Or be utter Ihni binni dimi diniwiny anitaime and completely fail trying to butt-feck the club for their own profit.
ALL issues relating to the bond issue and club finances
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In the latest episode of the United Hour Podcast, Nik (@Rood) was joined by comedian Ali Woods to look back at the best and worst moments of a rollercoaster season with the annual United Hour Awards.
Has Ten Hag been sacked yet? We're not sure and we hope not, but it's looking more likely as the days pass.
Who should replace him and why is it taking so long to make a decision?
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No. They're not. As LondonRed already pointed out that a large part of valuation comes from rand value which is directly linked to the performance on the pitch. United losing out on a couple of years of trophies and you'll see that shrink, ie high risk.
You'll assuming the club's valuation to be 18-20 times EV/EBITDA? That's already insane.
The valuation may be on the high side but the float is marketing the club as an 'emerging growth company' (which is pretty strange for a club with over a century of history!) so higher multiples are valid.
I dont agree that brand value is directly linked to success on the pitch, of course there is some link but our brand is now extremely strong and revenue streams are not entirely dependant on success on the pitch.
Brand value in football is easily replicable as Chelsea and City attest.
Do we actually know what ever happened to the PiK's? Did they get paid off?
Yes, as a high growth company, you can have higher valuations. But not stupid ones. No way can we be valued as a 2Bn USD company.
The 'emerging growth company' classification is a nice little quirk for the glazers listing on the NYSE. It applies to any company with a revenue of less than us$1bn (among other requirements). It means that your disclosure requirements are far less than that of companies that don't qualify for such relief. Basically it is much cheaper (ongoing costs of being a listed company) and a lot less transparent (still way more than being a private company) than being an established company.
Tl;dr it means the glazers get to retain a lot more privacy than they would be allowed to do in London. Nothing untoward about it though.
Yeah thats true. Except maybe Facebook type firms which have shown recent exponential growth with potential for incredible upside, you'd be hardpressed to justify a multiple as high as that. 15 is probably the limit and even that's quite a stretch in the current environment. Keep in mind though that the 100mn EBITDA figure is GBP not USD. So a 14 multiple would mean a 2Bn US$ EV.
Your revenue is about £280M v Arsenal's £225M. So you should be worth about 25% more than Arsenal who are capitalised at £1Bn, say £1.25Bn less debt of £400K. About $1.3Bn (possibly less allowing for the Arsenal capitalization being artificially high just now.
That's purely going off of revenue.
If there was company A with 10m revenue, but had 100bn in assets, then company B with revenue of 20m but no assets, does that make company B worth twice that of comany A? No.
There are loads of factors for a valuation, revenue is just one of them, as are assets, profit, debt, brand etc..
It's based on share price (which factors the others) and revenue - as hard as you're gonna get.
You youngster you. Time was when Everton and Villa weren't far behind us financially at all.
Pete, those numbers are for 2009-2010. United's revenue for 2011 was (GBP) 331 million, Arsenal was 227 (according to SwissRamble/Deloitte).
Arsenal's core football business (after excluding the property side of it from the accounts) isn't as profitable as United's. However Arsenal probably has more upside - especially if you look at their underdeveloped commercial revenue stream.
On the whole, I wouldn't say your numbers are far off. United should sensibly value in the £1.2Bn to £1.5Bn range. Things don't always make sense in these kind of listings though.
There was very little commercial use of our brand then, however in terms of world wide recognition despite having 1/4 centuary with little success United were arguably the most well known english club world wide despite Liverpool being far more successful on the pitch
Please, please take this with a pinch of salt. I am only repeating what I was told by my friend at Jefferies, who asked some people in NY. That makes this less than hearsay so again, take this with a fecking fistful of salt. Seriously, heart disease levels.
They are looking for US$350m - US$400m but if they can get the price they want this will go up. If they don't hit their valuation this figure will be lower, but not much lower (i mentioned the transaction size/cost of listing balance in a previous post).
Again to stress, this figure could be anywhere from US$100m to US$1bn. But the best bit of news is if the valuation is right, their aim is to raise enough to clear it all, and that is what I hope you all take away from this.
Trying hard not to sound like an ITK/WUM but as the guys on the deal don't have a clue yet (just a pre-determined target) then I am afraid this is the best I can do. Will know more when the roadshow begins properly.
They are looking for US$350m - US$400m but if they can get the price they want this will go up. If they don't hit their valuation this figure will be lower, but not much lower (i mentioned the transaction size/cost of listing balance in a previous post).
Again to stress, this figure could be anywhere from US$100m to US$1bn. But the best bit of news is if the valuation is right, their aim is to raise enough to clear it all, and that is what I hope you all take away from this.
Trying hard not to sound like an ITK/WUM but as the guys on the deal don't have a clue yet (just a pre-determined target) then I am afraid this is the best I can do. Will know more when the roadshow begins properly.
When is that?
Practically, the maximum debt they can retire with the proceeds of an equity sale is (from memory) 35% of the bond i.e. about 175Mn GBP. In theory, they could raise more and try to buy the bonds on the secondary market as they've been doing quiety with the Club's cash for a while now but it'll get pretty difficult in practice if they're sitting on a pile of cash with a clear intention to use it for that specific purpose. The prices will go through the roof and make it impossible.
If I had to guess, they'll limit new shares to US$260Mn - 300Mn(the GBP 170Mn I mentioned above plus any fees and costs associated with the listing) and fill any excess demand with their own shares so they can recover some or all of their outlay to retire the PIKs. Any more cash in the club doesn't really make sense given that United is already very healthily cash positive.
Well each deal is different and my knowledge of us ipo's compared to emea ipo's is not as strong but generally they will be going on a pre-marketing phase at the moment (or whenever they want to begin-must be done in 90 days though). The CEO/CFO/COO/owners will be travelling around meeting investors and trying to sell the company. "invest in us because blah blah.." and answer any questions they have in terms of strategy.
Because of utd's global appeal this might take a while. By that I mean I would think they would be targeting Asian investors where utd are so popular and where 'a sound investment' might become a secondary thought after the prestige of being a part owner of mufc (what I would do anyway). Lot of travelling.
Then they will gauge roughly what investors are prepared to pay - set a price range eg us$10-us$15 per share then engage in a book build (confirmed investments). Find out exactly what investment folks are prepared to make for what equity stake then we are good to go. The final form prospectus (the exact same one as has been revealed already but with figures inserted) will then be released.
Assuming they have begun the roadshow already then we should know definites within a month. Hopefully get an indication before then but a lot depends on where gill is going to be. Investors will want to speak to him but he might have transfer/pre-season tour related business that slows the process down.
Cheers for that London. I was expecting a 'one month' type of answer! It is nice to hear some behind the scenes info.
I have absolutely no idea what the bond covenants are. Seems like red Indian knows his stuff on this.
The glazers can only sell shares worth 10% of the offering though. If demand is there (at the right value) then they would be fools not to take advantage of it.
The glazers can only sell shares worth 10% of the offering though. If demand is there (at the right value) then they would be fools not to take advantage of it.
Football brands can survive rough usage because they're based on fan loyalty, which is tenacious. Once fans identify with a club over a period of time they don't readily switch.
Again - look at Liverpool. More than 2 decades of failure and their 'brand' is still commercially valuable. Two years ago Forbes valued them at £500M. With one CL trophy being all they had to show for twenty years of football.
If we win nothing in the next ten years, United's commercial value may (or may not) slowly decline, but it won't evaporate like dew in the morning sun.
Even a Liverpool-like fall from grace will probably do no worse in the medium/long term than halve the club's value. We'd still make profits, and still pay our debts.
The top clubs are resilient. A bit like those desert toads that lie dormant for years beneath the sand, only to re-emerge when the first drop of rainwater trickles down to their underground hideaways. They're like Steven Seagal - Hard to Kill.
$2bn is not unfeasible but must be toward the upper end of the range - demand will dictate the price, not valuation analytics
Times change Grandad! anyway, we have been far ahead financially for decades now - it is hardly a recent thing
That's just bollocks really, because even if our revenue was the same as yours then we would still be worth a lot more due to 'brand value'
Because we're Man Utd? Don't be a wanker.
What a sad state football has become, when people are bragging about the 'brand value' of a club.
Nothing against you Rood, it's just disheartening to see what we've starting to resort to. Call it naive and outdated but I remember when you didn't have an idea abou the finances, branding and sponsorship - it was all about the football. Simpler times but probably better times.
yes, basically - do you disagree?
You don't need to have an idea about the finances to understand "brand value", it is actually the part of the value of the club that is more related to football than business - it is about being the most successful club in English fotball history; it is about 100 years at Old Trafford; it is about best, law, charlton; and ronaldo, rooney and beckham
I wouldn't call your view niave or outdated and I can understand your sentiments, but this is the club finances thread after all - besides there are no subjects offlimits when there is some Gooner bashing to be had as far as I am concerned
I'd imagine they would be targeting Asian investors too considering they have made plenty of networks during their last roadshow here in Hong Kong when they were pitching the Bond issue. I was just surprised that they chose to list in the US rather than Hong Kong. The administrative fees and stringent regulations make the US not as appealing a location as Hong Kong, which is also a hub for attracting the wealthiest investors in all of Asia (read: China).
I suppose there are a few reasons why they chose the US. Maybe the Glazers want to manage their asset from home and coupled with the fact that they must have been advised by Jeffries to switch the location as they have almost no presence in Asia unlike the Morgan Stanley's of this world. That to me raises a big red flag because Im not convinced that Jeffries is able to reel in the sort of investors we need to reach the (very high) valuations that the Glazers are aiming for.
However, we shall see. As a Manchester United fan I obviously really want this IPO to do well. Like I said before though, im a bit sceptical that it is Jeffries leading the offering considering how large of a brand Manchester United is. I know its not a full listing and maybe the Glazers have some connections to this IB, but I really hope they know what they are doing because the IPO market is not in the best shape right now, even in Asian markets let alone the US.
In many ways I feel the same but Pete is just being a tit as usual and Rood just put him in his place
Dramatic headline.
This could tie in with the rumours doing the rounds that there is a difference of opinion among the Glazer spawns. Apparently a couple of them are looking to sell their stake and exit, would explain the apparent rush to list at a time that probably isnt the best in terms of market sentiment.
Thanks for sharing. Sounds interesting. Debt free would be a nice position.
Yeah they're really taking quite a risk. They might be hoping for multiples in the 15-20 range but one look at Damodaran's data on EV/EBITDA multiples for Industry sectors shows that only a couple break the 15 mark. They could potentially even end up with a 10 in the current environment especially given the differentiation in voting power of the shares and suddenly the Club's only worth about 1Bn GBP - just 25% increase in value to show for seven years of growth?
That only matters if they want to sell, doesn't it? Which they've shown no sign of wanting to do.
If they're in for the long haul, as they claimed in the beginning, what counts is the growth of real income in the future.
Even if the IPO fails, does it matter? Looking at the club's accounts, the debt interest is no problem, and the debt itself may have shrunk to £100M/£200M by the time it falls due in 5 years.
Yeah its more about perception than reality. Practically, there's very little need for this IPO. At the current earnings level, the current interest burden of approximately 40Mn is well covered leaving enough aside for re-investment (if they choose to use it for that purpose).
Most likely, the IPO has 3 purposes
1. Returning cash - while they've invested very little of their own money in the club, they've also got nothing back. They'd probably like to see some cash coming back from their 'jewel in the crown' investment. Dividends could be unpopular so they probably see this as their best option. Loose a miniscule amount of control but recover a good amount of cash - cover the PIK retirement if nothing else.
2. Risk mitigation - cover for the uncertainty likely after Fergie eventually leaves by distributing some of the risk- say 30-40% of it
3. Reduce cost of capital - while the overall interest burden isn't ruinous, the rate must be a real annoyance especially given the current interest rate environment. 8.375% was appropriate for a different time.
Obviously, all these will fail if the IPO fails. Not the end of the world but a serious loss of face.
Agree with this.
You omitted one possible important reason for the IPO - ending the bad press and fan hassle arising from the debt. If it's gone, United finances are no different from those of other clubs, and the Glazers may hope that the negative image of their ownership will die with it.
Who are you and what have you done with the real WA?
They couldn't give a shit about fan hassle and negative image, not a shit.
Dealtalk: Man United filing shows Glazers' borrowing, buying debt
16:20 ET, Sat 7 Jul 2012
By Paritosh Bansal and Greg Roumeliotis
NEW YORK (Reuters) - Manchester United's filing for an initial public offering of shares in the United States is shedding fresh light on the way its owners, the Glazer family, both borrowed from and bought debt in the English soccer club in recent years.
American entrepreneur Malcolm Glazer and his six children, who took control of the English soccer club in 2005 after a bitter takeover battle, have in the past been criticized by fans for saddling the club with too much debt, amid fears that it didn't have as much money as some rivals to compete to buy and retain top players.
Now the filing shows that the Glazer family was not only borrowing from the club - which describes itself as one of the most popular and successful sports teams in the world - but that at least one son also bought the club's debt, earning a higher rate of return on that money than the family was paying on its borrowings.
"The historical dealings between family members of the company are something for investors to be aware of before they decide to invest in the IPO," said Thomas Conaghan, an attorney at McDermott Will & Emery, who represents companies in IPOs.
He said that such sweetheart related-person transactions -while legally permissible - may not be in the best interests of the club.
It was not clear why the Glazers borrowed from the club rather than from other family companies or banks in 2008 or what they used the funds for. The family has a diverse portfolio of interests, including U.S. shopping mall owner First Allied Corp and the Tampa Bay Buccaneers, an American football team in the NFL.
Other experts emphasized that the Glazers were well within their rights since they own the company and it was not publicly traded at the time of the transactions.
"It is important to realize that it is not uncommon for private companies to make loans to owners," said Campbell Harvey, a professor of international business at Duke University.
However, Manchester United is no ordinary private company. The club, founded in 1878, boasts a global fan base of 659 million, many of them following the sport with almost religious fervour. The disclosure may help reignite the debate that became extremely heated at the time when the Glazers first took control of the storied soccer club after a passionate drawn-out battle, which saw the family's patriarch Malcolm Glazer facing protests from Manchester United fans.
Manchester United spokesman Philip Townsend declined to comment on the IPO or the Glazer family's private affairs. The timing of the IPO is unclear.
Buccaneers' director of communications Jonathan Grella, who has spoken on the Glazer family's behalf in the past, could not be reached for comment. The public relations firm that the club has hired for the IPO in the United States, Sard Verbinnen & Co, and the lead underwriter for the IPO, investment bank Jefferies Group, both declined to comment.
DEALINGS WITH THE GLAZERS
At the height of the global financial crisis in December 2008, the six Glazer siblings - Avram, Joel, Bryan, Edward, Darcie and Kevin - got 10 million pounds ($15.5 million) in loans for at least five years from the club "for general personal purposes" - or about 1.67 million pounds each - and paid an interest rate of 5.5 percent, according to Manchester United's filing with the U.S. Securities and Exchange Commission this week.
In November 2008, commercial banks on average charged an interest rate of 11.44 percent for a two-year personal loan, according to the U.S. Federal Reserve.
Manchester United said in its filing that it believed "the terms of the loans were at least as favourable to us as compared to terms that we would have received in connection with a loan to an independent third party."
Then between October 2010 and January 2011, one of the sons, Kevin Glazer, members of his immediate family, and a Glazer family company bought $10.6 million of Manchester United senior secured notes in the open market that paid an interest rate of 8.375 percent. The notes "were acquired for general investment purposes," according to the SEC filing.
It was unclear precisely which other members of the family, apart from Kevin Glazer, were involved in that transaction, or what funds they used to make that investment.
In April 2012, Manchester United paid the Glazers a dividend of 10 million pounds, which was used to repay the loan it had made to the family.
To be sure, the Glazers injected 249.1 million pounds into the company in November 2010, which the company used to repay another expensive loan. Lower debt would tend to make the company more palatable for investors in an IPO.
The filing doesn't reveal how the Glazers funded that capital injection, whether from their own resources or through more borrowing. Moreover, that was after the family had levered up Manchester United in the first place, loading a soccer club that was once debt-free with huge amounts of borrowings to fund their 790-million-pound takeover in 2005.
Manchester United still has a debt pile of 423 million pounds, which it plans to reduce through proceeds of the proposed IPO. However, the cash and cash equivalents on its balance sheet dropped to 25.6 million pounds at March 31 this year from 150.6 million pounds on June 30, 2011.
Soon after taking over the club in 2005, another son, Joel Glazer, told the club's television channel MUTV that his family wanted to develop Manchester United as "a great club."
"Judge us over the long haul. Don't judge us on a day or the last several months," Glazer said at the time.
(Reporting by Greg Roumeliotis, Paritosh Bansal and Olivia Oran in New York; Editing by Martin Howell and Jan Paschal)
16:20 ET, Sat 7 Jul 2012
By Paritosh Bansal and Greg Roumeliotis
NEW YORK (Reuters) - Manchester United's filing for an initial public offering of shares in the United States is shedding fresh light on the way its owners, the Glazer family, both borrowed from and bought debt in the English soccer club in recent years.
American entrepreneur Malcolm Glazer and his six children, who took control of the English soccer club in 2005 after a bitter takeover battle, have in the past been criticized by fans for saddling the club with too much debt, amid fears that it didn't have as much money as some rivals to compete to buy and retain top players.
Now the filing shows that the Glazer family was not only borrowing from the club - which describes itself as one of the most popular and successful sports teams in the world - but that at least one son also bought the club's debt, earning a higher rate of return on that money than the family was paying on its borrowings.
"The historical dealings between family members of the company are something for investors to be aware of before they decide to invest in the IPO," said Thomas Conaghan, an attorney at McDermott Will & Emery, who represents companies in IPOs.
He said that such sweetheart related-person transactions -while legally permissible - may not be in the best interests of the club.
It was not clear why the Glazers borrowed from the club rather than from other family companies or banks in 2008 or what they used the funds for. The family has a diverse portfolio of interests, including U.S. shopping mall owner First Allied Corp and the Tampa Bay Buccaneers, an American football team in the NFL.
Other experts emphasized that the Glazers were well within their rights since they own the company and it was not publicly traded at the time of the transactions.
"It is important to realize that it is not uncommon for private companies to make loans to owners," said Campbell Harvey, a professor of international business at Duke University.
However, Manchester United is no ordinary private company. The club, founded in 1878, boasts a global fan base of 659 million, many of them following the sport with almost religious fervour. The disclosure may help reignite the debate that became extremely heated at the time when the Glazers first took control of the storied soccer club after a passionate drawn-out battle, which saw the family's patriarch Malcolm Glazer facing protests from Manchester United fans.
Manchester United spokesman Philip Townsend declined to comment on the IPO or the Glazer family's private affairs. The timing of the IPO is unclear.
Buccaneers' director of communications Jonathan Grella, who has spoken on the Glazer family's behalf in the past, could not be reached for comment. The public relations firm that the club has hired for the IPO in the United States, Sard Verbinnen & Co, and the lead underwriter for the IPO, investment bank Jefferies Group, both declined to comment.
DEALINGS WITH THE GLAZERS
At the height of the global financial crisis in December 2008, the six Glazer siblings - Avram, Joel, Bryan, Edward, Darcie and Kevin - got 10 million pounds ($15.5 million) in loans for at least five years from the club "for general personal purposes" - or about 1.67 million pounds each - and paid an interest rate of 5.5 percent, according to Manchester United's filing with the U.S. Securities and Exchange Commission this week.
In November 2008, commercial banks on average charged an interest rate of 11.44 percent for a two-year personal loan, according to the U.S. Federal Reserve.
Manchester United said in its filing that it believed "the terms of the loans were at least as favourable to us as compared to terms that we would have received in connection with a loan to an independent third party."
Then between October 2010 and January 2011, one of the sons, Kevin Glazer, members of his immediate family, and a Glazer family company bought $10.6 million of Manchester United senior secured notes in the open market that paid an interest rate of 8.375 percent. The notes "were acquired for general investment purposes," according to the SEC filing.
It was unclear precisely which other members of the family, apart from Kevin Glazer, were involved in that transaction, or what funds they used to make that investment.
In April 2012, Manchester United paid the Glazers a dividend of 10 million pounds, which was used to repay the loan it had made to the family.
To be sure, the Glazers injected 249.1 million pounds into the company in November 2010, which the company used to repay another expensive loan. Lower debt would tend to make the company more palatable for investors in an IPO.
The filing doesn't reveal how the Glazers funded that capital injection, whether from their own resources or through more borrowing. Moreover, that was after the family had levered up Manchester United in the first place, loading a soccer club that was once debt-free with huge amounts of borrowings to fund their 790-million-pound takeover in 2005.
Manchester United still has a debt pile of 423 million pounds, which it plans to reduce through proceeds of the proposed IPO. However, the cash and cash equivalents on its balance sheet dropped to 25.6 million pounds at March 31 this year from 150.6 million pounds on June 30, 2011.
Soon after taking over the club in 2005, another son, Joel Glazer, told the club's television channel MUTV that his family wanted to develop Manchester United as "a great club."
"Judge us over the long haul. Don't judge us on a day or the last several months," Glazer said at the time.
(Reporting by Greg Roumeliotis, Paritosh Bansal and Olivia Oran in New York; Editing by Martin Howell and Jan Paschal)
So let me get this straight- Kev borrowed from us at 5.5% and then went out and bought some of our debt which was paying him 8.375%......Nice one!
That's money from nothing for him and meanwhile for us that was 10m we could have been using towards a CM.
Deafening silence!! 6 hours have gone by since that was posted and still no glazer lovers with any answers?
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