ALL issues relating to the bond issue and club finances

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

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  1. Feb 12, 2014

    Plugsy New Member

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    David Conn is just one of those journalist morons who wrote one article 7 years ago and they just publish it every few months with sightly updated figures. All scare mongering and exaggeration.

    It's a wonder was Drasdo and Green are often the only 'sources' these people have. Really look at any article on the subject written between the takeover and about 2012 and in 99% of them Green will be cited as "independent football analyst" or some such. That's why media coverage has always been so one-sided.
  2. Feb 12, 2014

    Revan Assumptionman

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    Exactly. I was thinking the same but people here are saying that he's reliable. Even if we count those 150m or so that Glazers paid from their sale of shares, still is around 530m which makes around 63m per year which still isn't possible. Something is wrong with those numbers for sure. Also, the debt only in the beginning was around 80m per year or so but on the recent years it was lower (now only 20-25m per year) so again the numbers doesn't add up. I sense an agenda here.
  3. Feb 12, 2014

    ravelston Full Member

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    Historically he's tended to regurgitate anything andersred has fed him on United's finances - it's not exactly independent research. That's not to say that the numbers aren't enormous, but they only represent one side of the picture. We've saved approaching £300m on interest [Edit: Oops - meant to say dividend] and tax payments over the period as a starter - never mentioned by Conn. And, as mentioned above, a considerable amount of our current cash flow is attributable to the Glazers' management - how much we will never know but certainly enough to be very significant. In terms of actual cash flowing out of United it's hard to get up to £200m as the "Glazer cost" to date - and the number declines rapidly as the amount of the commercial revenues you choose to attribute to the Glazers increases. (Don't get me wrong, £200m - or even £100m - is still a lot of money. It's just not £684m.)
    Last edited: Feb 12, 2014
  4. Feb 12, 2014

    Will Absolute New Member

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    Well, I'm not an accountant, so it's not beyond the boundaries of possibility that I'm overlooking something. :D

    I'd like to hear what ravelston has to say.

    (or London Red or one of the other professionals)

    Edit: see above
  5. Feb 12, 2014

    Skywarden Full Member

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    £684m. :lol:
  6. Feb 12, 2014

    ravelston Full Member

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    It's important to differentiate between things like interest, dividends and taxes which involve cash actually flowing out of the operating entity, and the issue discount associated with financial changes or the effects of exchange rate fluctuations on the value of financial obligations or almost anything related to the PIKs, which don't involve cash leaving United.

    The cash that has unambiguously left United includes around £360m of interest payments, £90m used to repurchase bonds in the couple of years before the IPO, and the £10m dividend that the Glazers paid to themselves prior to the IPO. Additionally, some of the costs associated with the various refinancings and the IPO were paid in cash (accountants, lawyers, various consultants, etc.).

    The majority of the costs of the refinancings and the IPO were paid through "issue discounts" (also known as the underwriters' spread). That just means that the underwriters take a chunk of the money you raise so you have to raise a little more than you need. During the refinancings and the IPO the money raised never came near the operating entity that is United - it was simply paid to retire whatever securities were being replaced. The result is that the debt outstanding is increased by the amount of the issue discount each time it is refinanced - but this isn't a cash drain on United unless and until internally generated funds are used to pay down the debt. Hence these are potential costs that are, as yet, unrealized (and which may never be realized). On the positive side, issue discounts are amortized and thus reduce our taxable income.

    There were a bunch of inter-company transfers tagged as payment for consulting and other services in the years before the IPO. There is no way of knowing the extent and value of the services provided. It's likely that at least some of those charges were genuine - it's hard to see how we could have ramped up commercial so rapidly without outside assistance. These are usually included in the estimates of the "Glazer costs" - I suspect, at least in part, erroneously.

    The only impact of the PIKs on United arose from the deductability of the notional interest that was paid on them and the amortization of their issue discount. That is, their existence gave us a tax break. They were secured against the Glazers' shares so, if they had defaulted, our ownership would have passed to the lenders but there would have been no claim on United's assets.

    As I said in my prior post, without the debt we would have paid approaching £300m in dividends and taxes since 2005. This should be offset against the costs associated with the debt and with the Glazers' ownership.

    [Edit: I forgot the costs associated with unwinding the interest rate swap prior to the bond issue in 2010. I think we were looking at £20-£30m of cash costs.]
    Last edited: Feb 13, 2014
  7. Feb 13, 2014

    ::sonny:: Full Member

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  8. Feb 27, 2014

    MikeUpNorth Wobbles like a massive pair of tits

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    "Fans and investors asking themselves if Moyes should be replaced, but this is the wrong question. The right question is why has he not been relieved of his duties already."

    That's bang on. The decision not to sack Moyes is now bordering on negligence.
  9. Feb 27, 2014

    Big Ben Foster Correctly predicted Portugal to win Euro 2016

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    The Glazers will sack him sooner rather than later. The share price plunging and the concerns of investors aren't something they'll be able to keep ignoring.
  10. Feb 27, 2014

    Skywarden Full Member

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    I really don't want to turn this into another Moyes discussion but, he's not going to be replaced mid-season without proper replacements lined up.

    Feel free to take the discussion to the appropriate thread(s).
  11. Feb 27, 2014

    FlawlessThaw most 'know it all' poster

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    He has a 6 year contract, meaning he won't be sacked until some kind of clause gets kicked in. Given it is mathematically possible for us to still qualify for the Champions League next season, he won't be fired without a massive pay off.
  12. Feb 27, 2014

    Spoony The People's President

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    Yeah but I can't see them risking our short term future. Unless they've still got faith in his abilities the folk in charge won't chance two seasons away from CL football. Personally I don't think anyone will care whether he's given the boot this summer...
  13. Feb 27, 2014

    Mauzindark New Member

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    It could all be a master ploy by the Glazers. Bring down the stock value, buyback the shares, release DM, bring in Klopp, club value explodes, sell the shares back.
  14. Feb 27, 2014

    Pexbo has never watched Star Wars

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    Right now, I reckon there is probably three people in the club still Champion his cause. Ferguson, Charlton and Gill.


    On the board and above I mean - PNev, Round and Moyes go without saying, although I reckon two, possibly three of those probably want to see the back of Moyes right now too.
  15. Feb 27, 2014

    steeeb Full Member

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    Whatever the case, they won't be doing anything until the end of the season. Not being able to progress in the Champions League and no improvement in the league will seal his fate, unless he can demonstrate some master plan in the summer to overhaul the squad and the football we play.
  16. Feb 27, 2014

    Big Ben Foster Correctly predicted Portugal to win Euro 2016

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    I agree, unless they think there's a good short-term option available now who could either steady the ship and get us 4th (very unlikely), or overturn our deficit against Olympiacos and qualify by winning the CL (even more unlikely).
  17. Feb 27, 2014

    JustAFan The Adebayo Akinfenwa of football photoshoppers

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    Not much the investors can do though, the voting power of those shares in pretty much non-existent isn't it?
  18. Feb 27, 2014

    Big Ben Foster Correctly predicted Portugal to win Euro 2016

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    Investors influence the share price, which influences the owners' decisions. In theory at least.
  19. Feb 27, 2014

    Red Defence Full Member

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    Better we give him a massive pay off and get rid than see our players look as uninspired as they were against Olympiakos. Never remember seeing them look so down and depressed right from the start of a game.

    Rene M and Mike P are still around to coach the players so we can get shut of the coaches too. Small price to pay if it means our players will have a desire to play football again.
  20. Feb 27, 2014

    Bojan11 Full Member

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    Not sure about Gill. I'd say Woodward is.

    Gill wanted Mourinho apparently, but couldn't convince nobody else.
  21. Mar 4, 2014

    Bestie07 Full Member

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    Liverpool posted revenues of £200m. Ours are predicted to cross £400m this year. I didn't realize the difference in revenues between the two was so huge.
  22. Mar 4, 2014

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

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    That was their revenue for last year, for comparison, ours was £360m. This year they'll have a big boost from the television revenues just like we will. Next year should be the most interesting though as they'll have champions league football and we won't.
  23. Mar 4, 2014

    Adebesi Full Member

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    A ha but we'll have those friendlies to plug some of the gap....
  24. Mar 4, 2014

    Pogue Mahone Poster of the year 2008

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    How much is CL football really worth, though?

    As in how much more does a club earn playing in the CL than they would in the (spit) Europa league?

    If our revenue was 160m more than the dippers last year, I seriously doubt the difference between CL and Europa will put much of a dent in it in the season ahead.
  25. Mar 4, 2014

    Rado_N Yaaas Broncos!

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    I think we got something like £30m from CL football last year, by way of prize money and gate receipts.
  26. Mar 4, 2014

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

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    I think andersred said that if we don't make the CL we'd stand to lose around £35m iirc and if we miss out on Europe altogether we'd lose in excess of £50m but the long term damage it would have on us when it comes to commercial partnerships can end up costing us a lot more. Sponsors want exposure in Europe if they're going to pay high fees. You also have to factor in that the television rights will inevitably go up for the champions league in a couple of years' times. United could probably cope without it for a couple of years without a huge dent but in the long term the champions league is a must IMO. Investors in the club want growth and no CL is going to be quite a hindrance to that.
  27. Mar 4, 2014

    Bestie07 Full Member

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    Yeah true, but we have the Chevrolet deal and the new kit deal about to kick in as well in the next year and a half. We're fine financially, just need to sort out the mess on the pitch.
  28. Mar 4, 2014

    Pogue Mahone Poster of the year 2008

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    So 15m in the difference between expected revenue from the two competitions?

    That's less than 10% reduction in the difference in income from the previous season. With both clubs likely to get a big increase in their top-line from the new TV deal I would expect that % to be even smaller next year.

    Obviously, being out of Europe in the long term is a Very Bad Thing. I was really just addressing your idea that the difference in our league fortunes this season will have much of an impact on the relative wealth of Liverpool and United in 2014/15. Looks as though it won't.
  29. Mar 4, 2014

    Melvyn prostate examiner

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    It's vital that we are in the CL once the new BT TV deal kicks in in 2015. The gap between CL and non CL clubs will only widen and if we're out of it, even with our mammoth commercial revenues, we'd be hard-pressed to make up ground against that kind of money from TV revenue.
  30. Mar 4, 2014

    Bestie07 Full Member

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    How much difference will the new CL TV deal make?
  31. Mar 4, 2014

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

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    The difference would be £35m between the two competitions.

    I just looked up anders' post and he points out that:
    Europa League (to the quarter-finals): EBITDA down c. £30m in 2014/15
    No European football: EBITDA down c. £45m in 2014/15

    £30m knocked off EBITDA would be a big deal. To put that into context our EBITDA for this year is expected to be around £130m.
    The new TV deal has already kicked in.
  32. Mar 4, 2014

    Pogue Mahone Poster of the year 2008

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    Ok, I get it now. The difference between CL and Europa (quarter-finals) is 30m?

    What sort of progress in the CL is assumed in that scenario?
  33. Mar 4, 2014

    Rado_N Yaaas Broncos!

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    What does he base those figures on, though?

    I'm sure I read something in the last few days that put our CL money for getting to the stage we did as £20m, and then for home gate receipts we earned an extra £9-10m for those games.

    Where does £45m come from?
  34. Mar 4, 2014

    Rood nostradamus like gloater Scout

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    There is confusion about the BT CL rights - unlike the PL rights, that money does not go to PL clubs. It goes to UEFA and although I am sure there will be some resultant uplift for all CL clubs, it is not a direct uplift in TV revenue like domestic TV rights.
  35. Mar 4, 2014

    Rood nostradamus like gloater Scout

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    He based it on CL TV revenue from 12/13 (around £30m) plus his estimate of £3/4m matchday revenue per game. I havent checked his numbers though.
  36. Mar 4, 2014

    Rado_N Yaaas Broncos!

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    Revenue maybe, but in real terms the profit made per game would be considerably less once you factor in staffing costs etc.
  37. Mar 4, 2014

    Bojan11 Full Member

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    I hope we not playing stupid friendlies.

    Liverpool have been successful this season because they just had the league to focus on. No Europa league has helped them.

    So playing midweek to earn a bit of cash would be ridiculous.
  38. Mar 4, 2014

    Plugsy New Member

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    The BT deal won't double CL TV prize money. It's only a doubling of a single contribution to the pot. For it to double then monies paid by all broadcasters across Europe would have to double, which is unlikely.
  39. Mar 4, 2014

    Mauzindark New Member

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    Can some-one explain one thing to me please.. If we keep our current trajectory how much of a hit would that be when the kit deals are up for renewal in 2015 ? We know Adidas dropped Liverpool for under performing on the European football clause. Could a similar thing happen to us if unfortunately we're outside Europe for maybe 2 seasons ?
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