. That is a part of this take over a deeply dislike.

 

[Stretch]

Do they know their stuff? When they bought they club, they never expected to have to sell shares or having to raise a £500mil bond.

With regards to "not interfering", im sure they would if Fergie wasn't in charge.

I don't see the Glazers putting any of their personal fortune into the club to reduce the debt.

They have bitten off more they can chew with United.

Sorry, but how do you know this?

 

[Jimy_Hills_Chin]

They have bitten off more they can chew with United.

Can't agree with that at all. I am no financial expert by any means but if Forbes value the club at GBP1.4bn and the Glazer's bought it for what was it 400m of their own money, if they clear the remaining debt with this IPO they are left with a 900m asset.

Now all these figures are imprecise no doubt but I think that this investment is working quite well for the Glazer's and there is plenty of room for further growth too.

 

[Denis' cuff]

Can't agree with that at all. I am no financial expert by any means but if Forbes value the club at GBP1.4bn and the Glazer's bought it for what was it 400m of their own money, if they clear the remaining debt with this IPO they are left with a 900m asset.

Now all these figures are imprecise no doubt but I think that this investment is working quite well for the Glazer's and there is plenty of room for further growth too.

Well, he is right in that they appear to be struggling with the debt


Even if/when they pay off the debt the clubs profits will be circulated as and when needed to prop up their other interests. Their ownership of the club is a disaster.

 

[charleysurf]

Well, he is right in that they appear to be struggling with the debt


Even if/when they pay off the debt the clubs profits will be circulated as and when needed to prop up their other interests. Their ownership of the club is a disaster.

As much as everyone says "Oh, I'd hate the club to be owned by a billionaire sugardaddy" it seems to be exactly what some want. Because its the only scenario where you can be sure profits will not be taken out of the club. The PLC took profits out of the club.

 

[Jimy_Hills_Chin]

Well, he is right in that they appear to be struggling with the debt


Even if/when they pay off the debt the clubs profits will be circulated as and when needed to prop up their other interests. Their ownership of the club is a disaster.

If Londonred or some other financial expert could clear this up for us. If the IPO does as well as expected and clears the remaining debt will the Glazer's be left with an asset significantly greater than their initial investment?

 

[NoLogo]

So what are going to use the 100m $ we are estimating we could get from our stocks? Pay off debt or invest in the squad?

 

[Damien]

So what are going to use the 100m $ we are estimating we could get from our stocks? Pay off debt or invest in the squad?

It said in the prospectus/form thing that the money would be used to pay off debt.

 

[Escobar]

Interesting enough, they had an indepth look at other top clubs who are listed. Most of them are not doing too well and the price is slowly but surely going down. They say that is mainly because the success of the club is not predictable and football clubs are not seen as long term investments. Therefore, football club shares are seen as very risky and used for risky gamblers by brokers etc...

 

[UnitedRoadRed]

If Londonred or some other financial expert could clear this up for us. If the IPO does as well as expected and clears the remaining debt will the Glazer's be left with an asset significantly greater than their initial investment?

Yes because they invested feck all. They borrowed the initial £290m that they used to buy the first lot of shares then as we all know financed the rest of the deal at credit card percentage rates.

 

[UnofficialDevil]

Lets see- they sold Ronnie for 80m which went to pay off interest.... then paid out another 400m+ on interest - surely enough for another 5 Ronnies or the equivalent

That's the equivalent of 6 Ronaldos stripped from the club, just so they and those hedge fund bastards can keep driving Ferraris and fecking models in Greenwich Connecticut!

Meanwhile we're all paying out a 1000 for season tickets, still driving the old escort and scoring occasionally round the back of the chip shop.

This is how feel about the cnuts too.

 

[Rood]

I wish people would let the cayman islands thing go. Has 0 bearing on anything to do with the club. Not like clubs contribute any significant tax revenue anyway. Negligable amounts compared to the players.

It was awful allowing a club to be bought with so much debt. Man utd or Macclesfield it really doesnt matter. But you can't fault the glazers for their business acumen.

I am always amazed at the public's revulsion at such things. If anyone works for a big firm or the company they work for is owned by a big plc, they will all have some debt. Most private companies will. Barring the cash goliaths apple and google, you would be hard pushed to find a single £500m+ company that doesn't have any. It always strikes me as odd that the public find their football club with debt more shocking than their employers, their livelihood, being burdened with debt.

I am certainly not a fan of the glazers, far from it, but if you ignore your sentimental ties to man utd it really isn't that shocking. The world operates on credit. Car loans, mortgages, credit cards, student loans. almost every m&a deal will involve some debt finance.

Safe to say that utd have lost out significantly in terms of taking money out of the club that could have been reinvested. But let's not kid ourselves. Our revenue would be no where near what it is without the glazers influence.

Again not saying it is a good thing at all, just saying you have to admire their head for business. Doubling the value of the underlying asset in 5 years is no mean feat.

Can't argue with any of that - welcome to the Mains!

 

[Rood]

It is difficult to give any worthile opinion on all this until we know:
a) how much money they manage to raise
b) what valuation it puts on the club

The good news is that they plan to pay off as much of the debt as possible. Although I've always been of the opinion that the debt was not such a big problem anyway, and it will only become clear over time how difference this actually makes to the footballing side of the club.

Personally, I was a shareholder of the club in the past and was too not happy when I was forced to sell my shares back in 2005. I had always hoped to have an opportunity to be a shareholder again, however the shares will be a lot more expensive this time around and the lack of voting rights will make me think twice about buying any.

 

[peterstorey]

I am always amazed at the public's revulsion at such things. If anyone works for a big firm or the company they work for is owned by a big plc, they will all have some debt. Most private companies will. Barring the cash goliaths apple and google, you would be hard pushed to find a single £500m+ company that doesn't have any. It always strikes me as odd that the public find their football club with debt more shocking than their employers, their livelihood, being burdened with debt..

A football club should not be run to primarily to make a profit like the plcs you're comparing them to. Different animal.

 

[Rood]

A football club should not be run to primarily to make a profit like the plcs you're comparing them to. Different animal.

I'm guessing from a couple of his comments that LondonRed probably agrees with that - I certainly do, but that is a whole different subject as far as I am concerned.

 

[LondonRed]

A football club should not be run to primarily to make a profit like the plcs you're comparing them to. Different animal.

Wholeheartedly agree Peter. I am firm believer in all clubs breaking even. Unfortunately the people that own our team do not share the same view.

Again, whilst we are all of the opinion that the highly geared privatisation of MUFC was a travesty as money flowed out of our club and into the pockets of some faceless man on a different continent, he does not give a shit what we think. This is a business investment to him.

The ONLY reason he cares about on pitch success is that it affects the valuation of the underlying asset.

The plc model for sports teams is ridiculous at its most basic level. Our biggest asset is our 'brand' but how you begin to quantify that with any degree of accuracy is beyond me. Imagine an oil and gas company buying a smaller competitor. You raise £x through the issue of shares, you use the cash to buy the competitor. You will of course pay a premium to its true worth in order to convince the other party to sell, but primarily you are left with expenditure of £x, with a TANGIBLE asset worth £y in return.

Now imagine Utd are rolling in it in a few years. We make a £150m bid for Messi (bear with me) and buy him. What is messi worth? We will have an idea of how much additional revenue we would make with sponsorship/merchandising etc. but no one can put an actual value on him. Sure it might lead to on field success. Even if we win the champions league three years in a row would that cover his acquisition? What guarantees are there that any player bought would result in on field success. What if he gets injured? Look at what you could have bought RVP for at the beginning of last season (ignoring contract length and being a year younger). What would he cost now? The oil and gas company has bought a competitor that has defined revenues of £x, forecasted profits of £y etc. We can say what it will be worth. With a football club there are just so many variables.

 

[Will Absolute]

Interesting enough, they had an indepth look at other top clubs who are listed. Most of them are not doing too well and the price is slowly but surely going down. They say that is mainly because the success of the club is not predictable and football clubs are not seen as long term investments. Therefore, football club shares are seen as very risky and used for risky gamblers by brokers etc...

The value of top football clubs has been rising for a long time. (Despite twenty years in the wilderness, and every conceivable problem, Liverpool remains a desirable asset). While not exactly T-Bills, provided they're run prudently, the glamour clubs are a reasonably safe investment.

United is worth more than £1.4B. When the Glazers bought the club, profits were about £45M. Last year EBITDA was £111M. Despite a horrible season of football, this year's profits won't drop much below £100M. That's as bulletproof as any investor can ordinarily expect.

With the new TV deal, and increased commercial sponsorship, profits should rebound to well over £130M from 2013. Three times their size when the Glazers bought the club.

The Glazers paid ca. £800M. So £2B is not an unreasonable estimate of the club's present value.

A lot depends on FFP. If it's not implemented, playing second fiddle to City forever may seriously lower United's longterm worth.

 

[KingMinger22]

The value of top football clubs has been rising for a long time. (Despite twenty years in the wilderness, and every conceivable problem, Liverpool remains a desirable asset). While not exactly T-Bills, provided they're run prudently, the glamour clubs are a reasonably safe investment.

United is worth more than £1.4B. When the Glazers bought the club, profits were about £45M. Last year EBITDA was £111M. Despite a horrible season of football, this year's profits won't drop much below £100M. That's as bulletproof as any investor can ordinarily expect.

With the new TV deal, and increased commercial sponsorship, profits should rebound to well over £130M from 2013. Three times their size when the Glazers bought the club.

The Glazers paid ca. £800M. So £2B is not an unreasonable estimate of the club's present value.

A lot depends on FFP. If it's not implemented, playing second fiddle to City forever may seriously lower United's longterm worth.

Good post.

Would love to see profits rise to £130m next season but you must factor in what should be an increasing wage bill. We will need a good run in the CL which will require some luck without signing some midfielders.

 

[KingMinger22]

One positive at least that we should take from this is that it appears to be a step closer to eventually seeing the Glazers sell up and feck off. I am hoping that is only 2-3 seasons away - prob when SAF retires as it will be a lot more risky in terms of success on the pitch then.

 

[RedCanuck]

One positive at least that we should take from this is that it appears to be a step closer to eventually seeing the Glazers sell up and feck off. I am hoping that is only 2-3 seasons away - prob when SAF retires as it will be a lot more risky in terms of success on the pitch then.

There is no guarantee that the next owners won't use a leveraged buy-out to aquire the club in the same way that the Glazers did.