I just remortgaged at under 2.5%... You're going to the wrong banks.
ALL issues relating to the bond issue and club finances
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Andy Green @andersred
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Gross debt @manutd steady at £361m. Interest rate has been largely fixed. Annual cost down to c. £20m. Very manageable at this point.I think I'm closer to 5%. I really need to look at this!!
Actually, you've got it wrong.
It means that we got a floating rate loan. We've entered into the swap agreement with a thrid party that will pay us the floating rate and we'll pay them an agreed upon fixed rate. This means that we've converted our interest payments from a floating amount to a fixed amount every month/ quarter. Unless, the floating rate breaches the agreed upon caps and floors in which case the excess cost or gains would be either United's.
In short, we will have a fixed amount of interest every qtr.
That's what I wanted to know.
So they are paying £20m a year to cover both the interest and some repayment? That sounds pretty good to me anyway. It seems we have cleared £28m of the debt in the last 6 months, keep that rate up and we'd be debt free in about 7 years.
Being debt free isn't actually the goal, I don't think. Almost every company has some level of debt - certainly most non-sugar-daddy football clubs do.
The key is having predictable, manageable payments - which it sounds like we do.
Overall we look healthy - good amount of cash, great EBITDA and decent wage/revenue ratio. I'd imagine a lot of the increase in wages is down to bonuses from winning the league - will be worth it if we have to pay that again soon!
The key is having predictable, manageable payments - which it sounds like we do.
Overall we look healthy - good amount of cash, great EBITDA and decent wage/revenue ratio. I'd imagine a lot of the increase in wages is down to bonuses from winning the league - will be worth it if we have to pay that again soon!
No we haven't. We have borrowed 17mn GBP more in the last six months. In the last three months, we haven't repaid any debt (nor borrowed more)
The figures I have read put the gross debt at £389m in June and it's now down to £361m?
Possibly due to GBP appreciation and other restatements. Look at the cash flow statement... Within financing cash flows, look at repayment of borrowings. If its a negative amount, it implies net repayment. If positive, it implies net borrowed.
Havent we now reached the point where we not only have no major worries about having the current amount of debt but are now in a situation where keeping the debt as is makes more sense? To get tax benefits, etc. Correct me if i'm wrong.
What i'm saying is, we probably wont see large decrease in the debt anytime soon, if ever.
What i'm saying is, we probably wont see large decrease in the debt anytime soon, if ever.
The road to ruin, we're dooooooomed!
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Spend? Never. Woodward haggles at Starbucks
Any finance experts care to analyse this article?
http://espnfc.com/blog/_/name/espnfcunited/id/10565?cc=3436
http://espnfc.com/blog/_/name/espnfcunited/id/10565?cc=3436
Well I'm not a financial expert but when the article says in one paragraph the gross debt stands at £389.2m and then then not three paragraphs later suggest the club will want to pay off the £504m bonds - I think a little fact checking/poof reading is in order.
It's the standard 'ignorant' Glazer article. Saying how we're "struggling" to pay the debt, pointless, inaccurate speculation on their personal finances. It's all there. It could so easily be 2006
There are some points there that are worrying indeed... The PIK what happened to that? And if the Glazers borrowed money to pay that off they are likley to use United as a piggybank to finance that.. And even with all this new revenue we still haven´t made any money at all or paid off any huge chuck of the debts.. We are runnig an very strange model, all looks rosie but if we fail in the CL or our growth doesnt keep on climbing we could have problems heading our way.... Now I get why all the players we tried to buy this summer couldn´t cost more than 25m!
Growth could half and we'd still easily be able to afford interest payments which now stand at £20m a year. The desperation for scaremongering worked in 2006, started losing its edge in 2010 but now looks frankly ridiculous. . We can pay the debt interest off the back of the money we get for sponsoring the training ground for goodness sake. The idea that somehow there are 'troubles ahead' is reminiscent is nonsense.
It isn't a strange model at all. It's very, very usual for businesses to run with a serviceable level of debt.
Yeah those models worked wonders back 2008..
Nothing changes, we run a club barred with debts even if we are managing our loans better. Well the rates today are much better then back in 2008-2009.. PIK can someone please tell me what United did with those as it is a huge factor in the outcome! And dispite the huge amounts of cash being generated we didn´t show any profit at all.. I´m not saying we are in deep shit or dire straits but ignorance is bliss and the more you look into this takeover the more you feel like something isn´t right..
I dislike the Glazers and the takeover, but the club is a business, whether we like it or not. A serviceable debt is how most big businesses are run.
Sooo... we're no longer doomed?
Not with new deals kicking in (Premier League, UCL rights (from 2015), Sponsorship deals)
Didn't United pay off the PIKs?
Nope, we have £80m sitting in the bank to spend if United want to, interest payments are down from 60m to 20m! And the Nike shirt deal hasn't even been finalised yet. United are now (if they choose to) able to compete with the likes of Chelsea/City.
Indeed - the vast majority of our fans have now realised that there is not much to worry about on the financial front (as Ive been saying for years!), there is still the odd loon who doesnt get it yet but really this debate ended a long time ago.
But on the wider point, when have we ever been in a position to stop winning trophies and fall out of the Champions League and it wouldn't have a bad impact on the club?
People act as if before the Glazer's took over we could afford to finish 9th and everything would be hunky-dory. Few people who scaremonger in this way actually point out that the plan initiated at a time of poor European displays and lowest league finishes in about fifteen years. In fact the whole business plan was drawn up and put into place during this period. So to either suggest that only post 2005 did performance matter to our financial strength and security as a club is as nonsense as suggesting that the club was bought during a time of relatively little success with a business plan that hinged on "we must always win things or we're fecked"
People act as if before the Glazer's took over we could afford to finish 9th and everything would be hunky-dory. Few people who scaremonger in this way actually point out that the plan initiated at a time of poor European displays and lowest league finishes in about fifteen years. In fact the whole business plan was drawn up and put into place during this period. So to either suggest that only post 2005 did performance matter to our financial strength and security as a club is as nonsense as suggesting that the club was bought during a time of relatively little success with a business plan that hinged on "we must always win things or we're fecked"
I feel for them in a way. Fans that is. It isn't really an easy situation to grasp unless you really dig deep. It's understandable that many of them have taken their lead from others and the various comments but Green and Drasdo and the media over the last few years (who have seemingly repeated the aforementioned's comments without filter or caveats since the takeover) it isn't any wonder some still cannot move being "but debt is bad, we have debt, that must mean we're going to go bust" mindset.
It's a symptom of those who purport to represent the fans only telling the fans what they think they should know in order to further their own aims. We know why Andy Green gets media attention and that's because the prospect of United being in financial trouble is a big story and he has been the 'go-to' guy on that very subject by large sections of the media. When you consider this it's fairly obvious why he's been (to avoid saying the words "deliberately misleading") um...suspiciously inaccurate in his predictions and projections over the years. I know predicting finance is difficult but I don't think it's beyond the realms of possibility that he was peddling a line of 'doom' knowing full well that this is what garnered him so much media attention. You don't really get on Sky News or have articles printed in the paper if all you have to say is "Things will probably be fine".
There are other things we've been kept from too. Ticket prices increasing under a slower rate these last 8 years than they did the previous. The large ticket rises initially after the takeover being pre-agreed by the PLC and would have happened anyway. And the fact that despite all the charge exclaiming how little the clubs money was spent on the club, how £90m has been spent on upgrading the stadium. A figure I believe has never been reported other than by the club itself. For people who have their finger on the financial pulse of the club these kind of omissions are suspicious.
Fans, who don't really either have the time or inclination to look into the issue themselves brought the scaremongering hook, line and sinker. Now when the likes of Green are slowly but surely getting away from the scaremongering because they realise they can no longer look credible doing it, the white noise of the 2005-2011 period of "WE'RE ALL GOING TO DIE!!", largely in order to self-promote individuals who knew how easily this line could get them extra work, is still ringing in their ears and hard to move on from.
Well according to most United did not.. The Glazers did and no one knows how!
http://www.bbc.co.uk/news/uk-11762838
Those loans were huge and knowing the Glazers pawned some big shit to pay up the PIK´s they are going to want it back!
So since I started being the boring one let´s look at the major points of this finacial report.
Debt up and a loss in a major upward trend!
Well we got more cash in the bank that´s the only really good thing there..
We will need this cashflow just to stay alive and nobody gives a shit how we got rid of the PIK´s..
Other than that I am a happy camper!
I think the difference is that under "normal" circumstances if we started dropping down the League table we would simply cut our cloth to suit. Shareholder dividends would be cut to nothing and investment in other areas, such as the stadium and youth facilities would also be cut. However we would still be able to maintain a budget for the playing squad that would soon have us competing again under normal circumstances. The debt meant that during that period there was far less room for maneuver, as interest payments (unlike dividends) had to be paid irrespective of our financial health.
Our turnover in 2006 for instance was £173m. Our total expenditure for the year was £173.5m (£96m wages, £37.5m other, £40m interest). This essentially meant that the club was digging into it's cash reserves just to keep it's head above water. Obviously increasing revenue was always the goal, but failing to qualify for the Champions League at this time would have firstly reduced income directly and secondly made revenue growth much more difficult.
At this point in 2006 if the club did fall out of the Champions League the difference would be obvious in my opinion. As a PLC the chances are no dividends would be declared and the £40m interest bill could and would have been used to invest in the playing squad. Under the Glazer model to invest significantly if we did start slipping in the League table there would have had to be more borrowing, which would have lead to higher interest payments, which would have lead to less cash to invest; basically a downward spiral. This is ignoring the loans booked to the holding company.
It's also worth mentioning that we stayed very competitive whilst spending a net amount of around £11m for 5 years 2006-2010, which is testament to Sir Alex. If you believe that a normal level of spend over this period would be somewhere in the region of £100-120m. I don't think it takes a doomsday prophet to think that if we assume that net spend could (and usually would) have been at least £100m higher over that period and performances on the pitch could have lead to a similar figure in decreased revenue, you suddenly see a £200m gap in finances as of 2010.
Obviously our finances are incredibly healthy right now, but I don't think it's a ridiculous statement to say that had luck turned against us we could have been in a very difficult position and you only have to look at Liverpool as an example of that. They were a club competing at the top when bought by Hicks/Gillett and at that point most would have argued that they would finish in the top 4 for the foreseeable future. However it is clear that 3 seasons of spending nearly £30m net on transfers, followed by a year later losing out on Champions League revenue meant they fell into a downward spiral.
How much did Fellaini cost, again?
You raise some good points but on the issue of net spend our net spend from 1992-1998 was:
ZERO
In fact, we'd made a small £40,000 profit on our transfer business. In all the years together the PLC spent on average £7.5m a season. If you exclude the Ronaldo transfer, which was an exceptional amount, the net spend each year under the Glazer's has been £23.5m per year on average. Now the Ronaldo sale takes it down to £14.7 but if you deducted an £81m transfer fee from the PLC net spend over the years from 1992-2005 we'd be looking at a net spend of £3m a year
27m and we overpaid because we failed every other target we tried! If we paid over 7m for Bebe I guess 2m don´t count??
We didn't spend as much as we expected this year not because the funds weren't there but because Woodward ballsed it up. He got cocky and ended up with egg on his face. It's clear he wanted to be the deadline day master and have everyone writing about how stealthily and cerebrally he pounced on deadline day to secure his targets. Instead what was written was "what a cock"
I don't think it was anything to do with Woodward getting cocky, it came down to Moyes not being comfortable buying players he hadn't fully scouted and probably terrified of spending a lot on the wrong players. Our Fabregas bidding was just designed to unsettle the player. I'm sure if we were told we could have him for £50m, we'd have coughed it up.
Thiago - Moyes knew nothing about and it seems we didn't make any formal approach.
Herrera - we weren't comfortable making him our record signing and fecking right too.
Fellaini - Moyes knows him very well and decided we needed someone for midfield and was more comfortable paying for what he knows.
I think we'll see very different activity in the next few windows. Our finances are fine, it's plain to see.
You have a fundamental misunderstanding about the PIKs - it is very little to do with the club, it is the Glazers' personal debts which is exactly why nobody gives a shit about it.
To be fair to him, I dont think Andersred was ever trying to be "deliberately misleading" - he just got it wrong and he has at least had the decency to admit that. There were other loud scaremongering voices online (just look back in this thread) who mostly just disappeared when their prophesies of doom did not materialise.
Green's analysis always tends to be pretty interesting but of course his conclusions always come with a strong bias and that is still the case today - even relatively recently he had to issue an apology (not for the first time!) after badmouthing SAF over the IPO.
His biggest mistake was giving his support to the whole boycotting fiasco - that was always the issue that I was most strongly against and went out of my way to try and send out the message that this was not the right way forward. Glad to see that he mentions this in his latest article:
"This dramatic reduction in the financial importance of normal match going fans should put to bed once and for all any ideas of boycotts or similar actions against the owners (the idea of which I have entertained in the past)."
MUST have also taken a less extreme approach over time, note that their tagline nowadays is "Working towards a future where United's owners have the same priorites as its fans" - that is a big difference to their core message of some years ago and is part of the reason why we now see talks restarting between the club and MUST (plus other fan groups) after a long break without any dialogue.
Perfectly put.
I believed in a boycott, and I still think that would have been the best course of action to take, but when it became apparent within a few months that no meaningful boycott was going to take place, then that was the end of the matter for me, I renewed membership and moved on.
Up until the debt was no longer an issue a couple of years ago the Glazer's didn't invest significantly in the playing squad. Of course if you go back decades ago transfer spend will be minute, as the money in Football wasn't as it is now.
When you look at our spend around the treble winning time when money started pouring into the game you'll see an obvious trend. Fergie was spending big money (£20m+) almost every year. Buying Stam and Yorke for instance in one Summer was insane spending, as was Veron/RVN a few years later, with Rio a year after that and Rooney after that.
This kind of spend wasn't possible 2005-2011. If our team began to falter this kind of spend (pro rata) could not have been sanctioned without extra borrowing. To buy the kind of players and spend the kind of money we did 2000-2005 during the 2006-2011 period would have cost us well over £100m more than we actually spend. If you go on the conservative estimate that prices went up 50% over that period you'd be looking at an additional spend of around £115m, which without more debt wouldn't have been possible.
Fortunately Fergie proved that he could not only win the League whilst spending big, he could also win it on a shoestring by basically spending nothing for 5 years. Obviously the £80m for Ronaldo was a big fee, but as AVB is proving this season, even if you reinvest every penny and then some, losing a World Class player isn't easily replaceable. The fact that Fergie only bought Valencia the season that Ronaldo left and we stayed as competitive as we did was truly incredible (although I'm sure Fergie under normal circumstances would have been eager to spend a good chunkof it on a World Class player).
But I still think he (and they) created much of the hysteria in the first place. If it wasn't now largely impossible to suggest the business plan hasn't worked I'd bet money that lot will still be pushing the whole 'the sky is falling down' agenda to this day. I'll give them no credit for abandoning fear-mongering once they realised it no longer gained traction. It shouldn't have happened in the first place.
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